When the new Collective Bargaining Agreement came out during the 2011-2012 off-season, I wrote about a lot of the downsides for small market teams. At the time the downside was somewhat debatable. We didn’t see how the new system would impact the Pirates at the time. There was some debate over whether the new system would hurt small market teams. Some argued that eventually teams like the Yankees and Red Sox could take their big spending to the draft and the international markets, and take away the Pirates’ only avenue for acquiring young potential impact players.
Here’s what we knew at the time: small market teams had no chance at adding star players through free agency. Their only hope was that they could draft and develop a big impact guy, or sign a future impact guy out of the international ranks. They could spend whatever amounts of money they wanted in those areas, and even the highest spending teams were only spending a fraction of some of the biggest free agent contracts.
Small market teams still have no chance at adding star players, or even most mid-level free agents through free agency. That’s because free agency wasn’t addressed. The only thing that was addressed was the draft and international spending. Here are the early results for each for the Pirates.
The Pirates didn’t have any problems making tough signs under the old system. Their $5 M deal with Josh Bell in the second round pretty much broke the old draft system. You know, because it’s that type of unchecked spending that’s going to send baseball down a path where not all teams can compete. So what happens in the first year? Mark Appel drops to them, and they can’t sign him because they’re limited to what they can spend under the new system.
Now Appel probably doesn’t drop to them under the old system, since a higher team could offer him a lot of money. But they would get one of the top seven picks in that scenario. Maybe that ends up being Albert Almora, who went one pick before they selected.
The Pirates have the fifth biggest draft pool this year, although that’s largely because they have two first round picks. Without that compensation pick, the Pirates would have a pool ranked in the 20-25 range (based on last year’s value of $2.8 M for the 9th overall pick).
The international market might be switching to a draft by 2014. If there’s one area where I agree that big market teams could hurt small market teams by spending, it’s the international market. That’s straight free agency, meaning the top players usually go to the highest bidder. It would be easy for the Yankees, Red Sox, or Dodgers to invest an amount they wouldn’t miss and have a monopoly on the top talent each year. In a draft, any team could spend big, but you could only negotiate with your own draft picks. So it’s not like the Pirates wouldn’t be able to sign their own draft picks if big market teams were allowed to spend big.
The problem with the current international market is that the spending is restricted across the board, and it is restricted by standings. The 2013 international bonus pools came out today, and the Pirates have the 13th biggest pool. They are given just over $2.4 M, which is down from their normal $3 M budget in previous years.
The difference between Pirates and the bottom team is only about $600,000. The difference between the Pirates and the top team is about $2.5 M. All of this is based on the 2012 standings. The Pirates had the 13th worst record in the league, and because of that they fall outside of the big bonus pools that are awarded to the worst teams (which include the Cubs, Red Sox, Blue Jays, and Mets).
Under the old system, small market teams only had one path to success. That was finding impact players through the draft and international markets and developing enough to form a winner under a much smaller budget than the big market teams have. Under the new system, small market teams have the same path to success. Only now they get punished for their success.
In order for a small market team to have continued success, they need to keep adding talent through the draft and international markets. The new system makes it harder for them to add that talent once they’ve had success. In fact, they don’t even need to have success. The Pirates didn’t have a successful season last year. In terms of showing year-to-year improvements they were successful, but in terms of winning or contending, they fell short. But a below-average finish is enough to drastically reduce their international spending budget, and give them a low draft budget (which, again, is only top five because of their compensation pick from Mark Appel).
Under the old system, the Pirates could sign their first round pick in 2012, spend $10 M in that draft, then spend $10 M again in 2013. Under the new system they were limited to about $3.5 M in 2012 once Appel didn’t sign. They’re limited to $8.8 M in 2013 with the compensation pick, and would be closer to $6 M without that pick.
Under the old system, the Pirates could finish with a better record than the Cubs, and still spend as much as they could, or more. Under the new system, the big spending Cubs get $2 M more to spend on international players than the Pirates, all because they finished with a lower record one year.
That really highlights the problem with this new system. The Cubs don’t need the draft or international markets. They can sign expensive free agents. They can trade prospects away for pitchers like Matt Garza. They can even do all of this with an albatross of a contract like Alfonso Soriano. On the other hand, the Pirates have trouble signing expensive free agents. They need to proceed with caution before trading away prospects for one player. If they had a guy making half as much as Soriano, with the same production, they’d be in a horrible situation. And they definitely need the draft and international markets.
Despite these differences, the Cubs have $10.5 M to spend in the draft on ten picks, while the Pirates have $8.8 M to spend on 11 picks. The Cubs have $4.5 M to spend on international players, while the Pirates have $2.4 M to spend. So not only can the Cubs take advantage of other avenues of talent acquisition, they also have an advantage on the amateur level.
What this means is that the Cubs will have an easier time building their team up. Then, once they’re to the point where they’re winning more, and not getting big budgets to work with in the draft and international markets, they can rely on those other avenues of talent to keep them at the top.
When it comes to small market success, people often talk about a “window”. That’s a short time period for small market teams to contend before their top players leave via free agency for the big market teams. Well run small market teams don’t necessarily have a window. In theory they could continue on a cycle where they see top players depart, but don’t see a drop off due to strong internal replacements. But if you are a small market team that is limited through the draft and international markets, you’re going to have a hard time adding these replacements.
In short, small market teams had the odds stacked against them under the old CBA, but a well run team could beat the odds and have a team that was successful year after year. Under the new CBA, a well run team has a harder time replenishing their system, since any success in the majors makes it much harder to continue adding talent to the system from the amateur ranks. We’ve already started to see that with the Pirates. Their limited spending abilities cost them a first round pick in 2012, and that compensation pick in 2013 is the only reason they have a decent draft budget. Their below average finish would have put them on pace for a bottom-third draft pool, and put them in the middle of the pack for the international bonus pools — far from the big bonus pools at the top. The Pirates didn’t even need a winning season to receive a big blow to their ability in adding amateur talent. Just think about how difficult it will be to continue adding young talent if they start putting together winning seasons.
Links and Notes
**The 2013 Prospect Guide and the 2013 Annual are both available on the products page of the site. If you order them together, you’ll save $5. Get them both to use throughout the 2013 season.
**For the second start in a row, James McDonald struggled early, then settled down to shut down opposing hitters. It’s good that he made the quick adjustment, but not so good that he’s struggled early two starts in a row. The Pirates managed to come back tonight, but they can’t afford a big inning from the other team in most starts. If McDonald wants to be more like the first half version from 2012, he needs to limit those big innings. It didn’t cost him against the Cubs. Tonight it did cost him, and it probably will if he starts off another game in the same way.