SBJ/June 4-10, 2012/Leagues and Governing Bodies

MLB teams tiptoe into bonus pool

MLB teams are generally not expected to surpass the new signing bonus pools for the first-year player draft, set to begin today, because of harsh new penalties in place for excess spending.

The new rules, among the foremost changes in the five-year collective-bargaining agreement signed last November with the MLB Players Association, strip an overspending team of a future draft pick for exceeding its assigned bonus pool by as little as 5 percent. A 15 percent spending overage creates a $1 fine for every dollar over the limit and the loss of two future first-round draft picks. In addition, if a team fails to sign a pick, the slot value of that selection still counts against that club’s bonus pool.

Since November, teams have been formally briefed on the new structure, and have studied how best to manage draft pick negotiations within the new confines.

“We’re going to be as aggressive as we can, and we want to take full advantage of the system as it exists,” said George Postolos, Houston Astros chief executive. The Astros have the first overall pick in the draft, and the second-largest signing bonus pool at $11.18 million for its set of picks in the draft’s first 10 rounds. Minnesota has the largest overall bonus pool at $12.4 million, with each team’s respective pool number calculated by the number and specific position of its selections.

“I would expect teams to stay within the limit, because forfeiting a draft pick is a very severe penalty. Our goal in Houston, like many clubs, is to have the best collection of young talent in the game, and forfeiting a pick is directly contradictory to that,” Postolos said.

As veteran free-agent signings have become more risky and teams have aggressively sought to sign long-term contracts with their own young stars, baseball’s first-year player draft has assumed a heightened importance. The bonus pool structure represents a compromise between MLB’s original push for a hard slotting system requiring pre-set compensation based on specific draft order, and the union’s aim to preserve individual bargaining rights for draftees.

The still-open question this year is how contract negotiations will manifest themselves between this week’s draft and the July 13 signing deadline. In particular, clubs have been advised that if they want to sign a draft pick above the league’s slot recommendation, they should first sign some other selections below slot so as to not hamstring themselves. Individual player signability is also likely to be a heightened factor on many team draft boards, a marked change after many years in which the league’s slot recommendations were widely ignored.

“There is a strategy to the new system, just like there was a strategy to the old system,” said Rob Manfred, MLB executive vice president for labor relations and human resources.

But as MLB Commissioner Bud Selig in prior years has chastised teams for overspending on draft pick bonuses and ignoring the slot recommendation, Manfred said the new structure was not aimed at sharply reducing aggregate spending. The combined bonus pools for the 30 clubs is $189.9 million, 1 percent less than the $191.9 million spent on bonuses for picks in the first 10 rounds last year.

“We made it clear to the union right away that we weren’t looking to take money away from the system. Rather, we were after creating increased predictability and certainty with regard to the clubs, and we think that’s been achieved,” Manfred said.

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