June 21, 2017

Baseball Therapy

Senior Signs

by Russell A. Carleton

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MLB held its annual draft last week. That snoring sound that you hear is amateur scouts and prospect writers all over the country finally getting a well-deserved nap. We won’t really know the final results of the draft for another decade or so. Maybe one team just drafted two Hall of Famers, like the Royals did in 1979. As someone who is decidedly not a prospect writer, I think I’ll just pick a team at random and say that they “won” the draft. (They’re all mostly guessing anyway.)

There were all sorts of fun picks. The Twins gave everyone a mild surprise when they tabbed Royce Lewis as the first overall pick. The Nationals drafted Darren Baker, son of manager Dusty Baker, who had previously nearly become the youngest player ever to score a run in a World Series game. The Mariners literally drafted a guy to work in their front office. No, I’m not making that up.

While we don’t know what’s going to happen with the players in this draft class and won’t for a while, the 2017 draft can already teach us something interesting about what’s happening to the draft itself. But to find out what that is, we’re not going to look at the top of the draft, but in the ninth and 10th rounds.

Here’s a listing of how many players picked in the ninth round in each of the last seven drafts were college seniors:

2011 – 6/30
2012 – 11/30
2013 – 16/30
2014 – 16/30
2015 – 18/30
2016 – 19/30
2017 – 20/30

And here’s the 10th round:

2011 – 5/30
2012 – 21/30
2013 – 18/30
2014 – 22/30
2015 – 19/30
2016 – 19/30
2017 – 27/30

Some of you may already know where this is headed, but for those of you who don’t, here’s what happened in the 11th round of each draft with respect to college seniors:

2011 – 6/30
2012 – 1/30
2013 – 1/30
2014 – 3/30
2015 – 2/30
2016 – 0/30
2017 – 0/30

What exactly is going on in the ninth and 10th rounds? The answer is that once upon a time, there were effectively no regulations on signing bonuses. There were “friendly suggestions” for slot values for draft picks, but no one paid much attention to them. in 2012, the newly revised collective bargaining agreement introduced the draft bonus pool to MLB. Teams were given a certain amount of money to spend how they wished on signing picks made in the first 10 rounds. After the 10th round, teams were allowed to pay bonuses of whatever size they wanted, but of course, by that point, most of the good talent has been taken.

So, let’s talk about what it means to be a college senior taken in the ninth or 10th round. You clearly weren’t a priority, because all of the teams have passed over you eight or nine times. Unlike a high school senior or a college junior, you can’t say, "Well, if you don’t give me what I want, I’ll go back to school.” You have no leverage, and so a lot of senior signings end up with tiny bonuses, the kinds that amount to a rounding error for a first-rounder. Tenth-round picks in 2017 were assigned a “value” of between $131,300 and $137,100. If you sign a college senior for a bonus of $5,000, that’s money “saved” that can be put toward a bonus higher up the chart.

Shortly after the 2012 draft (the first with the slotting system), people started to notice that in the 10th round, teams seemed to suddenly catch a case of senior-itis, where they clearly hadn’t in the 2011 draft. It’s not hard to figure out why. Teams only had a limited budget for bonuses, and while they technically aren’t allowed to discuss bonus demands with a player before drafting him, teams (*cough*) usually have a (*cough*) pretty good idea (*cough*) of what a player might want to convince him to sign his name on the dotted line.

It’s not all that hard to figure out what teams are doing. As they make picks and do their mental accounting of how much they (*cough*) anticipate their draftees will request through their (*cough*) “advisors,” there comes a point in the draft where there’s only enough left in the kitty for a relatively small bonus. The ninth- and 10th-round picks, instead of being “best available” players, are instead spent on college seniors whom they can get on the cheap. All teams have a file of players they have scouted who fit this profile. A team might as well take the one they like best from that list at that point. In the 11th round, those restrictions on signing bonuses are gone, and it’s rather telling that teams return to mostly ignoring college seniors.

If we’re looking carefully, we see that in 2017, the 10th round featured 90 percent of all teams taking a college senior. Rates had been high before, in the 60-70 percent range, but this year it seemed like everyone was essentially checking out of the 10th round. We also saw that two-thirds of ninth-round picks were seniors. Looking over time, we see that the trendline for college seniors in these rounds is most certainly pointing upward.

Some teams threw themselves headlong into the strategy. The Braves drafted seniors in rounds five through 10, and the Mets and A’s did so in rounds six through 10. Probably not unrelated, the Braves signed their top pick, Kyle Wright, who had been projected by many to go in the first three picks, to a deal that was well above the slot value for the fifth pick. In fact, his signing bonus was the richest one ever given out to a draft pick.

We’ll never know for sure whether the Braves walked into their draft room with the specific plan to draft a bunch of signable seniors or (more likely) whether the move was a response to unfolding events—“Wait, Wright’s on the board? But we’re (*cough*) pretty sure he still wants $7 million? Oh well, you only live once!” What we can see is that looking at the draft logs for most teams, there came a point where they reached out and grabbed their first senior, and then drafted nothing but seniors until the 10th round. That point came at different times for different teams (the Giants, for example, didn’t draft any college seniors in the top 10 rounds), but it was there.

