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The "blow up the draft cap" theory
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Post by grandsalami on Jul 13, 2023 22:28:31 GMT -5
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Post by wOBA Fett on Jul 13, 2023 22:28:46 GMT -5
If you can't spend $80MM on an MLB draft, owning a baseball team shouldn't be for you. Considering the multiple years of the team control, you'd probably end up saving money under this strategy as well compared to paying 3 veterans $10MM per for 5 years. How much money do you think MLB owners just have laying around? Very few could just throw out $80 million dollars like it’s nothing lol, an owner’s net worth is not the amount of liquid money they have. Also, they own the team to make money, blowing absurd amounts of money like that is the exact opposite of what they’re going to want to do when it isn’t competitively required (meaning you can field a good team without doing it. It’s a fun thing to say as a fan they should do, but anyone that takes a second to think about it or understands business (I work in Athletics finance, albeit a bit different of an operation) can pretty easily understand why it’s not realistic or even, really, possible. It's not blowing absurd amounts of money any more than creating a portfolio of assets that could potentially grow in value or tank. If I was looking at my future payroll knowing I can pay 1/3 of my lineup and 1/5 of my starters rookie contracts for 5 years and get comparable MLB production to what I'd get if I were paying 40MM total to MLB veterans over that same period, I'm netting around $70MM after 5 years assuming I spent $80MM on the draft. Anything else is gravy. Could they all turn up busts? Sure. Same risk exists with any investment. As for liquidity, I think you underestimate the access to capital owners have available.
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Post by thegoodthebadthesox on Jul 13, 2023 22:33:20 GMT -5
How much money do you think MLB owners just have laying around? Very few could just throw out $80 million dollars like it’s nothing lol, an owner’s net worth is not the amount of liquid money they have. Also, they own the team to make money, blowing absurd amounts of money like that is the exact opposite of what they’re going to want to do when it isn’t competitively required (meaning you can field a good team without doing it. It’s a fun thing to say as a fan they should do, but anyone that takes a second to think about it or understands business (I work in Athletics finance, albeit a bit different of an operation) can pretty easily understand why it’s not realistic or even, really, possible. It's not blowing absurd amounts of money any more than creating a portfolio of assets that could potentially grow in value or tank. If I was looking at my future payroll knowing I can pay 1/3 of my lineup and 1/5 of my starters rookie contracts for 5 years and get comparable MLB production than if I were paying 30MM total to comparable MLB veterans over that same period, I'm net around $70MM after 5 years assuming I spent $80MM on the draft. Anything else is gravy. Could they all turn up busts? Sure. Same risk exists with any investment. As for liquidity, I think you underestimate the access to capital owners have available. I think that math is completely awful and that you really don’t have a firm grasp on what the investment actually is (I mean, you’d be $240 million in the hole before you’d even start seeing rewards on this, you’re probably better off just spending that money in luxury tax payments on players you know are good), especially since you think having access to capital is the same thing in this context. Whatever, more power to ya. Once I see it happen I’ll start to take it seriously as a long-term investment strategy but given you have thirty ownership groups who live to make money and, with I’m sure some nepotism exceptions are VERY good at it, somehow I doubt that random internet poster is onto an idea that they haven’t already weighed.
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Post by wOBA Fett on Jul 13, 2023 22:53:42 GMT -5
It's not blowing absurd amounts of money any more than creating a portfolio of assets that could potentially grow in value or tank. If I was looking at my future payroll knowing I can pay 1/3 of my lineup and 1/5 of my starters rookie contracts for 5 years and get comparable MLB production than if I were paying 30MM total to comparable MLB veterans over that same period, I'm net around $70MM after 5 years assuming I spent $80MM on the draft. Anything else is gravy. Could they all turn up busts? Sure. Same risk exists with any investment. As for liquidity, I think you underestimate the access to capital owners have available. I think that math is completely awful and that you really don’t have a firm grasp on what the investment actually is (I mean, you’d be $240 million in the hole before you’d even start seeing rewards on this, you’re probably better off just spending that money in luxury tax payments on players you know are good), especially since you think having access to capital is the same thing in this context. Whatever, more power to ya. Once I see it happen I’ll start to take it seriously as a long-term investment strategy but given you have thirty ownership groups who live to make money and, with I’m sure some nepotism exceptions are VERY good at it, somehow I doubt that random internet poster is onto an idea that they haven’t already weighed. Where did you get the $240MM in the hole from? I'm looking at $40MM in the draft + $40MM tax = $80MM (though it's probably closer to $70MM because the pool money isn't counted). Early round guys probably sign somewhere in the $2MM-$5MM range and later round guys probably sign somewhere in the $1MM - $2MM range. I called that investment $80MM initially, but lets call it 100MM if you want. So now I have 20 T100 prospects who I paid $100MM to acquire. I'm out $100MM at the start. Let's say 4 (3 hitters 1 pitcher) of those guys turn into caliber MLB players and make their debut sometime in year 3. Between year 4 and year 7, I am paying 1/3 of my lineup prearb money for quality production. What would that same level of production I'm getting from my prearb players cost on the free agent market? Probably about $10MM per player on average, so $40MM per year total. $40MM per year savings over 3 years means I'd be paying out $120MM to free agents, but instead I'm paying prearb players and I've recouped back my initial $100MM investment. During years 7-10, I turn a profit on that investment during the arbitration years and then can resign the player or trade them away. The reason this hasn't been done has more to do with "breaking the draft" and pissing off all the other teams in baseball. Doesn't mean that the strategy wouldn't give a team a massive edge.
