NIL, MLB finances may factor in decision of draftees to sign with teams

Major League Baseball has been looking to institute a draft system for the first time in decades. If implemented, it would be the first time that players would not be able to sign with any MLB team as soon as they turn 18 years old, but instead wait until their selection is made.

The mlb draft analysis is a blog post that analyzes the MLB’s recent draftees. It discusses how finances may factor in their decision of signing with a team.

2:47 p.m. Eastern

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    ESPN’s Jeff Passan


      • MLB insider on ESPN
      • Author of “The Arm: Inside the Billion-Dollar Mystery of Sports’ Most Valuable Commodity,” “The Arm: Inside the Billion-Dollar Mystery of Sports’ Most Valuable Commodity”

The Major League Baseball draft has operated on a basic premise since its beginning in 1965: those who are selected will sign. However, a series of events has positioned 2021 as an ideal year for players to choose college over the professionals.

The NCAA’s new restrictions on players monetizing their name, image, and likeness, as well as the possibility of a new collective-bargaining deal that is more friendly to amateurs, have given top players power they haven’t had in previous seasons.

Organizations’ willingness to recognize that the environment for signing is as hostile as it has ever been will determine whether any player decides to forego signing. At the same time, executives told ESPN that the dangers of foregoing guaranteed money, even if it is paid later, make it unlikely that the top players would choose college.

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That assumption may be called into question in the not-too-distant future. Players are considering the possibility as the top of the 2021 draft board remains in flux leading up to the draft, which begins Sunday at 7 p.m. ET and will be broadcast on ESPN. It could be a returning college player or a high school player who falls short of expectations, but the difference in bonuses assigned to each pick slot — the Pittsburgh Pirates have $8.4 million to spend on the top pick, while the Colorado Rockies get $5.2 million seven picks later — makes draft position matter. Teams may pay over slot for a player by spending less in subsequent rounds — and they may have to, given the college options available today.

Playing in college no longer entails doing it only for the sake of receiving a scholarship. NIL rights provide players — especially those who attend schools like Vanderbilt, which has established a strong reputation as a collegiate powerhouse and regularly attracts the top recruiting classes in the nation — the chance to work with businesses that can benefit them. The opportunities for college athletes are now limitless, whether it’s baseball-card businesses, NFT platforms, or clothing outfitters, and sources told ESPN that the top college players might see million-dollar-plus paydays.

The allure is obvious given the incentive system in the 2021 draft. MLB and the union agreed in March 2020 to a scheme in which clubs stagger signing bonus payments for the 2020 and 2021 drafts. A $100,000 upfront signing bonus is the highest amount that may be paid. The remaining bonus is due July 1, 2022, and the remainder due July 1, 2023.

Players selected in the 2022 draft will have earned their full signing bonuses by that time. By August 1, the signing date for 2021 draftees, it will be apparent if that incentive is powerful enough to persuade players to return to college.

With the current collective bargaining agreement about to expire on December 1, MLB and the union may rethink how amateur talent is acquired. Both sides anticipate an increase in bonus pools, which are the set amounts of money given to each club in each draft. Agents have also recommended that the union fight for big league contracts for drafted players to be reinstated. The 2011 basic agreement eliminated big league agreements for amateurs, which would instantly put a player on a team’s 40-man roster.

The amount of players that are affected by this situation is obviously restricted to the top tier of the draft. Jack Leiter of Vanderbilt, for example, is a great match for the proposal. He is a sophomore-eligible pitcher who is well-known and regarded as marketable due to his SEC profile and more frequent appearances on television than others. Aside from the NIL windfall, Leiter would be a great candidate for a big league contract due to his near-major-league-ready skills.

Leiter, who is anticipated to be selected in the first round of the draft, would be taking a big risk by returning to Vanderbilt. Whether it’s the risk of injury or ineffectiveness, or simply the loss of development time in a minor league system, a player who refuses to sign places a bet on himself — and that bet can backfire spectacularly, as it did with Matt Harrington, who turned down a $4 million bonus in 2000 and a $1.2 million bonus in 2001 and ended up playing independent ball.

There are, however, success tales. After the Pirates selected him eighth overall in 2012, right-hander Mark Appel returned to Stanford rather than sign with them. A year later, Appel was selected first overall in the draft and signed a contract for almost $3.5 million more than his 2012 slot value. High school athletes who do not sign are more likely to do so. A gain of $3 million or more by going to school isn’t out of the question, whether it was now-Kansas City Royals starter Brady Singer or Cincinnati Reds prospect Nick Lodolo.

There are two players in this draft that did not sign in 2018: UCLA shortstop Matt McLain, who was chosen by Arizona, and Ole Miss righty Gunnar Hoglund, who was drafted 36th by Pittsburgh. McLain is a possible top-10 selection, while Hoglund is projected to surpass his prior draft ranking despite having Tommy John surgery this year.

If a club selects an early-round player who does not sign, everything is not lost. While they would forgo the advantage of having a player in their organization for a developmental season, they would get a selection in the 2022 draft one spot behind their unsigned pick from the previous year.

The who gets the first pick in the mlb draft is a question that has been asked for decades. There are many factors that go into deciding who gets the first pick, but one factor may be which teams have money to spend on their players.

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