I had an unusual draft experience this past week: As Major League Baseball’s 2014 Draft rounded the corner from Round one to Competitive Balance Round A last Thursday, I received a call from one of my dad’s co-workers, Jack. His nephew was eligible for the draft, and after posting a strong junior season, he expected to be selected in the first ten or eleven rounds. Jack called to ask a few questions about the draft.
From the very outset of our talk, it was apparent that neither Jack’s nephew — let’s call him Ross — nor his family was prepared for the mechanics of the draft. Ross had just posted an excellent season statistically and had had a fair number of conversations with scouts about where he could expect to be taken, but a quick chat with his uncle revealed that, beyond the baseball, Ross wasn’t ready for draft day. Our talk went a little like this:
Jack: “He’s talked to a couple of teams, and some of them have been telling him where they expect to take him.”
Me: “Where’s that?”
Jack: “He’s heard everywhere from maybe the third round to the eleventh round.”
Me: “Who’s saying that?
Jack: “A few teams. He’s mentioned that Texas seems to like him a lot.”
Me: “That’s really cool.”
Jack: “Yeah, he’s excited. But teams keep asking what his bottom line is, and we just don’t know.”
Me: “Don’t know what his bottom line is?
Jack: “Don’t know what a bottom line is, or what it should be.”
Me: “Oh. They’re asking what he’ll sign for.”
Jack: “Why are they asking him?”
Me: “Each team gets a certain amount of money they can use for draft picks. They’re asking him to see if he’s in their budget, based on how much money he wants and how much they like him as a player.
Jack: “Is that allowed?”
Me: “It’s very common. Teams negotiate with players in advance all of the time. I’m a little surprised your nephew hasn’t given anybody a number yet.”
Jack: “He has no idea what number to go with. Or what he should ask for.”
Me: “Well, it’s sort of whatever he wants.”
Jack: “Is $25,000 good?”
Me: “Not really, not if he’s really a potential third round pick.”
Jack: “So maybe $200,000?”
Me: “Has he talked to an agent or an advisor?”
Jack: “Isn’t that illegal?”
Me: “Technically agents are, but advisors aren’t. Has he talked with one of those?”
The rest of my night was a whirlwind. Between explaining the logistics of the draft to Jack, offering advice to the player and his family, and scrambling to try and find him an advisor who could help him out much more than I, I was able to get a brief glimpse of the draft process from the player’s perspective. It was frantic and, I must admit, fun.
More pertinently though, this was about the point in the conversation where two overarching points, separate and apart from Ross’s particular situation, became apparent. One, there is enormous information asymmetry between teams and players pertaining to the process and logistics of the MLB draft. Two, the NCAA’s rules that prevent players from hiring an agent while they’re enrolled are reprehensible.
Let’s start with the first point. Ross was in a reasonably good position to know how to dance with MLB teams before the draft. Ross plays in a major college program. Two of his best friends were Day 2 draftees, and one of his former teammates was a first round pick just last year. His father also spent roughly a decade in the major leagues as a trainer. Given his father’s contacts, his college coaches, and his teammates, he seemingly had plenty of resources that could have prepared him for the financial side of draft day. That he hadn’t come up with a number — or even floated scouts a vague range of what it would take to sign him — speaks to the hidden complexities behind the process.
Think about all that a player like Ross has to know and do prior to the draft: In addition to focusing on baseball — where performance is vital, especially in the weeks leading up to the big day — the player has to weigh the relative value of staying in school versus turning professional. Should he lean towards pro ball, he needs to come up with a dollar amount that would push him out of school. He then has to share this information with club officials from teams that want his services, even though such discussions are technically forbidden. Oh, and he’s supposed to navigate this process — which can lead to a suspension if big league teams decide not to play nice — without formally hiring representation.
It’s the last part that really stacks the deck against players. If a player like Ross, one who seemingly has as much access to information about the draft process as any eligible college junior, doesn’t know that he can have an advisor, how prepared can a pop up junior college pick or an average high school draftee be for the draft? Plenty of players and parents of players don’t know that each team has a spending limit, much less the ramifications these seemingly arbitrary figures have on the bottom line they ultimately feed scouts and front office personnel. It’s classic information asymmetry, and it’s all made worse by the NCAA’s rules that prevent college athletes from hiring an agent.
I don’t really want to spend too much time harping on the NCAA for this rule. Everybody knows it’s ridiculous for an organization claiming to have the best interests of athletes at heart to prevent them from hiring an agent in advance of one of the most important financial moments of their lives. Hopefully the collegiate landscape will change soon.
I do think it is instructive, however, to point out that players are suffering from the NCAA’s archaic rule. Take Ross as a case study. Unclear on the rules governing the relationship athletes can have with advisors or agents — and perhaps worried that contact with an agent might jeopardize his collegiate eligibility regardless of whether he did anything wrong or not — he shied away from consulting outside help until literally the day of the draft. As a consequence, players like Ross are ill-prepared to negotiate with major league teams, potentially costing themselves money that will be funneled elsewhere in the draft.
Ultimately, Ross was drafted just after the tenth round, traditionally the tipping point from when players sign for bonuses north of $100,000 to contracts worth much, much less than that. Every year, a number of late picks sign for big dollars as teams take advantage of rules that allow them to circumvent some amount of the draft’s prescribed bonus cap, and with luck, Ross may be one of those players. Regardless though, it’s clear that the system hurt him here. A lack of transparency led to a situation where he was inadequately represented in advance of one of the most important days of his life, and it may have cost him tens of thousands of dollars. It’s a shame and a sham, and having a front row seat this year made it clear just how backwards this process is.