The COVID-19 pandemic has forced the entire baseball world into a cataclysmic shake up, expediting consequential change industry-wide. Organizations have been forced to re-prioritize financial assets in the midst of spring season cancellations, leading to large-scale layoffs and furloughs. Scouting departments were reduced substantially, both in numbers and availability to players. With the 2020 amateur draft three months away, the question became “how do we best utilize our resources to maximize the value of our limited opportunities in the face of the current circumstances?” Video analysis became the primary means of evaluation leading up to the draft season. Unintentionally, that transition to online scouting could have paved the way for more of the same in the future. That unfortunately allowed organizations to be more comfortable with the subsequent combination of the online scouting process and laying off their scouts. With those changes occurring in addition to the reduction of the draft from 40 rounds to 5, teams faced a predicament that will impact each of their operations moving forward.
The MLB First Year Player Draft has been the main avenue of talent acquisition for Major League Baseball since 1958. In a normal draft, teams get approximately forty chances to find and reap the most value out of their selections. This year that number was reduced to five chances. Teams having to reduce their draft opportunity from 40 rounds to 5, a 87.5% drop, were now forced into a crunch. The stakes were now raised for each pick. In a year when teams were severely restricted on opportunity, the pressure to capitalize on that limited opportunity was just as stressful as the hindsight regret of missing on a pick. The first five rounds of the draft are the most talented and the most critical in acquiring talent that will commit to joining the organization. How did this year’s first five rounds deviate from years past? Did organizational philosophy change at all? Did teams approach this draft differently than years past, knowing they had fewer opportunities to pick? Here were some of the factors that played into those considerations:
College vs. High School
The previous five drafts from 2015 to 2019 were used to define recent draft trends. Within those years, only the first five rounds in each draft were pulled to make a suitable comparison of value teams are looking for out of those picks in the draft.
Since 2015 there’s been a 4.8% average increase in bonus money spent in the first five rounds each year. This is not surprising since as time goes on, players become smarter, stronger, faster, and more valuable. All of the players drafted in these rounds the past two years have signed which also partly explains the recent increase. Not to mention, inflation plays a role in that as well. However, the percentage of bonus money spent by round didn’t deviate far from the average this year. In fact, every year since 2016 has seen a greater adherence to the mean bonus money percentages given to players by round. Therefore we did not see any significant difference in how money was allocated by round in this draft. If anything, teams only continued to further define their monetary limits on draft picks.
Could this be because teams decided to stick closer to slot values in 2020? This didn’t turn out to be the case. Over the previous five years, the league had averaged spending -$871k under slot in each of the first five rounds. That was largely skewed by the first round which is consistently underpaid in large amounts, year after year. Teams collectively averaged paying first rounders $8.2 million under slot. That number decreased slightly this year to $7.3 million (average of $200,000 under slot value per pick). However, the pattern remained the same in terms of the rounds that were overvalued and undervalued on average (in order 3,2,4,5,1).
While there may not have been any changes in the allocated percentage of bonus money by round, monetary values continued to rise with yearly inflation. The percentage of draft picks paid over slot value was identical (34%) and the average player received $13k over slot value compared to $5k under in years past.
College vs High School
Selections in the 2020 draft were a lot more reliant on college players than in years past. We saw that in the distributions of the level of draft picks. It was the first time in history that the first seven selections from the draft hailed from the college ranks. The overall percentage of picks from four-year colleges went up from 60.9% to 67.5% while high school picks dropped from 35.1% to 29.4%. Naturally, the percentage trends of bonus allocation for the same groupings were effected in a similar manner.
It’s easier to project a college player than a high school player. College picks are more physically mature, have more experience against high level competition, and are more ready to deal with a lot of question marks stemming from a new situation. Because they traditionally lack in all of these areas, high school players are deemed to be more long-term projects. They tend to be more costly than college players because of the applied pressure of getting an education and developing at the college level. They also aren’t accustomed to living away from home and may prefer to go the safe route and choose to develop their skills in college first. It was clear that teams prioritized greater projectability and signability. This in turn also led to significantly less money being spent on high schoolers collectively. Usually the money in the first five rounds is enticing enough to persuade players away from college. With rare exceptions such as Matt McLain in 2018, high school players drafted that high will always sign.
Signability is an important factor every year, but even more so in 2020. There wasn’t a player selected in the first rounds that didn’t sign in 2019 and the same happened this year. With only those five rounds, teams had to be 100% sure they could reach an agreement with all of their draft picks.
Signability is one of the most important qualities at the top of the draft board. Teams need to have that commitment from their draft picks so they don’t lose out on drafting someone else they know will sign. Since 2015 there have only been twelve players selected in the first rounds that haven’t signed. Seven of those twelve were in Round 1. Eleven of the twelve were pitchers. Nine of the twelve were coming out of high school.
There are two interesting trains of thought behind analyzing draft picks based on player position. One is that organizations draft by positional need. The other is that they draft strictly based on their perception of the most talented players available. In this draft there was a mix going on across the league and a mix within some organizations as well.
The two positions that saw the largest deviations from normal percentages were outfielders and pitchers. Compared to the average, 2.9% fewer picks were drafted as outfielders and 5.1% more picks were pitchers. We saw that teams were taking more liberty in overvaluing pitchers. That wasn’t a trend unique to this year, though. Pitchers have the greatest average year-to-year increase in value since 2015 among all positions. At $5.7 million, pitchers are then followed by third basemen ($2.0M) and catchers ($1.4M).