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Post by thegoodthebadthesox on Jul 13, 2023 22:55:56 GMT -5
...and also, I should add...those older drafts earlier in the thread aren't aging well. That said, I'm pretty convinced the Red Sox board with a BPA approach would do better than a board using MLB Pipeline rankings like the above. However, I still don't think the benefits outweigh the massive $ it would take to pull this off although its not my money. Honestly though, I’m not sure it would be much better. If you look at the first 20 picks in each draft, the 20 players that MLB teams thought were the best in the class (for the most part - signability stuff of course), you aren’t ending up with as good a haul as you’d expect. Some classes you have quite a few stars in that allotment but I’m not sure the odds merit an $80 million annual investment just to use a consistent number given you still have to spend the money to fill out the rest of your roster anyway, and that’s with as generous a set of players being given to you as absolutely possible. I think at the end of the day there are too many variables in the development of these prospects to make it a sound investment. I think if owners are going to start aiming for reckless spending advantages they’d just start employing Golden State Warriors levels of tax willingness, as that’s at least proven talent (though the Mets and the Padres are showing that doesn’t always work, either).
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Post by Chris Hatfield on Jul 13, 2023 22:57:23 GMT -5
...and also, I should add...those older drafts earlier in the thread aren't aging well. That said, I'm pretty convinced the Red Sox board with a BPA approach would do better than a board using MLB Pipeline rankings like the above. However, I still don't think the benefits outweigh the massive $ it would take to pull this off although its not my money. Let's say you land three T100 prospects applying this approach, including one T20 guy. Wouldn't that justify the $80MM costs and loss of draft picks? Go look at ramireja's work on what a "chalk" draft would look like in past years. It kind of answers the question before you even start asking how realistic the plan is. And I don't agree that if an owner doesn't want to pay the cost of a low MLB payroll to sign a bunch of amateurs, they shouldn't be owners.
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Post by thegoodthebadthesox on Jul 13, 2023 23:07:25 GMT -5
I think that math is completely awful and that you really don’t have a firm grasp on what the investment actually is (I mean, you’d be $240 million in the hole before you’d even start seeing rewards on this, you’re probably better off just spending that money in luxury tax payments on players you know are good), especially since you think having access to capital is the same thing in this context. Whatever, more power to ya. Once I see it happen I’ll start to take it seriously as a long-term investment strategy but given you have thirty ownership groups who live to make money and, with I’m sure some nepotism exceptions are VERY good at it, somehow I doubt that random internet poster is onto an idea that they haven’t already weighed. Where did you get the $240MM in the hole from? I'm looking at $40MM in the draft + $40MM tax = $80MM (though it's probably closer to $70MM because the pool money isn't counted). Early round guys probably sign somewhere in the $2MM-$5MM range and later round guys probably sign somewhere in the $1MM - $2MM range. I called that investment $80MM initially, but lets call it 100MM if you want. So now I have 20 T100 prospects who I paid $100MM to acquire. I'm out $100MM at the start. Let's say 4 (3 hitters 1 pitcher) of those guys turn into caliber MLB players and make their debut sometime in year 3. Between year 4 and year 7, I am paying 1/3 of my lineup prearb money for quality production. What would that same level of production I'm getting from my prearb players cost on the free agent market? Probably about $10MM per player on average, so $40MM per year total. $40MM per year savings over 3 years means I'd be paying out $120MM to free agents, but instead I'm paying prearb players and I've recouped back my initial $100MM investment. During years 7-10, I turn a profit on that investment during the arbitration years and then can resign the player or trade them away. The reason this hasn't been done has more to do with "breaking the draft" and pissing off all the other teams in baseball. Doesn't mean that the strategy wouldn't give a team a massive edge. $240 million comes from the idea that you’re repeating this strategy, because if it’s optimal and you get it right, why would you only do it once? So let’s say optimistically these prospects debut by year 3, you’d have invested $240 million before you even know if it works or not. In the scenario you laid out, sure, maybe it’d make a sound investment. But you’re absolutely not going to get 20 T100 prospects from one draft class, you’d probably still end up with 3 or 4. So you’re being extremely over optimistic with the caliber of prospect that would still be available late, even if you only drafted sign-ability guys. And even if you did end up with 20 of them, you’re not guaranteed a 20% hit rate. But let’s say you’re right again and you end up with 1/3 of your lineup and 1/5 of your rotation being paid pre-arb money… aren’t many teams already doing that? Would the increase in talent, assuming many of the guys in existing MLB rosters being paid that are some semblance of top prospect, merit the investment? I mean you are ascribing a high-end outcome to every variable here and, if I’m understanding what you’re attempting to lay out correctly, it’d all be for a 20% ROI? You genuinely think that’s worth the risk? But sure, I am totally convinced of the argument that an owner of a professional sports team would sacrifice a “massive” competitive edge and a shrewd investment because they’re afraid of making other owners mad. That seems real logical.
