Different Rules. Same Outcome.
by Rany Jazayerli
At this point, if Major League Baseball had enforced their slotting recommendations by threatening violators with being exiled to Siberia, I think Scott Boras would be coming to the podium today to announce that the Detroit Tigers had agreed to move their franchise to Novosibirsk.
In theory, as a result of the changes in the draft process this year, teams ought to have considerably more leverage than they have in the past. In theory. The creation of a firm August 15th deadline eliminates the ability of draftees to drag out the negotiations (by attending Junior College or playing in the independent leagues) until just a week before the following draft. More importantly, the new rules which gives teams that do not sign their first rounders a compensation pick in virtually the same slot next year, gives teams a considerably more palatable option than in the past, when they would only get a compensation pick at the end of the supplemental round.
There is a principle in negotiations known as BATNA – short for Best Alternative To a Negotiated Agreement. Basically, this refers to your fallback plan in case a negotiation breaks down. In previous years, the BATNA for a team negotiating with its first-round pick would be the compensation pick at the end of the supplemental round the following year. As the BATNA would typically be a lesser player than the first round pick, a team’s leverage was not very high. If the alternative to signing, say, Brien Taylor was to get the 50th overall pick the following year…well, that’s why the Yankees ponied up the big bucks to sign him.
The change in compensation rules for this year dramatically improves the BATNA for teams. If the Devil Rays don’t sign David Price, they get the #2 overall pick next year. Given that Price would be back in the draft himself, you could make the argument that the Devil Rays’ BATNA is equivalent in value to Price. They can play hardball with him, knowing that if he doesn’t sign, they can replace him with equal value next year. The same goes with the Royals, who if they don’t sign #2 overall pick Mike Moustakas will have the #3 or #4 (if Price also doesn’t sign) pick next year; and the Cubs, who will have the #4, #5, or #6 pick next year if Josh Vitters doesn’t sign.
But here’s the catch, and here’s why Scott Boras is such a brilliant negotiator: the value of the BATNA drops the deeper into the draft you go. If a top talent like, say, Rick Porcello – a consensus Top-5 draft pick on talent alone – were to drop deep into the first round, the BATNA of whichever team drafted him would not be a comparable player. Meanwhile, no matter where Porcello is drafted, his BATNA – to go to college – doesn’t change at all.
The Detroit Tigers could not resist when Porcello fell to them with the 27th overall pick. And with the deadline approaching, they apparently could not resist giving Porcello almost everything he was asking for. And for good reason: the Tigers’ BATNA was pick 27A next season, and the odds that a player of Porcello’s caliber will fall that deep into the draft again are slim to none. The Tigers don’t appear likely to be drafting at the top of their first round on their own accord anytime soon, so from their standpoint, this might be their last opportunity to nab a premier player in the draft for a very long time.
This is classic game theory: a rule change that should give teams more leverage in general – because they have a better BATNA than before – gives a specific team in a specific circumstance (a team that drafts a top talent late in the first round) less leverage specifically. And we know it only takes one outlier to drive up values for the market as a whole. For proof, just look at Scott Boras’ work every winter.
The irony is that, had Porcello been drafted by the Royals or the Cubs or some other team at the top of the draft, he would have been less likely to get the $7-million-plus contract he was asking for, because those teams would have had a better BATNA; they would have been compensated with a higher draft pick in 2008 if they had failed to come to terms, and so they could have held firm with a lesser offer. In other words, the farther Porcello fell in the draft, the more money he was likely to earn. And by announcing to teams ahead of the draft that Porcello really wanted to go to college and would only sign for Josh Beckett money (inflation-adjusted), Boras helped his client fall deep into the draft. Which was exactly what he wanted.
Also note that Porcello hasn’t officially come to terms yet, but that didn’t keep the baseball world from learning the news that Porcello was getting a record-breaking contract. With a little more than 24 hours until the deadline, news of Porcello’s signing only increased the pressure on teams at the top of the draft to sign their players, while increasing those players’ market value. Two of those players, Moustakas and Vitters Matt Wieters, are Boras clients.
It’s Scott Boras’ world. And we’re all just living in it.
