SECAUCUS, NJ :: MLB commissioner Bud Selig speaks during the MLB First Year Player Draft held in Studio 42 at the MLB Network in Secaucus, New Jersey. (Photo by Mike Stobe/Getty Images)
With a new collective bargaining agreement in place as of this off-season, the MLB draft saw changes. No longer could teams spend anything they wanted on their draft picks without fear of penalty, as budgets were imposed, based on the number of picks a team had, as well as where those picks were. Because of this, the Red Sox, who had averaged nearly $9 million in draft spending per season from 2007 through 2011, were limited to just $6.884 million for the 2012 draft.
There were ways around this to a degree, though, ones identified shortly after the new CBA was negotiated and became baseball law. Essentially, since a team could spend up to five percent more than their allotted budget before incurring the loss of a future draft pick, clubs who didn't mind paying a 75 percent tax on their overages could see a little more money used towards signings. In Boston's case, with $6.884 million to play with, they actually had $7.229 million assuming they didn't mind going up to that five percent threshold.
That, plus signing college seniors within the first 10 rounds that the budget covered, in order to shift money around to bigger ticket items elsewhere, was how the Red Sox -- and others -- got around the new CBA as best as possible, in order to retain some semblance of spending freedoms past. Boston, as it was expected they would, outspent their budget. Baseball America crunched the numbers to tell us how much the Red Sox, and the rest of the league, did so by.
The Red Sox spent 4.1 percent more than allotted, or $7,167,000 total. Because of this, the third-highest overage percentage, they are being taxed an additional $211,650 dollars. All told, though, that's just $7,378,650, or, still roughly $1.5 million less than they've averaged per draft over the last five seasons. That last bump in the overage comes from signing a few post-10th selections for over $100,000 -- the money past the first $100,000 counts against the budget for the first 10 rounds, to keep teams from simply saving the big dollars for the latter portions of the draft. If not for this, you can be sure the Red Sox would have handed Carson Fulmer a competitive offer (had he even survived to that point in the draft, in this hypothetical world).
Where does the tax money go? Into a pool to be split among the clubs eligible for revenue-sharing, assuming those clubs didn't overspend their own draft budget. That leaves 12 teams: Orioles, Rays, Tigers, Indians, Athletics, Marlins, Reds, Pirates, Brewers, Rockies, Diamondbacks, and Padres. The Royals and Cardinals would both normally be eligible, but they outspent their draft budgets, by 2.5 and 3.4 percent, respectively. The Cardinals, in fact, are paying the third-highest tax, at $234,668.
The new CBA limited draft spending, but only sort of, as overall spending averaged out to $6.35 million per team from 2007-2011, and was $6.14 million in 2012. Almost every team spent as much as possible, with the average percentage of budgets spent at 97 percent -- this figure would have been higher, had the Pirates not failed to sign first-round selection Mark Appel, a move that knocked them all the way down to just 49 percent spent.
Essentially, money was moved around in order to still spend on the players that teams wanted. Front offices figured out how to get what they wanted without changing much in terms of dollars for them, simply limiting what many of the mid-level draft picks received by going college senior heavy. It will take time to see what kind of effect this has, if any, on the depth within farm systems.