Saturday, August 20, 2011

For the Record, the Nationals Overpaid on their Draft Picks

In the last few days, I've started to feel a little guilty about writing this the day after the signing deadline: "the team isn't just spending big--they're spending smart."

I still believe 100% in the main point I was making, that the draft is an incredible buyer's market, because the price teams pay for talent in the draft is massively suppressed by the collective bargaining agreement. Just look at the $30 million contract that Aroldis Chapman got compared to the $8 million that Garrett Cole got.

But if you look at the Nationals' signings purely in the context of draft dollars, they clearly overpaid. A couple days before the draft, Baseball America's Jim Callis put the "over-under" for the combined cost of signing the Nationals top three picks at $9 million, and the Nationals spent $11 million--and then threw another $4.15 million at Matt Purke. Scoring the negotiations, it was a blowout for Boras on every card.

Let's start with Brian Goodwin. Taken with the 34th overall pick in the supplemental first round, Goodwin got $3 million, the ninth biggest bonus paid to any player in the draft. It tied for the third-highest bonus ever outside of the first round and almost $2 million more than Corey Spangenberg, the only junior college position player taken higher than Goodwin at #10 overall.

I and most other fans I know have (appropriately) focused on the fact that Goodwin was generally considered better than the 34th best talent in the draft, so if you only look at draft order the Nationals got good value. But if you had told anyone in the industry prior to draft that Goodwin would get that kind of money, they would have laughed. Scott Boras scored an incredible deal for his client, probably double what he had any right to expect.

Matt Purke was the real eyebrow-raiser. Everyone knows the story by now. Drafted out of high school, Purke was ready to take a $6 million offer from Texas, but MLB, in control of the Rangers' finances at the time, blocked it. Then, just eight months ago, the TCU lefty was rated alongside Anthony Rendon and Garrett Cole as the potential top pick in a strong draft. But then he had shoulder problems, which some scouts think might be related to his slingy, low-three-quarters arm slot.

If healthy, Purke has potential frontline stuff. But health is a huge factor in how you have to value any pick, especially pitchers. And shoulders aren't like elbows--you don't just give a guy a new ligament and wait 18 monts for him to return to normal.

That's why most folks thought Purke and the Nationals probably wouldn't (shouldn't, even) make a deal. The established market value for a fourth-round pick with at best iffy medicals--even one with Purke's upside--probably isn't much more than a million dollars or so. And Purke, observers figured, could get closer to the $6 million that Texas wanted to pay him if he could just go out next year and show that his shoulder was ok.

But the Nationals made all that moot by simply offering him a contract that basically assumes that his health is not an issue. Which it clearly is.

All this was even more surprising because when the Nationals drafted him, Mike Rizzo (wisely, I thought) said the team would follow his performance in summer leagues and make their decision accordingly. Well, Purke didn't play summer ball. He hasn't pitched a single inning anywhere since the draft. The team says they were convinced by Purke's workouts and bullpen sessions, but scouts will tell you there's a big difference between side sessions and facing live batters.

I'm really nitpicking now, but even the Alex Meyer deal is a bit of an overpay. Now, because Meyer turned down $2 million from the Red Sox out of high school--and Scott Boras doesn't like to give back money--it's long been assumed that Meyer's price tag would begin with a 2. But still, that's still more than the bonuses paid to Tyler Anderson, Matt Barnes, Sonny Gray, or Chris Reed, four college pitchers picked ahead of him.

Don't get me wrong. I'm thrilled by what the Nationals did in the draft. I've been arguing for years that the draft is by far the cheapest source of premium talent, and that with a $68 million payroll in a large, wealthy market, the Nationals have plenty of resources to load up the farm system with high-upside gambles. And besides, it's fun.

But the nagging question in my mind is this: Are the Nationals aggressively exploiting market inefficiencies in a way that will lead to long term success? Or are they just throwing money at anyone who will take it?

Flushing $4 million down the toilet on one damaged goods pitcher isn't going to break any MLB team. But it won't take many Jayson Werth-type mistakes to put this franchise an a real financial straight-jacket, as opposed to the self-imposed limits of the Stan Kasten era.

It's just so hard for Nationals fans to worry about profligate spending after years of skinflint ownership. Can you even imagine the Nationals failing the way Jim Hendry failed in Chicago, saddling his team with massive contracts for a roster full of replacement level players or worse?

Then again, maybe I'm just an extreme pessimist who doesn't know how to respond to good news. After all, I worked my guts out to get Obama elected, and on election night in 2008, when everyone else was partying, all I could think about what what a nightmare the midterms would be in 2010. Here's hoping the Nationals aren't quite as perennially deflating as those other guys in Washington.

14 comments:

Nate said...

