Checking in with Jim Callis on the new draft rules

At first glance it appears the new rules for the First-Year Player Draft in baseball’s new collective bargaining agreement do not enhance competitive balance at all or provide a new system where the have nots can gain on the haves in Major League Baseball.

But after an interview this week with Baseball America’s Jim Callis, I don’t think the new rules are quite as bad for second-division teams like the Pirates, Royals and, yes, the Orioles that can no longer dump any amount they want into draft picks.

Callis points out the impact over several years that having a larger bonus pool (basically a salary cap) can have over teams with a lesser one. For instance, while a club like the Orioles may get a budget of around $10 million next year picking fourth, clubs picking late in round one may be allotted $4-5 million.

Over, say, five years, a losing club picking high in the draft could have in the neighborhood of $25 million more to spend on draft picks, should a team continue to pick high in the draft, over a perennial winning club. Callis figures that has to have some cumulative impact for the better for the losing club that has more to spend on picks.

“It will be interesting to see how this plays out,” Callis said. “It’s too early to know. Drafts take a few years to take effect, but after four or five years of this system, it could really level out farm systems.

“A bottom five team (in record) will have a draft cap around $10 million every year while a top five will have a cap of around $4.5 million every year. Over a five-year period, that is huge. I think it will really level the playing field.

“If you can only spend $4 or $5 million a year on the draft, you really have to hit on all the guys you give money to. No one hits year after year after year.

“There will still be teams that draft better than others. But if you gave me the choice of having an average scouting department that had $10 million dollars or a very good scouting department that had $5 million, I’d rather have the average scouting department. You will be getting better players probably.”

I mentioned to Callis that anything the Yankees can’t get in the draft, they usually can get on the free agent market every winter.

“But it’s tough to do that year after year after year. It’s tough to sustain doing that. The Yankees were not as aggressive in the draft as the Red Sox were, but they were aggressive internationally and that’s been shut down too. Maybe they don’t get Jesus Montero under this new system,” he said.

Callis also feels a club with a top pick like the Orioles might be able to sign its first-round pick for less than the allotted amount for that specific pick and then use the savings on other selections, an edge clubs with less of a total draft cap won’t have.

“Look at the coming draft. I don’t think there is a Manny Machado or Dylan Bundy-type superstar the Orioles will get with the fourth pick,” Callis said. “What they can do is maybe sign a guy for $2.75 million at No. 4 and that is $1.5 under the (allotted $4.2 million) cap for that pick. That savings essentially would give them (the equivalent of) two extra sandwich picks that a higher-revenue team won’t have. At the top of the draft you have more flexibility.

“In 2013, they start those competitive balance picks and I assume the Orioles will qualify for that. If you are picking at the top of the draft, you can essentially create a trickle-down effect to get the equivalent of extra picks and you are going to have competitive balance picks and, at the same time, they tightened up the free agent compensation rules, so there will be fewer (of those) picks for high-revenue teams.

“The bad news, if you are a less fortunate team, is you no longer can spend as much as you want. The days of all-you-can-eat at the buffet are gone. But because you will have more cap space, it will be easier to have a trickle-down effect. The teams won’t be all-you-can-eat anymore, but they are going to have a much bigger plate than the more fortunate teams.

“If I were a less fortunate team that had been aggressive in the draft, I would be disappointed, because now I am limited in what I can do and I don’t think that is good. But I don’t it’s necessarily as dire as people think.”

By the way, Callis uncovered more about the changes in the draft this week in this story. He pointed out that the draft will now be 40, not 50 rounds. He also pointed out that if a team fails to sign one of its picks in the first 10 rounds, it loses the cap money assigned to that pick and the team cannot use that money on other selections.

Let’s talk about the Winter Meetings: Roch Kubatko and I will be providing wall-to-wall coverage of the baseball Winter Meetings from Dallas next week. We kick off that coverage here today when we co-host a live video chat with readers right here at noon. Watch it live today and you can send in questions on this blog this morning, via the MASN Orioles Facebook page or through Twitter @MASNOrioles. Click here for more info.

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