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Understanding The Pirates’ 2017 Draft

Shane Baz was just one of a great series of picks for the Pirates in the 2017 Draft. A look at how the Pirates are going to sign the top talent.
Photo by Matt Freed/Pittsburgh Post-Gazette

With the MLB Draft being completed June 14, teams have only three weeks to sign their selected players before the July 7th deadline. The Pirates kicked this off nearly immediately with the signing of Shane Baz, a Texas prep RHP committed to TCU. While there was speculation that Baz would be one of the toughest signs in the class, and rumors that the Pirates would pass since he planned to attend TCU (the same school that cost Pittsburgh Nick Lodolo), the Pirates went over slot to sign Baz quickly.

These over slot deals happen frequently, but today, I want to take some time to talk about the inner workings of how the Pirates’ draft signings appear to be coming together.

The first thing to understand is the MLB bonus pool structure for draft picks. Through the collective bargaining agreement, MLB teams are limited in the amount that they can spend on amateur and college players, with penalties for exceeding these limits. So the Pittsburgh Pirates can no longer go all 2012 on the league and spend over $17 million on the draft (this has been covered elsewhere). To the stipulations:

1.) Each pick in the first 10 rounds has a slot value assigned to it. The total value of a team’s bonus pool is the sum of these slots assigned to each individual pick.

2.) After round 10, any player can be signed by a team for $125,000 or less at no impact to the total bonus pool for the first 10 rounds. Any dollars spend in excess of $125,000 on an individual signing is subtracted from the pool.

3.) You can outspend your bonus pool. If you outspend by 5% or less, you pay 75% of the overage dollar for dollar as a tax to the league. If you overshoot your bonus pool by more than 5% you are taxed in addition to losing future picks. No team in the history of the CBA has exceeded their bonus pool by the amount necessary to lose picks. The specific penalties are listed here, as well as the stipulations outlined above.

4.) If you do not sign a player in the first 10 rounds, the slot value of said pick is removed from the total. So for example, when Lodolo spurned Pittsburgh for TCU last season, their total pool amount of $7,007,900 was reduced to $5,431,900.

The takeaway from all of this is that you need to sign your first 10 picks, but you can’t exceed the allotted pools. If you overpay for a player early, and you consequently can’t sign a player in round 10, you lose the slot value associated with said pick, which can be costly. Because of this, teams usually use some strategy in their first 10 picks in order to assure that they have the funds necessary to spend on players who may otherwise not sign. Keeping this perspective in mind, let’s look at the Pirates’ 2017 Draft and see if we can explain what is happening here (now that a decent chunk of 2017 signings have come in).

The Pirates’ entered the draft as one of 7 teams with over $10,000,000 to spend on the first 10 rounds (plus over $125K payments in 11-40). In total, their bonus slots totaled $10,135,900. Let’s look at the impact of the 5% penalty and associated tax on this total:

Spending Tax Total
2017 Bonus Pool $10,135,900 $0 $10,135,900
+1% Load $10,237,259 $2,635,334 $12,872,593
+2% Load $10,338,618 $2,736,693 $13,075,311
+3% Load $10,439,977 $2,838,052 $13,278,029
+4% Load $10,541,336 $2,939,411 $13,480,747
+5% Load $10,642,695 $3,040,770 $13,683,465

So this is the range of values we are working with. I’m making the assumption that the Pirates will not be overshooting their bonus pool, but if they do, they could add $506,795 to their total.

Pick Number Name Class Slot Signing Savings
12 Shane Baz HS $4,032,000 $4,100,000 $68,000
42 Steve Jennings HS $1,635,500 Unsigned N/A
50 Calvin Mitchell HS $1,357,300 $1,357,300 $0
72 Conner Uselton HS $804,000 $900,000 $96,000
$7,828,800 $6,357,300 $164,000

The Pirates earned praise for their top 4 picks from across the industry, with FanGraphs Eric Longenhagen calling it “Perhaps the group with the most collective upside on the draft’s first day.” As far as the signings are concerned, Baz went over slot by $68,000 and Uselton by $96,000. Jennings has not signed thus far, but with these four picks the Pirates will be at least $164,000 over their allotted slot. So they need to make up money, and likely realized this during the draft. I expect this was a part of their plan.

Pick Number Name Class Slot Signing Savings
88 Dylan Busby JR $626,600 Unsigned N/A
118 Jason Delay SR $450,500 $100,000 -$350,500
148 Deon Stafford JR $336,500 $315,500 -$21,000
178 Cody Bolton HS $255,900 Not Disclosed Likely Over Slot
208 Jared Oliva SR $200,000 $200,000 $0
238 Blake Weiman JR $160,700 $150,000 -$10,700
268 Bligh Madris SO $142,700 $130,000 -$12,700
298 Beau Susler 5S $134,200 $5,000 -$129,200
$10,135,900 $7,257,800 -$524,100

Earlier, I mentioned strategy in MLB draft signings, and you can see that here. In going after the prep players in Baz, Mitchell, and Useltson – and the expected slot used to sign Jennings – the Pirates’ needed to recoup some slot value. Like I mentioned earlier, they need to sign the players they pick, so they couldn’t pick a player in round 10, ignore him, and save the money. However, the Pirates did the next best thing with their 4th and 10th round picks. The important thing to notice here is the player’s class. In Delay and Susler, the Pirates selected 2 Seniors (who typically possess less leverage in negotiations) who they likely selected earlier than their talents would otherwise have warranted. In exchange for this, the Pirates were able to sign both players below slot, saving $479,700 between the two picks. (They signed others below slot as well, but these were the two most prominent savings).

Bringing it all together, you have $164,000 of over-payments on Baz and Useltson, plus the savings of $524,100 on rounds 5 through 10. Leaving us $360,100 for over slot bonuses on Jennings, Busby, and Bolton. All are either unsigned, or in Bolton’s case, the bonus is not disclosed at this time. Additionally, the Pirates’ will likely save some money for rounds 11-40. So where does that leave us?

About as good of shape as you can hope to be in. Given the under $100K over slot payments for Useltson and Baz, I would wager on Jennings being in a similar range between $50,000 and $100,000. Busby I would expect to be below this range, with Bolton being the wildcard. I’ll be monitoring to see where his bonus ends up. Additionally, at the time of this writing, none of the Pirates’ round 11 through 40 picks have signed in excess of $125K. However, this could change, as the Pirates are likely to have some leftover funds from the first 10 rounds which they can use to convince guys to sign. This is a textbook example of how teams can manipulate their bonus pools in order to pursue as much impact as possible at the top of the draft.

About Joe Douglas (2 Articles)
Joe works at a consulting firm in Pittsburgh and is in the midst of pursuing actuarial credentials. He also writes at Rotographs primarily about Ottoneu.