On the other hand, we can also see that outfielders (-$0.6M) and first basemen (-$0.2M) have dropped in value in the draft over the last several years due to the rise in the value of pitching.
At the end of the day, teams are drafting athletes who they think have a chance to contribute to their future success. The position label is truly not important. Bryce Harper was drafted as an outfielder even though he predominantly played catcher in college. Most of the players getting drafted in the first five rounds have the skills and athleticism to play more than one position. It’s never been up to high school and college coaches to determine where their players will play in pro ball. On the other hand it’s worth noting that teams can be strategic about declaring a pick at a certain position because they know that values of certain positions are higher than others.
Take Spencer Torkelson in this past draft. He had played first base his whole career at Arizona State but was drafted as a third basemen due to his athleticism that allows him to make the transition to another position. Over the past five years, first basemen drafted in the first five rounds commanded higher bonuses on average than any other position. First basemen in the first round make $475k more than third basemen. Not saying this was part of the Tigers’ strategy, but position does play a factor in the perceived value of a selection.
There are certain areas of the country that produce more baseball talent than others. Did this trend continue in 2020 as well? Every year programs in Florida, California, and Texas develop the bulk share of talent from across the country. This year was no different. All three of those states were top five in number of draft picks selected and bonus money paid to its players. The more intriguing questions revolve around who filled out the rest of those lists. Georgia and North Carolina were the other two most drafted areas over the past five years. This year, Tennessee snuck into the top five due in large part to seven combined picks from Vanderbilt and the University of Tennessee.
Although, “most picks” doesn’t always mean the most money. While that was the case for the larger sample size between 2015 and 2019, 2020 wasn’t as predictable. For the last five years, the list of top 5 most selected states matched the list of top 5 most paid states in the same order. This year they did not match. Very impressively, the state of Arizona punctured the top 5 for highest paid states in terms of bonus money. Arizona State University had the highest number of picks from any single program in the country (5). With that, the state of Arizona was able to earn a total of $16.9 million, good for 7.1% of the total bonus money spent this year.
Finally, I wanted to look at how teams were spending their money and how the league was spending its money. What were their overall strategies when looking at team needs? Which teams valued hitting over pitching and vice versa?
From 2015-2019 a little more than half the league didn’t show preferential spending towards pitching or hitting in the early rounds. There were twelve teams that spent 60 or more percent of their bonus money on position players. Meanwhile, there were only two teams that prioritized their funds for pitching.
Position Players: Angels, Astros, A’s, Brewers, Dbacks, Giants, Marlins, Phillies, Red Sox, Reds, Twins, and White Sox
Pitchers: Braves and Nationals
Fast forward to 2020 we see an explosion of teams valuing pitchers in rounds one to five. Not only that, we see that teams took a much more decisive approach in committing to pitchers or position players.
Position Players: A’s, Blue Jays, Brewers*, Cardinals, Cubs, Mets, Orioles, Rangers, Red Sox, Reds, Rockies, Tigers*, Twins, and Yankees
Pitchers: Angels, Astros, Braves, Diamondbacks, Dodgers, Mariners, Marlins*, Nationals, Phillies, Rays, Royals, and White Sox*
* = spent 100% of their bonus money in this area
One notable organization who flipped the switch on their strategy was the Los Angeles Angels. The previous five years saw them spend only 24% of their bonus dollars on pitching. That was the lowest percentage of any team in baseball. Teams that aren’t willing to invest in pitching through the draft and aren’t able to sign stud free agent pitchers are going to have a hard time preventing runs. The Angels have struggled to make the postseason during the prime years of Mike Trout’s career due to the fact that their pitching has suffered mightily. Their roster is packed full of big contracts and veteran position players. What did they do with their four picks in 2020? They drafted two pitchers and two position players. They spent 74% of their bonus money on the two pitchers. Most of that money went towards Reid Detmers, the first pitcher the Angels have taken in the first round since 2014. Whether it was stressed as an emphasis due to the shortened draft or a change in organizational emphasis moving forward, the Angels were one of the teams that really stood out in their shift.
The Angels were just one of the six teams that distinctly flipped their draft investment philosophy from position players to pitching. It will be worth watching down the road to see if teams that struggle so much in a certain area invest heavily in amateur talent in that same area. And if they do, do they choose from the high school ranks or from the more polished college ranks? Players that have more high level experience will be able to make an impact in the big leagues sooner than later.
To Sum it Up
MLB teams invested $238 million in amateur talent from the 2020 MLB First-Year Player draft. Of the draft’s five rounds, allocations by round did not divert from the norm nor did the percentage of players being paid over slot. However, the average amount being paid to the average player increased from $5k under slot to $13k over slot. Pitchers were drafted noticeably more and outfielders noticeably less. Due to the abbreviation of rounds, teams valued experience and signability more than usual, manifested in the form of more college selections. The states of Arizona and Tennessee were major talent pools especially in the first round of the draft. The majority of the league chose to prioritize their bonus money for either position players or pitching . Six teams maintained their past investment strategy while six teams flipped. In a year with so much uncertainty and much less room for error, the ultimate theme of the draft was the security of safer picks.