My friend Jimmy Golen, writing for the Associated Press, tackles that puzzling question.
As another friend, the economist Richard Thaler, says in the piece:
I cannot think of any good reason why MLB would have such a rule, unless it is worried that the teams with the highest picks are not capable of making good decisions…it has to help the teams with the top picks to have the option of trading them for additional picks.
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Or they could just dump the whole slotting/signing bonus system and put a hard cap on rookie salaries (like the NHL), so that the team that gets the #1 pick can actually afford to draft the best player.
It’s very simple – because underfunded teams, poor teams, teams in bad markets, and incompetent teams would sell their draft picks by the bucket load.
This would mean that rich teams would not only control the Free Agent market, but also the talented young player market. The extreme amount of competitive imbalance would destroy the league over the course of a generation or two.
The actual draft order seems much less relevant in baseball than in other sports. In the NBA almost all of the superstars are top draft picks. In MLB most of the household names are drafted in the later rounds.
If you read Moneyball by the always-entertaining Michael Lewis, it appears that MLB is determined to make it as difficult as possible for small-market — or, strictly speaking, small-payroll — teams to compete.
From that perspective, it makes perfect sense. A team like the Oakland A’s is extremely good at evaluating draft prospects, so they would happily trade their high-round picks for a clutch of lower-round picks and get players who will perform better for less money compared to teams that do a far worse job of evaluating prospects (e.g. high school is a very poor predictor of future performance).
Another example: it used to be that when a team lost a free-agent — almost invariably, because a team like the Yankees or the Red Sox outbid a team like Oakland — after grooming and developing that player, they got a compensatory draft pick. No longer.
I can think of no logical explanation for this behavior on the part of MLB. My best guess is that they can’t deal with the reality that, as the stats geeks have demonstrated, the stars of the game are wildly overpaid compared to journeyman players compared to the marginal value they add, and the only way to deal with the cognitive dissonance of low-payroll teams like the A’s demonstrating this fact is to make them go away.
If the MLB has a rookie pay scale, it could be a way to force lower end teams spend more (think Marlins).
I think Carl is pretty far behind the times now. Oakland certainly did a pretty good job of exploiting inefficiencies in the draft system during the CBA era leading up to when the new version took effect in 2003. Since then the Blue Jays took the same Moneyball approach of drafting college players that had worked well in the early part of the decade, and failed miserably with it. I think MRB is basically right, but the result is that poor drafting teams with limited draft budgets- the Astros are the best example now, it used to be the Pirates and Padres- draft players who are worse than players who are still around. The draft process through this CBA period was probably among the most dysfunctional and market distorting, but we’ll see how it is revised which I believe will be for the draft in 2012.
It could be that it isn’t allowed because they didn’t think of it when they first started the draft. To make a change and allow it now, the players union would have to agree to it, and they’d ask for something in return to allow it. Is it worth giving the players union something in order to allow trading? Not when it isn’t obvious what the benefit is to teams.
It’s also to hold down salary costs by limiting the draftee’s options. Take Stephen Strasburg. He had two choices once drafted – either agree to a deal with Washington, or re-enter the draft the next year, where he would be a year older yet the same distance from true free agency. He didn’t have the additional leverage of saying “Trade me to the Yankees” who presumably would be willing to pay him more. In fact, don’t be surprised after the next CBA to see baseball continue in that direction with a hard slotting system or draft salary cap in order to keep costs down, and they can easly sell that to the players union by claiming that leaves more to spend on players in the majors who “deserve” it.