MLB is currently the only major sports league in North America to not allow teams to swap draft picks.  On top of this restriction, players can’t be traded until after the World Series in the year they are drafted (this was changed recently from one year after the draft date).  These restrictions led to the awkward Trea Turner situation this winter; Turner was traded as a PTBNL (player to be named later) to the Nationals in the Wil Myers megadeal and is currently playing in the Padres system while knowing in about a month he will have to report to the Nationals.  Now that MLB has taken care of draft picks after they’re made, here is a simple framework for how they could possibly handle draft picks before the draft.

A quick note: Excluded from these rules are compensatory picks from failing to sign a pick from the previous year, free agent compensatory selections and the competitive balance lottery picks.  These picks would continue to be under the jurisdiction of their current rules.

The +/- 10 picks rule

This is the basis of the structure: teams can only have the net gained/lost picks from trades that fall between, and including, -10 to +10.  Only the 40 regular assigned (noted as RA for the rest of the post) picks count towards the +/- 10 rule, so teams have to have between 30 and 50 of these RA selections.  This rule applies at all times, so no team can be even temporarily outside of these limits.

The 1st ten rounds

Because bonus pools are only based on the first 10 rounds, there are also special rules for picks in these rounds.  Each team starts with 10 RA picks in the first ten rounds.  With this in mind, each team is required to have 7 selections out of the 300 RA first round picks.  Note that this means teams don’t necessarily have to have 7 of their own RA picks in the first 10 rounds, they just need any 7 of these picks.  Like the +/- 10 picks rule, all teams must be in compliance with this rule at all times.  In terms of upper limits, there is no special maximum number of AR picks in the first 10 rounds a team can have, as long as they are in compliance with the +/- 10 picks rule.

Since each of the picks in the first 10 rounds has a bonus pool value assigned to it, the value stays attached to the pick.  However if the pick is traded more than once, the bonus value depreciates by 2% of the original value each time it’s subsequently traded.  That 2% simply vanishes, so MLB would have to find a way to give it back to the players, but the assumption here is that it would be given back outside of the draft bonus pool, so for the purposes of this framework, it simply disappears.

There is also a special rule for the bonus slots that applies to teams with only 7, 8 or 9 selections in the top 10 rounds.  If a team has less than 10 AR picks in the top 10, they still have 10 slots.  Any slots that don’t have a pick value associated with them have a value of $0, but they can still serve a use.  For any pick outside of the top 10 rounds, teams currently (and would continue to) have to apply any amount over a $100,000 bonus per pick to their pool.  With these empty slots however, teams can take one overage per empty slot and not have to apply that overage to the pool.  Each empty slot can only be used once for this purpose, and once an overage has been matched officially (the team declares it) with a slot, it can’t be swapped with another overage.

Buying and Selling Picks

One major concern with allowing the trading of draft picks is that teams would just sell and buy draft picks.  To curb that, the framework has a rule that restricts the buying and selling of draft picks to one buy (acquiring a pick for cash only) and one sell (vice versa) per team per draft year.  On top of this, to prevent teams from buying and selling picks in the top 10 rounds frequently, a team that buys or sells a pick in the top 10 rounds can’t repeat that action for the next 2 draft cycles.  That means a team can buy a pick in the top 10 rounds one year and sell one the next year (the two actions are separate).  The third year the team couldn’t have any cash-only transactions involving picks in the top 10 rounds, but in the fourth year they could buy a pick in the top 10 rounds, although they couldn’t sell one.  A team can buy and sell picks outside the top 10 rounds in years they can’t buy and/or sell picks in the top 10 rounds in accordance to the one buy/one sell per year rule.  Also, trading picks for any amount of PTBNL (with PTBNL the only asset going to the team trading the pick) counts as a buying or selling transaction, but if the player is declared at the time of the trade, then it doesn’t count towards the buy/sell rule.

Other notes on the framework:

  • The current rules about trading newly drafted players would still be in effect
  • Current eligibility rules for the draft would stay the same as well
  • As noted above, the order of transactions matter as teams must always be in compliance of these rules
  • If there is an international draft implemented, this framework wouldn’t automatically apply to that draft. This would only be in effect for the Rule 4 draft, unless it’s decided to apply it to the new international draft
  • Teams could trade picks for the three upcoming drafts only
  • Assigning of draft picks would be the same as current rules, as well as qualifying offer rules regarding draft picks

Scenarios with this framework:

Note: unless stated, only the draft considerations of the deals are stated.  The draft considerations would be part of a larger deal.  Also, unless stated, all teams have 40 AR picks with 10 of them in the top 10 rounds

Scenario 1: Team X currently has 50 RA draft picks, Team Y has 41.  Team X acquires a 20th round draft pick from Team Y.

