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Spending on amateurs called 'appalling'
Earlier this week, I got a call from someone with ties to baseball management, someone who is appalled by how much money teams spent on their 2011 draft picks.
The person who called me isn't alone in his frustration and anger — numerous executives are disgusted by the spiraling bonuses for amateurs, and commissioner Bud Selig advocates "hard slotting," or pre-assigned dollar values, for each pick.
The question is how to solve the problem. My management friend said the answer is for the players to pressure the union into slotting, taking money from the amateurs to create more for themselves.
"Why aren't the players insisting on slotting?" he said. "Why aren't they kicking down the union's door? Why are they allowing the union to allow $200 million of the money they earned to walk out the door?"
As always, when it comes to baseball labor issues — and the draft, in particular — things are not as simple as they seem.
I don't know how to fix the draft. I'm not even going to propose a solution. But I do know this: The major leaguers are not going to sell out the amateurs — their future brethren — and defy the entire history of their union.
I also know this: The 17 percent increase in guarantees for amateurs — from $201.8 million in 2010 to $236.1 million in '11, according to Baseball America — is not a trend baseball wants to continue.
My management friend views slotting — at least in theory — as a win for all.
• The owners who no longer would spend exorbitantly on unproven talent.
• The players who would benefit from the accompanying increases in payrolls.
• And the fans who would see better, higher-salaried players on their favorite teams.
Alas, the flaws in such a plan are numerous, and not just from the perspective of the players — or their agents, who have more to lose if baseball adopts slotting.
Some owners actually like the current system, major league sources say, believing it is one area in which low-revenue teams can compete for talent with the big boys.
The three biggest spenders in this year's draft, according to Baseball America, were the Pirates ($17 million in bonuses), Nationals ($15 million) and Royals ($14 million). For many such clubs, amateur talent is far preferable to free-agent talent, which rarely is available to them at an acceptable price, anyway.
Then there are the union's objections.
First, it is not the union's responsibility to tell clubs they cannot spend money on draft picks, or bargain away the individual rights of those players.
Second — and more important — there is no guarantee the owners would use their savings from a slotted draft to support higher payrolls.
My management friend scoffed at that argument, saying the bonuses awarded by teams such as the Pirates and Royals offer proof of their willingness to spend. But some on the players' side are skeptical, noting concerns — even among certain owners — that revenue-sharing money isn't always spent properly.
One solution would be a major league payroll floor that ensures teams would spend a minimum amount on payroll. But the union historically has opposed floors as well as caps, believing clubs should operate without restriction on both ends of the scale. A floor also would affect only a small number of teams.
For every argument, there is a counter-argument.
Some express concern that slotting would cause baseball to lose talented athletes to other sports. Others contend that baseball is the only way for multi-sport, high school stars to cash in at 18 — and if a such a player was offered a bonus of, say, $4 million instead of $7 million, he would still take the $4 million.
My management friend says agents should not worry about losing higher commissions on draft picks, noting that the commissions are relatively small. But union officials counter that the $236 million spent on draft picks is a relatively small amount in an industry with revenues of $7 billion.
Somewhere, there has to be a middle ground — perhaps a tax on teams that spend over a certain threshold, perhaps exemptions that would allow teams to spend freely on one or two picks per draft. To gain concessions from the players, the owners could dramatically reduce the number of free agents tied to draft-pick compensation.
As it stands, the low-revenue teams are at risk of losing their supposed edge — the Red Sox have spent more than $10 million in two of their last three drafts, and easily could ramp that number up to $20 million if they chose. Ditto for the Yankees, Phillies and other high-revenue teams.
Restrictions of some type, along with a rule that allows the trading of draft picks, might help level the playing field. Common sense also should apply: Future drafts likely will produce the same percentage of major leaguers no matter how much clubs spend, so why simply continue the arms race?
I don't have all the answers. My management friend doesn't have all the answers. But baseball needs to find a better way.
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