Solution to MLB draft dilemma: Don’t have one

On Tuesday, Major League Baseball officially declared Yoan Moncada — perhaps the most coveted player to defect from Cuba in the past few years — free to sign with any major-league club.

The bidding is expected to be intense, with the Yankees, Red Sox and Dodgers tabbed as the early favorites. Given the tax that will be levied on the team that signs Moncada, the high-revenue clubs are at a significant advantage, and Moncada’s signing will likely be used as evidence of the need for an international draft.

In his conversation with Ken Rosenthal last week, Commissioner Rob Manfred publicly supported such an idea, stating that his "long haul goal" would be "to get to an international draft." With the big-money clubs blowing up the league’s system for signing young international free agents, an overhaul of the process is inevitable. But while the draft has become the de facto method for sports leagues to distribute incoming young talent — under the guise of competitive balance, but with the primary goal of holding down acquisition costs — I’d like to suggest that Major League Baseball go the other direction instead.

The logistics of incorporating international players into a draft are problematic, which is why baseball settled on its current recommended bonus system instead. And there is merit to the structure that the league created; if you have various spending allocations in place, you don’t actually need to go through the process of draft positions. The best players want the most money, so by simply creating a system where some teams have more money to spend than others, you can funnel incoming talent to certain types of teams even without handing out specific draft positions.

The problem lies in the execution of MLB’s international system, as the bonus pools are akin to speed limits instead of actual barriers. Because teams have calculated that Moncada’s talent is worthy of paying the penalties associated with blowing their budgets out of the water, the limits are functionally useless. But if the limits were firm caps, and teams were unable to exceed their pool allocations, then we wouldn’t be facing a situation where the richest teams in baseball were flexing their financial muscles to add an elite talent while the have-nots sit on the sidelines wishing for a more level playing field.

So what if there was no draft? Instead, what if we just lumped all new players — foreign or domestic — into a single acquisition system where each player was free to sigh with the team of his choice, only with firm spending caps in place to ensure that young talent flows more freely to clubs that can’t compete on major-league payroll alone? In other words, a team’s talent acquisition budget would be inversely tied to its major-league payroll; the more you spend on big leaguers, the less you get to spend on prospects, and vice versa.

Last year, Major League Baseball gave out combined domestic draft and international signing bonus allocations of $285 million, or $9.5 million per team. Instead of distributing the pools based on prior year winning percentage — which rewards failure and incentivizes teams to lose on purpose — the player acquisition budgets could be increased or decreased based on the percentage of deviation from the league average major-league payroll. Last year, the league average payroll was $115 million, so a team that ran a $150 million payroll would have a 30-percent overage, and would in turn have its new talent acquisition pool decreased by 30 percent.

The real fun would come when teams start pushing payroll levels that are currently subject to the luxury tax. For instance, the Dodgers ran a $235 million payroll last year, or a 104-percent overage compared to the average payroll. Under this system, LA’s big-league spending would have caused it to forfeit the entirety of its new talent bonus allocation. The cost of running a payroll near twice the league average would become so steep that the luxury tax might not even be necessary. Just as teams are forced to trade prospects for veterans when dealing with other clubs, so too would this system effectively make teams surrender the rights to future prospects whenever they raised their major-league payroll.

On the other side of the ledger, teams with significant financial constraints would be given sustained advantages in young talent acquisition; a team spending $58 million on major-league players last year would have had its new talent acquisition budget doubled to near $20 million, giving it three or four times the spending power of higher-payroll clubs. For teams that simply can’t afford to compete for free-agent talent, a system along these lines would give them the ability to build a deeper, stronger farm system on a regular basis, and put them in the best position to sign unique talents like Yoan Moncada when they come along.

Additionally, eliminating draft positions has the benefit of avoiding disasters like we saw in July, when the Houston Astros and No. 1 overall pick Brady Aiken could not agree to a contract after a disagreement over his physical exam. The draft system offered a delayed professional career as the only alternative to accepting Houston’s offer, but a pool allocation system would have allowed him to simply sign with another organization once the two sides failed to find common ground. The allocation process ensures that MLB still gets to hold down the total acquisition costs of players entering the talent pool, but removes some of the negative consequences of forcing players to negotiate with only one franchise.

If we accept the primary roles of the draft are to both constrain spending and promote some form of competitive balance, then those outcomes can be achieved without actually having a draft. A firm spending cap for the entire league — covering both domestic and foreign talent coming into the game — fairly easily accomplishes the first goal, while the second can be achieved by creating an uneven playing field through spending pools rather than through draft pick allocation. Those spending pools just have to have firm limits.

From a logistical standpoint, spending pool allocations are much easier to manage than a draft involving players of all ages from every corner of the world. Teams would be forced to more clearly choose between short-term gains or long-term rewards, and the system could create one real advantage for markets that don’t have any at the moment. The best high school player in the country would be far less likely to be forced to delay his professional career, and when premium international players become eligible to sign, the big-market teams wouldn’t become the obvious favorites.

While Moncada’s signing is likely to be the nail in the coffin of the current international signing system, MLB has an opportunity to do things quite differently under the next CBA. Maybe the answer is getting rid of the draft we already have rather than adding a second one.