MLB Draft: Exploring an unlikely strategy for the St. Louis Cardinals

With the 2015 MLB Draft is just over a week away, I figured I'd take a Cardinals-specific approach to a topic that has intrigued me for some time now. A few years ago, MLB established new draft rules which attempted to regulate how much teams could spend on newly drafted players. This "bonus pool" system has been in place since the 2012 draft, and it has significantly changed the strategy behind drafting and signing players.

Here's an excerpt from an ESPN article, which details the bonus pool rules and the penalties that were put in place with the new CBA:

"Owners achieved their goal of reining in spending on amateur players coming to the major leagues. For high school and college players taken in the June amateur draft, there will be five bands of penalties, starting with a 75 percent tax on the amount 0-5 percent over a specified threshold for each team next year, based on its selection spot. For teams going 5-10 percent over, the tax will rise to 100 percent and they will lose their next first-round draft pick. If a team goes more than 15 percent over, it could lose its following two first-round draft picks.

For players taken in the 11th round and beyond, teams may give them signing bonuses up to $100,000 without it counting against the new threshold.

As you can see, the penalties for a team spending more than their allotted bonus pool can be significant. While most teams have been comfortable with going 0-5 percent over their spending limit, no team (as far as I know) has been willing to go past that amount and face the loss of first-round draft picks.

Interestingly, MLB has a similar bonus pool system in place for signing international free agents, and there have been several instances of teams blowing past their spending limits in order to sign a large crop of young talent. The Chicago Cubs and Texas Rangers did this for the 2013-2014 signing period, and several more teams have done so for the 2014-2015 signing period, despite even harsher penalties now in place.

Clearly these penalties haven't stopped some teams, as they see spending big on the international market as a way to gain a competitive edge over their other teams. As this strategy has become more common around baseball, I began to wonder why we haven't seen it translated to the draft. Off the top of my head, I would imagine that compared to the draft, the free-for-all nature of the international market makes it easier for teams to acquire a lot of top talent at once, which helps them justify taking on the resulting penalties. Because all 30 teams are involved in the draft in a more equal capacity, there is less of an opportunity for one team to acquire a lot of top talent and justify losing future first round draft picks.

Currently, teams follow the draft bonus pool system, for the most part, and almost always signing draft picks close to their slot value. If a team drafts a player that will take more money to sign, they usually compensate by drafting a below-slot player, such as a college senior, in order to avoid going over their bonus pool. As a result, teams rarely, if ever, use the "best player available" draft approach (even if they publicly say that they do), since signability and cost considerations are such an important factor in the draft.

But what if a team (specifically the 2015 Cardinals) threw bonus pool limits out the window and truly drafted the best player available, no matter what penalties may result from this strategy?

To start, here is a list of all the draft picks the Cardinals have in the first ten round of the 2015 draft. (The slot values are from 2014, since I will be using draft data from last year in my analysis.)

I chose the first ten rounds because signings after those rounds do not count towards the bonus pool, unless they exceed $100,000 (and they almost never do). To figure out how an all-out spending strategy would work, I used signing bonus data from last year's draft. Unfortunately, signing bonuses for players drafted after the tenth round are not usually made public, so I had to piece together what little information I could find in order to get a good idea of how many over slot players are signed (or could be signed) late in the draft and how big their signing bonuses are.

I decided to use a draft pick's signing bonus amount as a proxy for talent level; for example, an over slot second round pick who receives a $2 million signing bonus would have the talent level of a first round pick (21st overall), since that pick's slot value is approximately $2 million. (Full disclosure: I understand that these characterizations will not be perfect, since there are other signability factors that could influence a draft pick's overall signing bonus.)

Next, I simulated what a draft with this strategy would look like for the 2015 Cardinals. I went through each pick at the Cardinals' spot and found the highest signing bonus that was signed from that spot or later in last year's draft. For example, the highest bonus signed from the 23rd overall pick or later was for $2,000,000. For the 39th pick, I found the highest bonus remaining after that pick, and so on.  I did this for each of the Cardinals' picks for the first ten rounds, effectively accumulating the "best" players left in the draft at each draft spot. I wasn't concerned about who the individual players were; instead, I wanted to get a good idea of what level of talent the Cardinals could get at different spots in the draft.

Here is what I came up with:

(The "highest bonus" column lists the highest bonus signed after that pick in last year's draft. The "equivalent pick" column lists the round and number pick a signing bonus of that amount would be closest to.)

It appears as though the Cardinals, with their first twelve picks this year (including a competitive balance pick and an extra 3rd rounder), could get close to the equivalent of two first round picks, two compensation picks, two second round picks, a third round pick, two fourth round picks, a fifth round pick, and two sixth round picks by taking the best/highest signing bonus player available. This assumes that a) this year's draft doesn't play out remarkably different from last year's, and b) no other team decides to use the same strategy and take all the best/highest signing bonus players.

While the return from using this strategy looks pretty decent, it would put the Cardinals way over their bonus pool amount. With these picks, the Cardinals draft pool would be worth $6,792,000 (using 2014 slot values) but they would end up spending $11,505,000. As a result, they would receive the harshest penalty, a 100 percent tax on the amount they went over their pool and the loss of their next two first round picks.

The tax would be $4,713,000, which is certainly significant, even for a major league franchise. The bigger loss would be the two first round picks, though. Teams that figure to end the season with a good record, like the Cardinals for instance, would have less to lose in this situation, since they would be losing a late first round pick instead of a potential top ten pick. Because the draft is in June, teams can't be sure of where they will end the season, so they would be taking the risk of losing a more valuable pick than they had anticipated. By losing two first round picks, that risk would much greater, since predicting where a team will finish at the end of next year is even harder.

The gains from using this strategy could offset these losses, though, in the right situation. Getting six top-50 level players might not be out of the question, based on some of the signing bonuses given out in later rounds last year. And I didn't even include draft picks who didn't end up signing (with two notable exceptions). A team that was already willing to go over their bonus pool could also draft the tough signability players and have a better ability to meet their demands. Getting as much top 2-3 round talent is especially important, since evidence suggests that the draft is more or less a crapshoot after the first few rounds.

With that being said, there almost certainly have to be good reasons why front offices aren't using this approach. Perhaps owners aren't willing to sign off on something that could greatly increase signing bonuses across the board if other teams catch on and use the same strategy. Maybe teams don't want to draw the ire of MLB by challenging the rules.

It's also possible that I'm overestimating the amount of talent available in the draft by using signing bonus amount as a proxy for talent level. Players are drafted where they are for a reason, even if their signing bonus suggests that they should have been drafted much higher. A third round pick who ends up with a seven figure signing bonus may be worth less than a first round pick who signed for the same amount, simply because more teams had the chance to draft the third round player and chose not to.

Still, I would find it fascinating to see a team like the Cardinals use this approach. Sacrificing 2016 and 2017 first round picks would be tough to do, but it could be worthwhile, especially if the Cardinals think they'll be at the bottom of the draft order during those years. If the Cardinals find themselves in a position to draft over slot players that they are high on, they shouldn't let bonus pool concerns get in their way. It might not make sense for them to try this approach in 2015, especially since this year's draft class looks relatively weak. However, it is certainly something they could at least consider and reevaluate as circumstances change with each draft going forward.

Happy VEB Day! I will be at the game tonight, and since I am still pretty new here, I am very much looking forward to meeting people for the first time.