April 20, 2015
So You Want to Trade Your Draft Pick
The Dodgers and Orioles made a peculiar trade last week. They swapped catching depth, the Dodgers tossed in an arm who suits Dan Duquette’s tastes well, and the Orioles sent back Ryan Webb and the 74th pick in June’s Draft. It’s a minor move, one R.J. Anderson covered well on Monday, if only in passing. I don’t want to spend forever picking apart this one transaction, because even though I find it almost unendingly interesting, I acknowledge that it is, objectively, boring.
As part of a larger conversation, though, I can stake a much stronger claim that you ought to pay attention to this move. Notably, this trade involved the Dodgers getting the Orioles’ competitive-balance pick this June. It’s the eighth trade that has involved this small class of tradable picks, and (maybe most notably, or maybe not) makes four such picks in this draft alone that have changed hands. There’s been some talk about that, but even more talk about the fact that the Dodgers appear to have more or less bought the pick from Baltimore. They released Webb shortly after acquiring him, effectively swallowing his $2.75-million salary as a way of paying for the pick outright. In fact, because they also gave more than they got in the details of the deal, we can say that they valued that pick at something around (or north of) $3 million. The Orioles must have valued it similarly, or the trade would not have shaken out the way it did: Baltimore would have held out for something better than Chris O’Brien and Ben Rowen, if they didn’t think the pick at least balanced out the money they saved by dealing Webb. Rowen is a strike-throwing righty with a platoon spl—
Right. Sorry. Larger conversation.
I’ve been trying to figure out what, exactly, the willingness to do this deal says about each team involved therein. It’s been a difficult question to answer, so I widened the scope of my internal inquiry: What does it say about any pair of teams, when they get together on a trade involving one of these picks? What value have the picks themselves, and what strategy does dealing them away (or gathering them up) serve?
The only way to answer the question well is to review, in some (but not excruciating, I promise) detail, the history of these picks.
First, here are all of the 24 players taken as competitive-balance picks over the past two drafts, along with the slot money allotted to them, and the bonus they actually received.
Competitive-Balance Picks, 2013-14
One approach: Gather ye rosebuds, while ye may. These are all picks within the top 75 overall, meaning that even the last team in line is getting a shot at a relatively highly touted player their competition can’t touch. With the right maneuvering, it’s possible to double or triple up on high-risk, high-ceiling, high-profile talents, using the extra pick as a hedge against the normal ones. Of the 24 above, though, only six reflect this mentality. In fact, in 2013, only the Royals’ selection of Sean Manaea was this kind of choice. Nearly half of teams choosing last year went over the spare pick’s slot allotment to bet on big talent (Gatewood, Morgan and Wall stand out), though none did so as aggressively as the Royals did.
Another way of using the pick would be to simply draft to the slot value, adding an extra, solid player to the draft class. To most align with the spirit of the rules that created the picks, teams would all operate this way, using their gifted pick to add depth to their farm system. In practice, 11 of the 24 picks in the sample have been so used, with players signed for something within $100,000 of their slot allotment, just falling into line.
A third way of doing things is to use the pick as a cash voucher, a slush fund to redirect toward high-level talents taken either at the very front of the draft or at the very end of the pool-eligible portion. There are six instances of this strategy being applied to picks, too. The Cardinals, Indians and Pirates all saved at least $200,000 on a competitive-balance pick last summer, and each ended up spending very nearly all the money they could without incurring massive penalties. Less laudably, the Marlins—who haven’t even come close to their cap on pool spending in either of the two years—provide two more instances of that strategy on their own.
Let’s isolate the players who were taken by teams after said team traded for the pick, and see whether they were similarly used:
Traded Picks, 2013-14
*Compensation for not signing Krook
The Tigers’ selection of Corey Knebel is fascinating. They traded for that pick nearly 11 months in advance, sending their own, lower pick (the 73rd overall) to the Marlins for the 39th, as part of the Anibal Sanchez and Omar Infante trade in July 2012. Whether Dave Dombrowski knew it was the plan or not, when he finally got a chance to use that pick, he spent it on a quick-to-the-majors relief arm. Knebel debuted with Detroit less than a year after being picked, and delivered some short-term help before being traded. He fit the Tigers’ plan because he could return a lot of value in a short time frame, and because he didn’t require an over-slot bonus to do it. For the most part, teams who acquire these picks seem interested in saving money to spend elsewhere—but have varying degrees of success at actually spreading around their savings. The Marlins, as always, look purely penurious.