Why it is/is not legal: Team X wouldn’t be in accordance with the +/- 10 pick rule

Scenario 2: Team X has 9 RA picks in the top 10 rounds, Team Y has 7.  Team X acquires a 7th round pick from Team Y.

Why it is/is not legal: Team Y wouldn’t be in compliance with the 7 picks in the first 300 RA picks rule.

Scenario 3: Team X is out of bonus pool money, and only had 9 RA picks in the top 300.  They sign a 12th round pick to a $120,000 bonus

Why it is/is not legal: Assuming that Team X hasn’t used the 10th slot on another bonus overage outside the top 10 rounds, they could declare the slot used for the 12th round pick and its $20,000 overage and not be over their bonus pool.

Scenario 4: Team X receives an empty slot from Team Y to use on an overage on a 15th round pick

Why it is/is not legal: Empty slots can’t be traded.  Team X would have to use one of their own empty slots or bonus pool money for the overage.

Scenario 5: Team X acquired a 7th round pick with a $163,500 original bonus slot from Team Y via Team Z.  With all other top 10 round picks but the player selected with this pick signed at their respective slot values, Team X then signs the player to a $163,500 bonus.

Why it is/is not legal: Since Team X is the 3rd team to possess this pick, the bonus slot is now worth only $160,230, and so Team X would have an overage of $3,270 and incur the penalties associated with this overage.

Scenario 6: Team X sends cash only to Team Y for a 25th round pick, 3 days after sending a 27th round pick to Team Z for cash only

Why it is/is not legal: As long as Team X hasn’t bought another draft pick during the current draft cycle, it is legal.  Buying and selling are separate actions.  Team X wouldn’t be able to sell or buy another draft pick for the remainder of the draft cycle

Scenario 7: Team X bought a 7th round pick from Team Z two draft cycles ago and now strikes a deal to purchase a 6th round pick from Team Y in a deal with cash only

Why it is/is not legal: Team X is in the 2nd and final cycle of not being allowed to buy picks in the top 10 rounds, so they couldn’t make this transaction

Scenario 8: Team X has 49 picks, Team Y has 35, and Team Z has 41.  Team X acquires 2 picks from Team Z while sending one to Team Y.

Why it is/is not legal: This deal could be structured as a three way deal or as two simultaneous trades and still be legal.  The only way it couldn’t work would be a trade between Team X and Team Z and then a trade between Team X and Team Y as then Team X would be temporally not in compliance with the +/- 10 rule.

 

Thanks to Baseball America for their great work on the draft; their resources were a big help with writing this piece.

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2 Responses to “A Simple Proposal for Allowing the Trading of Draft Picks”

  1. Tyler

    “One major concern with allowing the trading of draft picks is that teams would just sell and buy draft picks.”

    I think we should consider why this is an actual concern. Does it hurt the players drafted? In this framework, draft bonus slots aren’t changed significantly so the players drafted are compensated accordingly, with no real impact. Does it hurt existing players? Presumably teams buying/selling draft picks are exchanging assets in a way that the assets will be used/valued by the other team, and that makes this essentially the same as PTBNL swaps. Does this hurt ownership/teams generally? I’m inclined to say “who cares” but presumably teams make these swaps in good faith so if you’re buying draft picks it’s with the desire to compete later (like buying international bonus slot money) and if you’re selling it’s to compete sooner. Does it hurt the sport itself? Really this is a question of whether it hurts ownership, and I think if we look at other sports where trading picks is allowed I don’t think there’s any correlation.

    Does it hurt parity? There, maybe, we see an actual risk, and maybe other sports give us a way to model this. Certainly this model of allowing trading draft picks might encourage tanking certain years. But here, the question might be better asked as what is the goal of parity– is parity measured year by year or over time? Something to consider for a future post, maybe.

    Reply
    • Nick Koss

      My main concern was higher revenue teams setting aside chunks of their budget every year to simply buy up draft picks. The idea behind allowing draft picks to be traded was to give each team more assets to use in trades rather than creating a entirely new market. I based this idea on the NBA rule where teams have a limit on how much cash they can send to other teams in trade per league year.

      Reply

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