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Post by wOBA Fett on Jul 13, 2023 23:08:27 GMT -5
Let's say you land three T100 prospects applying this approach, including one T20 guy. Wouldn't that justify the $80MM costs and loss of draft picks? Go look at ramireja's work on what a "chalk" draft would look like in past years. It kind of answers the question before you even start asking how realistic the plan is. And I don't agree that if an owner doesn't want to pay the cost of a low MLB payroll to sign a bunch of amateurs, they shouldn't be owners. It was actually about what I was expecting probably 5 major leaguers, 2 solid players and maybe 1 all star from the group. The 2019 class would have yielded Spencer Jones, Leiter, and Brooks Lee at a minimum.
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Post by thegoodthebadthesox on Jul 13, 2023 23:17:19 GMT -5
Go look at ramireja's work on what a "chalk" draft would look like in past years. It kind of answers the question before you even start asking how realistic the plan is. And I don't agree that if an owner doesn't want to pay the cost of a low MLB payroll to sign a bunch of amateurs, they shouldn't be owners. It was actually about what I was expecting probably 5 major leaguers, 2 solid players and maybe 1 all star from the group. The 2019 class would have yielded Spencer Jones, Leiter, and Brooks Lee at a minimum. 1. You can feasibly achieve that haul (1 All Star, 2 regulars, 5 big leaguers) in a “regular” draft. 2. You cherry-picked the one example of the three that turned out well, 2018’s had McLanahan but the rest is pretty bad and 2017’s outright sucked. So again, if the best case comes to fruition *maybe* it works but it’s still just a generally pointless level of risk.
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Post by Chris Hatfield on Jul 14, 2023 9:00:10 GMT -5
Yeah you have to incorporate the level of risk as well as how much better the expectation gets to correspond with the extra cash outlay, and to me at least, it's really not worth it.
Add the penalty of losing picks when the first round is clearly the most efficient place to add amateur talent, and I don't think it's that close a call, myself.
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Post by costpet on Jul 14, 2023 9:56:30 GMT -5
It says that in 1988 they had 62 rounds. That's at least 1860 picks that year. Where are you going to put them all?
On the other hand, the first 5 rounds are the most important for HOF players. The rest are a real crapshoot.
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Post by thegoodthebadthesox on Jul 14, 2023 10:00:45 GMT -5
It says that in 1988 they had 62 rounds. That's at least 1860 picks that year. Where are you going to put them all? On the other hand, the first 5 rounds are the most important for HOF players. The rest are a real crapshoot. I think the old system was one in which teams could essentially keep drafting until they decided to stop, but I could be wrong on that or just grossly oversimplifying it.
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Post by vermontsox1 on Jul 14, 2023 10:01:11 GMT -5
I think all you need to do is go back and look at ramireja's posts in this thread to realize that this strategy is definitely not worth it.
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Post by 0ap0 on Jul 14, 2023 10:06:12 GMT -5
I think all you need to do is go back and look at ramireja's posts in this thread to realize that this strategy is definitely not worth it. To be fair, just because trying it using MLBPipeline's board wouldn't have worked out doesn't necessarily mean that trying it using the Red Sox board would fail, too.
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Post by umassgrad2005 on Jul 16, 2023 11:35:07 GMT -5
I thank Ramireja for taking the time, shows available talent. Yet we all know each team has their own board and it's much different. Fun exercise yet we need the Red Sox board of who they would pick if they employed this strategy.
2017 was horrible, 2018 was much better. Gave you a true star pitcher, along with multiple guys that went to college and became 1st round picks.
So you certainly need the right class and very good scouting. It would also help to have extra picks early.
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Post by Chris Hatfield on Jul 17, 2023 6:01:49 GMT -5
It says that in 1988 they had 62 rounds. That's at least 1860 picks that year. Where are you going to put them all? On the other hand, the first 5 rounds are the most important for HOF players. The rest are a real crapshoot. I think the old system was one in which teams could essentially keep drafting until they decided to stop, but I could be wrong on that or just grossly oversimplifying it. The longest the draft has been since I've paid attention is 50 rounds, but that that time, you just didn't sign a lot of the guys drafted. For example, 2011, the last year it was that long, Boston didn't sign 23 draftees. It's kind of a weird system and why nobody within the game or who paid really close attention was all that upset about cutting it to 20. Yes, the pick that X really good player got picked at any away, but so did 20 picks ahead of that guy featuring players that were never signing. The 40/50 round drafts definitely also featured a decent amount of filling out the rosters in Lowell and the GCL with guys they didn't expect to get much further. www.soxprospects.com/dh2011.htm
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