College Juniors: Sign instead of Returning

Darren Heitner, a baseball agent wrote a fantastic article on collegiate seniors being undervalued after their collegiate careers are over.

Just how bad do MLB-bound college seniors have it? In a forthcoming law journal article titled, Foul Ball: Major League Baseball’s CBA Exploits College Seniors in the MLB Draft, author Jonathan Gordon sifted through the college seniors drafted in the first 10 rounds of the 2013 MLB Draft and found that those players signed on average for only 19.77% of the recommended amount at their respective slots. A total of 57 college seniors were drafted in the first 10 rounds and all 57 signed with the teams that selected them. Meanwhile, high school seniors drafted in the same rounds, and certainly controlling more leverage in negotiations, were able to command roughly 20% above their recommended slot values.

On one hand, it is not hard to support an argument that those college seniors who would be drafted in the first 10 rounds, irrespective of the language contained within the Collective Bargaining Agreement, are taking a discount due to teams trying to stay within their allotted cap on spending. However, other college seniors may be benefited by the newest iteration of the CBA — it could be causing teams to draft more college seniors in the first 10 rounds to balance their books and remain below their thresholds despite spending above slot on high school juniors. Signing bonuses are capped at $100,000 per player from rounds 11-40 of the MLB Draft.

In 2013, the No. 1 overall pick was allotted a slot value of $7.79 million and recommended compensation gradually decreased by draft position until the last pick of the tenth round, which had an associated value of $135,000. The numbers attached to each slot within the first 10 rounds are added up to compute an overall spending allocation per team. The lightest penalty exists when a team goes less than 5% over its allocation and must pay a luxury tax of 75% of the amount over the threshold. On the other end of the spectrum is a 100% luxury tax and forfeiture of its next 2 first round picks for any team that goes at least 15% over its allocation.

You can check out the full article by clicking here.