Deadline draft picks

Every year or so, a meme takes over the mainstream baseball press. I suspect it happens after the same meme takes over in front offices. Reporters hear their baseball ops sources spouting the same lingo enough, and they start to put it in their columns. Thinking back, it’s remarkable how quickly things like salary dumps and arbitration eligibility have gone from insider lingo to New York Post headline fodder.

The meme this trading deadline is compensatory draft picks. While the rules changed in the new CBA (here’s a great overview), they aren’t different enough to merit the burst of attention. It may be because the draft was televised, or just because baseball fans and the reporters they rely on keep getting savvier.

For those of you who haven’t been obsessively tracking trade news and rumors the last week or two, here’s the story. When your team trades for a rental—a player headed for free agency after the season—you not only get their services for a few months, but if they leave for a different team in the offseason, you get draft picks as compensation.

Exactly what draft picks you get depends on a multitude of factors, but the vast majority of such picks are in the first, supplemental first, or second round. Generally, a top 100 pick. The bounty can be even greater for a “Type A” free agent, now defined as a player among the top 20 percent of free agents at his position. That sounds like a tough standard, but there are more Type A’s then you may think.

Last year, Type A’s were defined as the top 30 percent, which included such luminaries as Kevin Millar, Frank Catalanotto, Ronnie Belliard, Mike Lieberthal, and my favorite, Aaron Fultz. Some of those guys wouldn’t make the cut this year, but I mention them to illustrate the standard.

Type B’s (also stricter this year, but again, only by 10 percent) are an even less impressive group, including the likes of Brian Meadows, Ramon Ortiz, Gregg Zaun, and—had he found a team to lure him out of retirement—Jeromy Burnitz. Teams that lost one of those players (if they offered him arbitration, anyway) got a supplemental first round pick out of the deal.

That’s the backstory. As I said in the first couple of paragraphs, this is an idea that has suddenly hit the mainstream. For example, the Brewers radio broadcasters incessantly mention that an important part of last week’s swap for Scott Linebrink is the draft pick compensation. Rotoworld provides another example of this (albeit aimed at a slightly more informed fan) in this blurb about Jermaine Dye:

The Boston Globe’s Gordon Edes says the Red Sox will not part with either Manny Delcarmen or Justin Masterson along with Wily Mo Pena for Jermaine Dye.
Then they’re probably not going to get a deal done. Edes says the Red Sox won’t give up the young pitcher for a rent-a-player, but it’s not just Dye — it’s also the draft picks he’d bring. Masterson was a second-round pick in 2006. The Red Sox would get at least one pick better than that next year if they brought in Dye now and then let him go as a free agent.

The same sort of talk has crept into commentary on deals for just about every other rent-a-player, including Luis Castillo and Octavio Dotel.

Valuing compensation

While the mainstream baseball media has done a great job getting the word out to more fans that draft picks are an important component in a midseason rental, many writers have fallen into a somewhat lazy (or, at least, word-count inhibited) pattern.

It’s exhibited by the quote about Dye. The assumption from the Rotoworld writer is that you can compare the original draft status of a prospect to a hypothetical future draft pick. I’m sure that the writer wouldn’t argue that you should swap Masterson for a 2008 supplemental first rounder straight up, but it’s worth discussing further.

I wish this was going to be one of those brilliant articles where I took you step-by-step through the entire process of valuing draft picks, valuing minor leaguers depending on the stage of their development and upside, and factoring in the different arrival times, and then ended up with one fancy number to say, “John Schuerholz, you get 10,000 points!” as if I were Drew Carey on “Whose Line Is It Anyway?”

I’m not going to do all of that in this article, but I believe I can offer a framework for it.

Apples and kiwis

Obviously, a prospect (like Masterson) who was a second-round pick is not equal to a future second round pick. The primary reason why is that someone who has reached high-A or above, especially if they’ve had some success there, has outperformed a whole slew of compatriots from his draft class. And that’s just among the guys who signed. Plenty of players in all rounds of the draft never come to terms with their drafting teams. There are things organizations can do to avoid that outcome, but it usually involves compromising the quality of the player they receive, or spending more money on the slot.

I suppose there may be a hypothetical scenario in which a prospect who was drafted in the second round (or wherever) is equal or inferior to a future second round pick. Particularly if the prospect hasn’t progressed very far (perhaps a college player is playing well in low-A a year after he was signed), a stronger-than-expected draft class might make the swap worth making. I doubt, however, that the variance in draft classes is enough to make this a very common occurence. And most unimpressive prospects aren’t going to garner much in trade, though the Mets will likely get a supplemental pick for Luis Castillo, who didn’t cost very much.

