The top-ranked player in the MLB draft signed for $1,620,600 less than his slot value. While it was a good deal for the team, it was also the right move for him. Here is why (and how the MLB draft works): ~ The MLB draft revolves around a team's bonus pool. This is the money that a team has to sign players in the top 10 rounds or pay those in the next 10 more than $150,000. That bonus pool gets broken down by the picks a team has, here is an example... ~ The Cleveland Guardians selected first and had a total bonus pool of $18,334,000. $10,570,600 of was for the #1 pick in the draft. This is where it gets interesting... ~ Step in Travis Bazzana, the presumed #1 pick. Yet not a slam dunk like Bryce Harper or Stephen Strasburg from years past. You see there were other players in the mix for that pick. So here is why the Indians took Bazzana... ~ First, they thought he was the best player for them. Second, they agreed to pay him $1,620,600 less than the $10,570,600 slot. Before you say this is one-sided, let me explain why both Bazanna and the Guardians win here... ~ Bazanna gets a bonus higher than any slot from pick number four down. If he plays hardball perhaps he falls, remember there was a list of players in the mix for those top picks. The Guardians win by allocating an additional $1,600,000+ toward other picks. ~ So remember, the next time you see any contract negotiation there is usually more to the story. When it comes to the MLB draft that is certainly the case. If you enjoyed this share it with your network and follow me for more at the intersection of sports and money. ***If you enjoyed this share it with your network andd follow me for more at the intersection of sports and money.
The bigger problem with the slotting system is how teams give college seniors as little as $5k to sign and then reallocate that money to convince high school kids to skip college. That’s where I feel really icky. Teams should have to pay a floor when they draft a kid.
And if they properly utilize that $1.6M, he'll be on a better team. And better teams get more exposure which could equal better future playing opportunity and endorsements. No one has a crystal ball and you can't be positive that you'll stay healthy or "pan out" - so I do understand going for more money up front. But if you bet on yourself and invest in staying healthy, this strategy could be extremely solid. Thanks as always for breaking it down Jacob Turner!
It would be interesting to see/hear about how smaller market teams play the draft game when compared to bigger markets. Are teams like the Yankees and Dodgers worried about development as much to play with slot values?
So interesting how much is happening behind the scenes in these stories.
Great breakdown of the bonus pool system! Also happy to know I'm not the only one who still interchanges "Indians" and "Guardians"...but then again, I'm still calling the Rogers Centre the Skydome 😂
Best part of the article was the slip from Guardians to Indians.
Good point! Don’t feel sorry for Travis Bazzana he’s set for life . If he invests wisely even if he’s never a professional baseball player. I deal with professional athletes and entertainers. (CPA). If you need tax planning advice please contact me
Was always curious about this
Seeing the #2 and 3 picks set a new signing record, it makes signing for that much below even more interesting. I have to wonder if the expectation that 2 and 3 would sign high was discussed to help prep him for the possibility and avoid negative feelings to start the relationship.
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