Matt Purke is the prospect version of Chien-Ming Wang. Throw a million a year (or 1/7 a Jason Marquis) at him to see if he gets back the stuff that made him a top prep pitcher. It's not an all-or-nothing proposition. If flames out as a starter and ends up a dominant LOOGY, that's probably worth $1M in major league payroll.

The Brian Goodwin contract is the most worrisome, to my mind. Between his off-the-field issues and some scouting reports suggesting he doesn't have the defense to stick in CF, I don't see how you can't call this an overpay. If the Nats wanted a quick-to-the-Majors CF prospect, I'd rather have seen them go after Leonys Martin, the Cuban that Texas signed.

However, in all things my guiding principle is this: If Bud Selig criticizes you, you're probably doing something right.

sjb said...

Remember that in Purke's case, the Nats weren't just taking his word about his health. He allowed the Nats doctors to do a full examination, including an MRI. (IIRC, this was one of the issues in the Crow nonsigning; there were concerns about his health and he and his agents would not allow the Nats to examine him or review his medical records before the deadline.). Purke's exam showed no structural problems; that he allowed it shows how eager he was to start his pro career.

Peyton Dowdy said...

I think some people have also failed to mention that by trading Marquis and Jerry Hairston Jr the team opened up enough cash to cover Brian Goodwin AND get 2 prospects for them. To me that was the biggest part of those trades. It almost ensured me that they were going to go over slot and have a bit of extra cash to put behind the draft and luckily that is what happened.

I may have missed something but the only off field issues I heard about with Goodwin was he didn't maintain his grades. I may have missed something but his suspension at UNC was an educational suspension.

Steven said...

@sjb--sure, but no MRI can guarantee that his velocity, command, and movement will be there the same as it was before the injury. It's a datapoint, but it's not nearly the same.

Crow's exam became an issue because of a bungled negotiation and irresponsible brinksmanship in which the team was publicly bashing the player, the player was souring on the team, and no one was communicating with anyone.

@Peyton--they had plenty of money to do these deals regardless of whether they traded JHJ and Marquis de Suck.

Kevin Rusch said...

For paying v. overpaying, especially for free agents, I think it's worth noting that a team that has as poor a track record at the Nats, you have to overpay to get guys to take your money. Sure, we drastically overpaid to get Werth, but when all the other free agents won't take market money to play for you, it has to be done. Call it the suck tax.

Now, we may have overpaid for these guys, but they are cheap, and when it's cash you have and talent you need, you can just write a check and make sure they come to you. (It's a reason why I'm surprised they haven't tried to get Wandy Rodriguez. if they offered to pick up 100% of his contract and throw a few organizational minor leaguers back to make it look like something other than a salary dump, you get a good starter for just cash. And just cash is what the Nats have.)

Anyway, what I'm saying is "sure they overpaid. but, so?"

Steven said...

@Kevin--Yes, of course the suck tax is real, though I think often exaggerated. Players usually take the most money offered to them, and only decide based on other factors as a tie-breaker. If they didn't, the union would have a problem with it, and frankly they'd be stupid.

Back in the 80s Green Bay Packers fans always used to mope about how the Packers would never be good in the FA era because no one would ever choose to come to Wisconsin. Turns out it had more to do with the fact that the team was horribly run, and once they started acting like a normal professional franchise it wasn't a problem at all.

Also remember, the Jays also pay a tax of sorts for the exchange rate, and some players don't want to go to NY, while the Rangers, Mariners, and Astros benefit from low (or nonexistent) income taxes in their states. Every team deals with stuff.

Anyway, I'm thinking about the team's process for making decisions more than outcomes. The Nationals are a business, and they have goals for profits, which means hitting goals for revenue while keeping expenses to some X level. Nationals fans don't want to hear that because the team has always spent so much less than they could by any reasonable business approach. But it's true, and if they keep spending like they did on Werth, they will start to box themselves in, and then when you're trying to keep Strasburg, Harper, Zimmerman, etc., you could have problems.

They're still way below that level, so don't get me wrong. I'm not saying they need to cut payroll. NOT EVEN CLOSE. What I'm saying is that what they're doing now FEELS like they're flailing wildly from one extreme approach to another, spending with desperation perhaps more than with purpose, and if that's true, there will be major problems down the road.

DC doesn't need another Dan Snyder type franchise, do you?

Wally said...

Your commentary on the Werth contract, while mostly things I agree with, doesn't seem to have any place in this blog about overspending on the draft. No team, even the Rays, can hamstring themselves by draft spending. I just can't see it (and it has not happened, imo). I have seen teams feel burned and CHOOSE not to spend big again for a while, but not something necessitated by financial concerns. Is there an example that you are thinking of?