Effectively, there are now three phases to a major-league team’s draft. There are the first few picks in which they mostly take high school players and college underclassmen. When the bonus money runs out, they shift over to the college senior file until the 10th round. Teams can select when they want that inflection point to be, effectively allowing them to choose whether they want to save a bunch of bonus money for a splurge on one or two special players or whether they want to spread the money around to multiple players. After that, it’s open season, but of course by that point most teams are just taking flyers on guys who will likely only ever be there to make up numbers on minor-league rosters.

So here’s where we ask whether the tradeoff is actually worth it. Should teams sacrifice more of their top-10 picks to the college senior volcano. Is it even a sacrifice?

Warning! Gory Mathematical Details Ahead!

I pulled data from the 2003-2010 drafts. While those drafts were completed under the “old” CBA, many of the players selected in more recent drafts have yet to poke their heads into MLB, even though they eventually will. I coded all players drafted based on whether they had met two criteria. One is that they had at some point (as of the end of the 2016 season) appeared in a major-league game. The other was that they had generated at least 5.0 WAR in their career.

Here is the data, paneled by round of how many players met each criteria, along with the median “slot value” for the round for 2017. (These are Houston’s numbers, for the fact that they picked 15th.)

Round	Made Majors	Reached 5 WAR	Slot Value
1	72.3%	25.1%	$3,588,200
2	50.4%	14.1%	$1,265,500
3	46.2%	9.2%	$597,800
4	37.1%	5.0%	$437,400
5	32.9%	4.2%	$326,600
6	29.2%	4.6%	$249,600
7	21.3%	5.4%	$195,300
8	17.9%	3.8%	$158,100
9	17.9%	2.5%	$141,600
10	19.3%	2.9%	$133,500
Total	36.6%	8.7%	$7,093,600

I think it’s worth looking at both the top and bottom of this chart. More than one quarter of first-round picks stall out and never make the majors. Seventy-five percent don’t make it to 5.0 WAR for their careers. There’s a very finite supply of players in that first round who are actually going to be good. What might surprise people is that while the lower rounds aren’t fertile ground for finding All-Stars, you sometimes get at least a bit player.

For every round that a team is willing to limit themselves to a low-cost college senior, it frees up a little more money to spend on someone else at the top of the draft. That’s fairly obvious. But what’s the cost? It’s not completely losing the ability to pick someone in the 10th round. It’s that you can only pick from one part of the talent pool. So, how often does that particular talent pool produce a fish? (It doesn’t have to be a Trout.)

Again, using data from 2003-2010, the college seniors who were drafted made the majors at a rate of 31.3 percent and provided at least 5.0 WAR in their career at a rate of 7.1 percent. Now, some of those are the Stephen Strasburgs of the world, so I limited the sample to those picked in the sixth round or later. Still more than one in five (21.2 percent) made the majors and 5.6 percent provided five wins of value. I limited the sample to those who got bonuses of $20,000 or less, and still 26.1 percent made the majors and 4.5 percent got to five WAR. Those numbers look pretty good, even compared to sixth- and seventh-round picks. Chances are still good that the senior they draft won’t ever make a dent, but chances were like that in the old days.

There’s a case to be made that teams, by switching over to the college senior pool, aren’t really taking much of a hit, even in the sixth round or so. They’re still drafting a lottery ticket. He’s just a slightly older lottery ticket, and he’s not as expensive. As we get into the fifth round, teams are probably losing a little bit of upside, but the amount of money that they can “reclaim” in their bonus pool also goes up substantially. If that buys someone in the first or second round who has a little better chance of making it in the majors, then the tradeoff might be worth it.

Senior Moments

The “sign a senior” strategy isn’t a bad one for teams. There aren’t a lot of top-end players, and why not get the one you really want. The sacrifice that you have to make to do that isn’t much of a sacrifice at all.

But lurking in there is a possible market distortion that the league might not be anticipating. If teams realize that there’s not a lot of downside to punting some of the lower rounds and that frees up more money for players at the top of the draft, then (*cough*) advisors for those top draft picks are going to suggest, out of the goodness of their hearts of course, that they ask for a bit more money. The more teams that adopt the “punt the 10th (and maybe ninth and eighth and seventh as well)” strategy, the more money there is floating around at the top of the draft, and the more likely someone will be to bite. That’s going to put upward pressure on prices at the top of the market, and raise the incentives for teams to think about punting the fourth and fifth rounds as well.

There’s probably a countervailing force in that the more teams that adopt that strategy, the more diluted the pool of “good idea” senior signs gets, and eventually the opportunity cost on the back end becomes an issue. But we could start seeing teams hitching their entire bonus pool wagon to three or four draft picks, and then leaving a few leftovers for some seniors they figure might be worth a shot. (There’s probably also the fact that some teams will just prefer to take 10 decent shots rather than 2-3 big ones, and that this is not an incorrect strategy in some cases.)

The data that we do have—and admittedly it’s only six data points—shows that we’re seeing an upward trend in teams using the strategy. It’s possible that this year’s spike was a nod to the fact that the draft class wasn’t considered to be very deep. Teams figured they should load up in the high rounds, because what would be left by the ninth round wasn’t all that interesting. But even before this year, we saw some slow growth in the strategy’s use. It’ll be interesting to see what happens with it next year.

Russell A. Carleton is an author of Baseball Prospectus. Follow @pizzacutter4
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