Here are the 2015 picks, for now:
Competitive-Balance Picks, 2015
It’s really hard to mine patterns from these trades, and not only because of the limited sample. The Marlins, Padres and Orioles—three of the four teams who traded away their pick over the last year—are all trying hard to compete in the short term, and all need to redirect resources from their future to their present in order to make that realistic. The Diamondbacks, though, are almost the opposite. Their greatest benefit in the trade with Atlanta is shedding a chunk of Cahill’s salary, but they gave up a future asset in order to gain that short-term freedom, right when that freedom seems to matter least.
Here’s what I think I can say, combining these moves with the ones we saw in previous years. Trading for a pick shows both a serious commitment to long-term planning, and a willingness to spend freely and maximize the value of the new asset. Trading a pick shows not only that one is bound tightly to a budget, but that one is focused on winning now, to the exclusion of all other considerations. In general, teams assign significant long-term value to these picks, and will only move them if they see a large potential gain in the short term to offset that. Take the Padres and Braves, who swapped a pick as part of the Craig Kimbrel deal. The Braves were saving $56 million in the exchange of contracts, but needed to make up for whatever surplus value Kimbrel would have provided against that. They got Matt Wisler, Jordan Paroubeck, Cameron Maybin and that 41st overall pick, to do it. Maybin has almost no utility to the team, since they’re moving into a rebuilding mode and he will be a free agent after 2016. Wisler is a good pitching prospect, and Paroubeck—a former competitive-balance pick, himself—has shown something in his early professional experience. Still, it doesn’t feel like those three add up to what Kimbrel would have returned on Atlanta’s investment. I’m just slapping a number on it, but it feels like a $5-million gap. For the Round A picks, that’s starting to look like a pretty fair estimate of their value. As I noted with Webb and the Dodgers, and as the Cahill deal reinforces, teams seem to value Round B picks at around $3 million. This surprised me. Teams take these assets seriously.
There are two exceptions to these rules, two teams who simply don’t seem to value extra draft picks the same way others do: the Marlins and the Orioles. Whether in a winning or losing mode, those two teams have gone out of their way to offload their tradable picks, for a relatively low price that seems mostly to be about escaping the obligation to spend money on the player the pick will become. The Pirates got the 39th overall pick from Miami for middle reliever Bryan Morris, after all. Without turning this into a diatribe or a condemnation, I want to underscore this: The Orioles and Marlins look like skinflints here. They’re treating the help the system offers them as a way to save a little money, instead of to augment their future.
Until the fall of the reserve clause, every transaction every team made could serve both its present and its future. Player salaries were only loosely tied to seniority, and teams had such control over those salaries that it hardly mattered how much a player cost, anyway. Team control wasn’t something you counted down by crossing off days on a service calendar; it was indefinite and permanent. A few rules, very limited in scope, forced teams to make a few tradeoffs between now and five years from now: the Rule 5 Draft has been around since 1959, and the Bonus Rules of the 1940s and 1950s forced teams to carry expensive amateur signees on their big-league rosters before they would otherwise have been there. Obviously, the Draft as we know it came into being in 1965, and most of those players needed time in the minors before contributing, but there was very little cost to the team in moving that player through the system as their development warranted. Teams rarely identified as buyers or sellers. They mostly swapped assets, allowing utility to override raw value when it made sense.
Once we started putting clocks on players, though, and once they gained some measure of self-determination, the tenor of trades had to change. It was no longer the case that the Yankees were good every year, and the rest of the league could simply rotate through the role of noble runner-up. The dynasties and dominance of the pre-free agency era are never coming back. Success is now cyclical, even if The Success Cycle isn’t a perfect model for it.
In this new economy, where teams must make many more tradeoffs and accept that all winning happens in windows, trading draft picks is both a wonderful and a dangerous idea. Teams can maximize efficiency by really pouring themselves into winning when they’re best positioned to do so, and by aggressively stockpiling young talent when they’re in a lull. They can use picks as currency, or wait and turn them into more redoubtable assets. The problem is that, while the competitive gulf between the haves and the have-nots is smaller than ever, the financial gulf is about as wide as ever. There are still teams making hard decisions, diverting resources from fringe costs like draft pick signing bonuses in order to maximize the MLB payroll budget, and there are still teams with so much money that they have to get creative just to spend it all. I’m not sure we want the Dodgers lining the pockets of Peter Angelos and Jeffrey Loria the way they have over the last several months. Angelos and Loria can’t be trusted to spend that money well.