I have received several questions about the system in place since the new collective bargaining agreement went into effect two years ago. It provides recommended values (or slot values) for each pick in the first 10 rounds, but teams have some flexibility to under or over spend compared to that amount. However, clubs must stay within a pre-defined total or face escalating penalties.
Also, if any player drafted after the 10th round receives more than $100,000, then that excess also is added to the total.
The key overall borderline that a club should not exceed is five percent over its signing bonus pool. If a club spends exactly 100 percent or less of its allotment, there is no penalty. If it spends 100-105 percent, it has to pay a 75 percent tax on the overage. That penalty is not so harsh that a club would not consider overspending slightly.
From 105-115 percent, it gets far more painful, however. There are three additional penalty levels with increases to 100 percent tax and more importantly, forfeiture of first-round draft picks and potentially second-round picks in future drafts.
The following table shows how this came about for the Cardinals in 2013.
|plus10 rdrs||> $100K||Not in totals||Not in totals|
|no pick loss||$20,895|
The first 10 rounds of picks were assigned values that totaled $6,907,900. The Cardinals could spend an additional $345,395 – five percent – assuming they were willing to pay the first level of penalty tax for overspending.
In the first 10 rounds, the Cardinals paid just two of 11 draftees over their pick values, second-rounder Oscar Mercado and 10th-rounder Malik Collymore. It is not a coincidence that both were high schoolers with leverage to attend college and re-enter the draft later.
Below-value signings of the other nine enabled the club to temporarily bank the savings. In some cases, the picks were college seniors, with less contract leverage. In other cases, players may have been taken "early," with a pre-agreed bonus amount between player and organization.
That "extra" cash allowed the Cardinals to also spend above pick value on three post-10th rounders – 11th-rounder Steven Farinaro, 12th-rounder Ricardo Bautista and 15th-rounder DeAndre Asbury. The three, all high schoolers, cost a total of $750,000 of bonus pool money.
All three were considered more talented than their round selected indicates, but their likely salary requirements to forego college and turn pro meant they were passed by. That is, until a club like the Cardinals was willing to take them late and find the money to "overpay" as if they had been selected earlier.
The bottom line
Taking all the overages and underages into account, the Cardinals spent $324,500 over their 100 percent allocation. That left them with just $20,895 more cushion that they could have spent before hitting the 105 percent mark and being assessed the loss of their 2014 first-round pick.
St. Louis' penalty is $243,375, or 75 percent of the $324,500 overage. Under MLB's revenue sharing plan, all tax proceeds are distributed to those clubs that did not exceed their signing bonus pools.
More importantly, the organization has signed the players they apparently wanted. Overall, just five of their 41 selections remain uncommitted to become Cardinals.
Note: To see the status and assignments of all Cardinals draftees, refer to the Roster Matrix, posted at The Cardinal Nation blog.
Brian Walton can be reached via email at email@example.com. Also catch his Cardinals commentary daily at The Cardinal Nation blog. Follow Brian on Twitter.
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