Draft Preview: Cardinals' slot money strategy

When the new Collective Bargaining Agreement went into effect prior to the 2012 MLB Draft, the league sought to dampen signing bonuses and transfer more money back to the owners. The result was a slotting system that assigned a value to every single pick in the first ten rounds of the draft. Once the values are assigned, every team is then given a pool which they are not allowed to exceed without penalty. There are areas of wiggle-room that can be exploited. The St. Louis Cardinals have done a solid job exploiting the deficiencies in the system and should be expected to do so again in 2014.

In the first ten rounds of this season's draft, the Cardinals have twelve picks. In addition to the last pick in every round, the Cardinals have an extra pick at the end of round one (34th overall) for losing Carlos Beltran to free agency after making a qualifying offer to him in the offseason. They also have an extra pick (71st) in between rounds two and three due to a rule that provides extra picks to some teams with low revenues or small markets. The Cardinals received an extra pick for the St. Louis market. Here are the slot values for the Cardinals' picks in the first ten rounds.

The slot value is important, but it is not nearly as important as the total number. With two extra picks and not signing any free agents that would lose them a draft pick i.e. signing Jhonny Peralta (no compensation) instead of Stephen Drew (loss of draft pick compensation), the Cardinals' pool of money ranks 12th out of all teams despite picking last in every round. Teams are allowed to use the allocated total in any manner that they wish. This is how the Cardinals used the allocated money in 2013.

The Cardinals used their money to go above slot on some players like Oscar Mercado and Malik Collymore while going below slot to players like Mason katz, Jimmy Reed, Andrew Pierce, and Nick Petree. Teams are not "allowed" to negotiate with players before the draft. Some players who are college seniors with little leverage or players who would otherwise be drafted in later rounds could accept a lower than slot amount allowing teams to offer more money to players who are more difficult to sign, typically high school players and players who have remaining college eligibility.

The above chart makes it appear that the Cardinals failed to use all of the money allocated to them. However, the maximum slot for every pick in the eleventh round and on is $100,000. Teams are permitted to go over $100,000, but any money over that amount is counted against their allocated pool money. Last year the Cardinals signed three picks above the $100,000 limit: Steven Farinaro (11th round, $750,000), Ricardo Bautista (12th round, $150,000), and De'Andre Asbury (15th round, $150,000). Adding those bonuses puts the Cardinals' total bonuses counting against the pool money at $7,232,400. This money exceeds the pool money the Cardinals' had in 2013 by $324,500. The penalties for exceeding the pool amount depend on how much beyond the allocation a team exceeds the recommended amount. The penalties are as follows:

Any team that goes over total recommended slot spending in any one year's draft by up to 5 percent must pay a 75 percent tax on the overage.

Any team that goes over total recommended slot spending in any one year's draft by 5 to 10 percent must pay a 75 percent tax on the overage and lose its first-round pick in the following year's draft.

Any team that goes over total recommended slot spending in any one year's draft by 10 to 15 percent must pay a 100 percent tax on the overage and lose its first- and second-round picks in the following year's draft.

Any team that goes over total recommended slot spending in any one year's draft by more than 15 percent must pay a 100 percent tax on the overage and lose its first-round picks in the next two drafts.

Outside of Bryce Harper, or a prospect like him (there isn't one this year), falling to the Cardinals, any penalty beyond the first level is prohibitive. For the first penalty, teams willing to sacrifice only money can add to their bonus pools. By spending an extra $324,500, the Cardinals went 4.7% above its allocated amount. Coming so close to the 5% mark was no accident. They used the same practice in 2012, when they went over their pool money close to five percent and went over the recommended slot by a million dollars to sign Carson Kelly.

Going up to the five percent mark this year would net the Cardinals roughly $350,000 in extra money to sign players. The Cardinals have smartly used this leeway to sign more players and more highly sought after players than they would have if they had stuck with the simple slot valuation. They may pick a few players in the first ten rounds that seem like reaches, but if those players are willing to sign for under the slot allocation, it will enable the Cardinals to acquire harder to sign players.

Generally the best strategy is to take the best player available and the Cardinals are likely to do that for the first few picks they have when the talent available is the highest. As the draft wears on, the Cardinals will do their best to maximize the accumulation of talent while being mindful of the bonuses that are likely required to sign the players they pick.