24 April 2017

Revenue Sharing: Rebuilding Teams Through the Draft

Guest Post by Clara Culver

Which MLB Hall of Famer was drafted 1,390th overall in the 1988 draft?

It would make a pretty good trivia question, wouldn’t? It might be an easy answer for some baseball whizzes: Mike Piazza.

Perhaps his case is a little unique. Nevertheless, it serves as an example that a quality ballplayer can be found in any part of the draft. Thanks to MLB’s revenue sharing system, struggling small market teams maybe getting an extra chance to find those diamonds in the rough.

Major League Baseball introduced revenue sharing in 1996, following the 1994 and 1995 baseball strikes. During the strikes it became more apparent that there was a need for revenue sharing. Large market teams were dominating the free agent markets (1). Player salaries had been rising since the 1970s when free agency took off after the Dodger’s lost their arbitration case against pitcher, Andy Messersmith.

In fact, Messersmith’s name come up more than once when you look at the history of MLB’s competitive balance and imbalance. Although his first mention is far more subtle - being listed as a third round pick for the Detroit Tigers in the 1965 Major League Draft (2). The very first draft held by MLB.

MLB was the last of four major US sports to implement a player draft. Prior to the draft, teams sent out scouts around the country to scoop up the best players with appealing offers. Wealthier teams, such as the New York Yankees - the baseball dynasty of the first portion of the 20th Century - were able to fund large scouting networks, seek out the best players, offer them the most money and provided them with valued player development within their minor league system. Smaller clubs, like the Cleveland Indians, were stuck in a growing imbalance created by this long-time scouting tradition (3). The draft opened up the opportunities for those smaller clubs to pick up players and continues to do so today.

The way teams view the draft has surely changed. With the start of free agency, small market clubs turned to the draft more and more to build their teams. Small market teams look to the draft differently than big market teams. With large player contracts and owners fighting free agency, by the 1990s MLB had yet again become lopsided in a similar way it had been prior to 1965. Teams like the New York Yankees and the Los Angeles Dodgers continued to grow, scooping up big contracts and drafting top talent. Low revenue teams struggled to hold onto talent once their players were eligible for free agency but got their choice of a draft pick first thanks to the reverse order draft.

And yet, big market teams are able to add all the right pieces to turn a bust of a season into a winner overnight. Or so it may seem on paper. Those without that kind of large revenue are expected to make a long turn around if they ever do at all.

As a Red Sox fan or a Yankee fan or the fan of another wealthy team, someone may crack a joke at the so-called “bottom feeders” making their presence known at the low end of the standings. However, they get a bonus that big market teams don’t: An extra draft pick.

In the 2012-2016 Collective Bargaining Agreement, the Competitive Balance Round of the MLB draft was installed. It is an attempt by MLB to create competitive balance in the league that is closely wound to the revenue sharing system (4). Teams with the smallest markets and revenue pools are eligible to participate in this particular portion of the draft. It's been a feature every year. The Competitive Balance Round consists of two rounds with six picks each. Formerly a lottery system in which those who didn’t make it to the six spots of Round A, were reentered into Round B. Although with the latest CBA renewed in December of 2016 the lottery has been replaced by a formula to assign draft order (5) . Round A covers draft picks in the 30-40 range, while Round B picks come from lower down in the 60-80 range. In recent years, what kind of major league players have made it from this range? Some pretty good ones. Players such as the Boston Red Sox outfielder, Jackie Bradley Jr and the New York Mets pitcher, Noah Syndergaard were both picked from the 30-40 spots in the draft.
With Round A of the Competitive Balance Round covering such a range it gives small market teams a new approach to how to rebuild from the bottom up. A small market team may value draft picks differently than how a big market team does (7). Big market teams have the freedom to sign higher priced free agents while at the same time building depth in their minor league system. Small market teams don’t have that luxury. Getting an extra pick that can benefit them long term. Not only are they getting an extra pick - draft picks from this round are the only draft picks that teams are able to trade.

Now the small market team has three benefits. One, they are getting an extra pick to solidify the depth of their organization. Two, they are able to trade this player for the chance at something better in return. Three, their organization is being helped in both their building process and finances from the same source: revenue sharing.

But what about those draft picks from Round B? Is it worth it for a small market team? They may sign plenty of minor leaguers to fill their ranks, but will those players ever get a taste of the Majors? The St. Louis Cardinal’s found Jon Jay down at 74th. The Braves took Freddy Freeman at 78th.

The key is draft strategies and teams have plenty of them. From traditional scouting techniques to new sabermetric data - the major league draft is the same for all teams. A room filled with scouts and team officials pouring over every detail of every potential player on the radar (8). But for the small market teams they have that extra pick. They have that extra opportunity to create something from it. If they chose, they also have another piece to use in a valuable trade.

Teams are always looking for a fresh edge on how to navigate the draft. Figuring out how and whom is the best pick to improve their team. Every team is trying to get a competitive edge. With young players spending up to several years in the minors, it’s just another layer of questions that team have to sift through (9). It may take a couple years, but what will the final product look like? Over the past five years, the Chicago Cubs took that approach. They rebuilt through smart draft decisions, trades and signings and won the World Series as powerful team.

With the help of revenue sharing and the Competitive Balance Rounds - the Tampa Bay Rays, the Minnesota Twins and others are being given a place to use the draft as a means to build a strong team.

Revenue sharing is new to the Major Leagues at just over twenty years of being in practice. The Competitive Balance Rounds are even newer and with will be interesting to see how small market/low revenue teams are capable - if at all - use them to their advantage.



1. https://www.si.com/mlb/2014/08/12/1994-strike-bud-selig-orel-hershiser
2. http://www.baseball-almanac.com/draft/baseball-draft.php?yr=1965
3. http://sabr.org/research/history-and-future-amateur-draft
4. http://www.sbnation.com/mlb/2014/6/5/5763034/mlb-draft-2014-competitive-balance-rounds
5. http://m.mlb.com/glossary/transactions/competitive-balance-draft-picks
8. http://www.fangraphs.com/blogs/what-happens-in-the-draft-room/




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