Also, I think a fair position could be that ALL teams should double their draft spending for the very reason you note re: CBA and bring in as many prospects as they can to their system. ESPECIALLY when compared to the international free agent. Someone mentioned Leonsys Martin - IIRC, a team could have signed Sonny Gray, Matt Barnes, Alex Meyer and Josh Bell for the same $$ that Martin got. Doesn't the package make more sense than just Martin? I would be curious about a dollars to WAR rate on draft v. Int'l FAs. I doubt it exists, but I would be shocked if the draft value didn't overwhelm it (even after allowing for the Felix H and Cabreras)

But my last question is on the process point you make in the last comment. On Purke, I think that they didn't price him as fully healthy. If Purke had no medical issue and had a freshman year redux, I think that he gets b/w $6 and $8m, given where Cole and Bundy came out. But even putting that aside, is your position that medical evals are so standard that no team can feel that their interpretation can be a competitive advantage? Especially if they have data that others don't? (Not trying to be an ass, just curious how you mean this; and note: I am not trying to say that the Nats staff has earned the right to be given that status, just whether you think there are competitive advantages to med evals).

But if you think that all meds get read the same way, I assume that even if Purke turns out to be healthy and becomes the pitcher that his HS and freshman college year projected him to be, it would still have been a mistake of process to sign him?

I guess what I am trying to say is that I think that you had it right the first time, and overspending relative to other draft dollars isn't a subsection worth comparing because of the relatively small dollars involved and vast price advantage compared to all other sources of talent.

Steven said...

Who knows, but I think it would be really hard for Purke to reestablish the same value he had pre-injury. A shoulder injury is a bad thing, and there are enough people who think his problem is mechanical that I think his value would be very unlikely to rebound all the way to where it was. Regardless, in this moment $4+ million is a lot for a guy who is probably damaged goods.

On the medicals, sure, teams can evaluate differently. The Nationals have a pretty miserable track record on injury prevention, so I'm not sure that makes me confident. But the main thing is that I no doctor can tell you with an exam and an MRI how a body will hold up under competition and full season wear and tear. It's an unknowable.

Kevin Reiss said...

And why hasn't the team traded Zimmerman yet? Sell high, Rizzo!

RaleighNat said...

Steven,

I like you're posts. They're thoughtful and make a serious attempt to be analytical. But, my friend, you are, without doubt, a pessimist. Its ok. Pessimists play an important dialectical role with optimists producing a synthesis that tends toward truth. But, at the end of the day, because of the CBA's market distortion of the draft that you acknowledge, spending $15-$20MM no Rendon, Myer, Goodwin, and Purke is absolutely great news. Risks? Sure. But the Nats' willingness to do whatever they can to bring in as much potential talent as possible increases the likelihood of sufficient talent flowing through the organization's pipeline. If I were a GM, I'd sign the best player with every pick and just about spend whatever it took to sign them.

Cheer up. This is baseball - we're not dealing with our nation's economic future, failed political system, or war and peace. Save your pessimism for matters that aren't intended to simply be fun and just enjoy the potential talent we brought into the organization. You can do it! (And if they all flop, well, we'll just be overly optimistic that the next batch of draftees will produce the Nats version of Derek Jeter, Roy Halladay or Albert Pujuls!)

jon antonucci said...
This comment has been removed by the author.
jon antonucci said...

Hater. The nats draft 4 first round caliber picks and sign them all and you have issue with it. For the record, the Nats evaluated Purke and he passed all of their tests. Are you privy to these documents too Steven? Not everyone who gets hurt when they are young are damaged goods for all eternity.

I don't care what Jim Callis says. It wasn't a blowout on every card, it was only a blowout according to what Callis says. He writes for baseball america and has NEVER been apart of any organization. When you draft players with signability questions you get talent later than you should for dollars that are a bit inflated for the round. I'd rather have the talent in our farm system than the money in our owners pocket. He has the money, let him spend it!

Also I love your comment about how no one in the industry would have thought Brian Goodwin would get more than a million. Who's your source? Brian Goodwin is an extreme talent, as is all the players the nats drafted, and the nats have the money to get these deals done..which is exactly what they should be doing. Would you have rathered they not spend the money on this group of players? Seriously, these are all moves in the right direction.

jon antonucci said...

response?

Todd Boss said...

The Nats spent $16.5M to lockup their first four picks. One of which was the consensus 1-1 of this draft for much of the past two years, another of which clearly was a 1-1 talent if not for a non-life threatening shoulder issue.

You pay what it takes to get the guys signed. $16.5M is NOTHING in the grand scheme of things. Its less than 2 years of Marquis. Its less than we'll pay for 1 year and two horrible months of Adam LaRoche.

Would you have been happier if the team had drafted (say) Purke and then NOT signed him, haggling over a couple hundred thousand dollars? Would you rather have spent $4M on a guy who could be an Ace in this league or saved that $4M and been able to claim on your little blog that "the Nats made the right decision by not overpaying for Purke?" Of course you sign the guy!

I can't believe the same guy who has posted complaints about our payroll level has the audacity to say we over paid for anything.