The point of all this is probably simpler than I’m making it out to be. A former second-round pick whom a team might actually want to acquire (or third-rounder, in the case of Will Inman) has probably far exceeded expectations. Thus, even if arrival time didn’t matter (say, getting a #4 starter for the 2009 rotation is equivalent to getting one for the 2012 rotation), someone like Inman or Masterson is worth much more than their draft slot equivalent in future picks.

For proof (or some reasonable semblance thereof), look no further than philly sox fan’s exhaustive draft study. While his work is far more sophisticated than how I’m about to represent it, we can glean that a supplemental first rounder will probably have a career value of about five wins (measured by WARP3, which sets the replacement level bar a good bit too low). Career value. That’s, uh, not very much. Even the highest first-round pick a team can get by way of compensation—#16—is, according to philly, worth in the 15-20 win range. Again, that’s career value, and it puts that pick on a path to, on average, match the career production of someone like Phil Plantier or John Halama.

Of course, there are always diamonds in the rough. I certainly hope so: Yovani Gallardo was a second-rounder, as were too many valuable players to name here. But balancing out those leading lights are a whole bunch of guys you’ve never heard of. (Unless, I suppose, you’re Kevin Goldstein. Hi Kevin!)

Ok, smart guy, do these picks matter?

Knowing what we know about the value of draft picks—or, more precisely, knowing that most front offices have an idea about the value of draft picks—I find it hard to believe that any general manager allows the probability of draft pick compensation to significantly affect the offers he makes for rentals.

I haven’t talked at all so far about the value of the rentals themselves. It’s worth mentioning: While someone like Scott Linebrink is hardly going to add four or five wins to the Brewers record, he may well add one or two (especially aided by the magic of leverage—that, and keeping Derrick Turnbow from pitching on back-to-back days), and those wins could easily end up really mattering. If Linebrink pitches well and the Brewers edge out the Cubs by a game or two, he’ll be worth every bit of what the Crew gave up for him.

In dollar terms, that difference is measured well into the millions, and would probably have a lingering effect for years to come. I’ll take that for Will Inman and Steve Garrison any day. The benefit of draft picks #25 and #50, the amateur equivalents of—oh, I don’t know—Gabe Gross and Laynce Nix—is nothing compared to the benefit of a postseason appearance.

More importantly, what do the pros think?

I mentioned the Luis Castillo deal a while back, and I think that gives us a useful insight into how much teams value supplemental picks, which may or may not be a good indication of how much the selections themselves are actually worth. (I suspect organizations have a pretty good idea, but I don’t feel strongly about it.)

As I said before, Castillo was traded for next to nothing. The two prospects who headed the other way, Drew Butera and Dustin Martin, may sneak into the big leagues at some point, but they offer no more value than a supplemental first rounder does, but without the significant upside. What the Twins gained, then, is salary relief. More specifically, they’re now off the hook for the remaining $2 million or so on Castillo’s contract.

To simplify the calculation without losing much accuracy, let’s say that Butera and Martin are worth zero. They might play a bit for the Twins, but they’ll basically be replacement-level players. Let’s further say that the Twins don’t care about replacing Castillo with Alexi Casilla—they’re out of it, so a win or two doesn’t matter at this point. By trading Castillo, they lost the supplemental pick they would’ve gotten when he left. (As, I’m assuming, a Type B free agent.) Unless the Twins are crazy about Dustin Martin, they think a supplemental pick is worth less than two million bucks.

It’s possible, too, that Castillo will be a Type A free agent. Remember that players are rated against others at their position (in this case, second basemen, third basemen, and shortstops), and there aren’t a whole lot of stud infielders likely to hit the market. I’m guessing Castillo will be among the better B’s, but if he is an A, the Twins are asserting that the two picks they’re giving up—including, possibly, a first rounder—are worth less than a million dollars apiece.

In baseball economics, that’s nothing. That’s a little more than a flyer on a rehabbing middle reliever. (Or, it’s desperation because the Twins are cheap, but they do value player development, and draft picks would seem to be an important part of that.)

It would seem, then, that the recent to-do about compensatory picks has overstated their importance. It may be fun to have handful of supplemental picks come draft day, but in terms of value, it’s not much different than getting a couple of extra 26-year-old Triple-A relievers from your trading partner. Publicizing those picks is a sign of ass-covering just as much as acquiring them is an indication of building for the future.

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