Make the World Go 'Round

The Sketchy Economics of an International Draft

by Shawn Hoffman

From the bottom falling out of the economy (and later, the free-agent market), to the dog-chasing-its-own-tail Manny Ramirez negotiations, Yuri Sucart's newfound celebrity, and the masochistic calls for a salary cap—it's been a very odd winter. And you can add to that list the story of 23-year-old Carlos Daniel Alvarez Lugo, who up until recently had been 19-year-old Esmailyn Gonzalez. Lugo is at the center of the scandal that took down Nationals GM Jim Bowden and special assistant Jose Rijo, and is causing a new wave of support for a worldwide draft.

Clearly, there are still abuses to the international free-agent system, but from the teams' perspective, cases like these have actually become few and far between since 9/11 (when MLB set up an office in the Dominican Republic to make sure that these things wouldn't happen anymore). Perhaps refusing to let a crisis go to waste, the teams are beginning to use the Gonzalez case as a political rallying cry. Conventional wisdom says that a worldwide draft would help boost competitive balance, eliminate bidding wars, and lower acquisition costs for the teams. Assuming that these things are actually true, it's no wonder that MLB's Rob Manfred says there is a "much stronger consensus in favor of the worldwide draft than there was five years ago."

But is it all really true? A while back, we interviewed Nationals manager Manny Acta on Squawking Baseball, and asked him what he thought about an international draft:

I'm not a fan of it. People talk about it limiting costs by stopping bidding wars for the top guys. But that's just the top guys. For everybody else, it could actually make things more expensive. There are so many kids down there that are dying to come up and be big-leaguers. The system, as it is, is good for both sides. If you institute a draft, less kids get signed. That's bad for the kids obviously, and bad for the teams, since the more players you sign, the better chances you have of striking gold.

The numbers seem to back him up. In 2008, major league players who were originally signed as foreign amateurs accounted for about 30 percent of all plate appearances and innings pitched. There isn't much hard financial data to go by, but one team executive I talked to estimates that a typical team can sign about 30-40 foreign players on a budget of $1.5 million—and that includes at least one high-end signing, somewhere in the vicinity of $800,000. In last year's draft, teams spent an average of $6.2 million to sign a similar number of players, so even counting foreign infrastructure and maintenance costs, teams are likely spending more than 70 percent of their total amateur budgets on the draft—meaning that the ROI from international players is probably a bit higher.

As for the top-tier foreign players—the subjects of those infamous bidding wars—they too are paid on a much smaller scale. The top ten bonuses paid out in last year's draft were for a combined $42.8 million. According to Baseball America, the top ten bonuses for international amateurs combined for $24.5 million—and that's the top ten of all-time, not just 2008. Michel Ynoa's $4.25 million deal with the A's (easily the largest ever given to a foreign amateur) would have been the sixth-highest bonus in the 2008 draft.

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lemppi

(32643)

Thanks for this article. Really great information and very timely....I've been blogging about the idea of the international draft. This puts much in perspective and its interesting to see Manny Acta's opinion.

Mar 12, 2009 09:44 AM