Appelgate

The Pirates’ selection of Mark Appel in the first round of the 2012 draft was fitting in a way. I’ve always been convinced that the record $5M bonus they paid second-round pick Josh Bell in 2011 was the final straw that led to Bud Selig’s iron determination to get the union to agree to a slotting system. Now Appel will be the first major test of that system. Selig has claimed—not that anybody in their right mind believes that Selig cares about anything other than cutting costs—that the purpose of the slotting system is to ensure that teams simply take the best player available. The Pirates did exactly that, but now they’re facing a very difficult road to signing him, not least because Appel’s agent—oh, wait, it’s “advisor”—is Scott Boras.

To review the rules quickly, each team has a draft spending pool that’s determined by adding up the slot amounts for their first ten picks. If a team exceeds its pool by up to 5%, it pays a 75% tax on the overage. If it exceeds its pool by 5-10%, it pays a 100% tax and loses its first round pick the next year. If it goes over by more than that, it can lose two first round picks. Then there’s one other key provision: If a team fails to sign a pick from rounds 1-10, the entire slot amount for that pick is subtracted from its pool. This prevents a team from building up a large, above-slot bonus for a top pick by simply not signing several later picks. The Pirates’ draft pool is $6,563,500. The slot amount for Appel is $2.9M. The slot amount for supplemental pick Barrett Barnes is $1,136,400.

Immediately after the pick, Baseball America speculated that it might take a large part of the Pirates’ draft pool to sign Appel. At first glance, this makes a certain amount of sense. Appel was widely expected to be one of the first two picks. He wasn’t necessarily, though, the #1 or #2 talent; BA ranked him 4th. The slot amount for the first pick was $7.2M, for the second pick $6.2M, for the third pick $5.2M, for the fourth pick $4.2M. So Appel was probably expecting to get somewhere in the $6-7M range.  It’s arguable whether he’s worth that much, because this was considered by scouts to be an extremely weak draft. Theoretically, though, it might take nearly the Pirates’ entire pool of $6.5M to sign Appel.

But it’s not that simple. A team can’t simply blow its whole pool on one pick because, if it fails to sign any of its other picks from the first ten rounds, it loses part of that pool. The system effectively forces teams to sign their early picks. The closest a team can come is to overdraft wildly, taking, say, a 10th-or-later round talent in the supplemental first round or in round two, and so on. Even then, the team will have to pay something to sign the player, and the player will have the leverage of knowing the team has to sign him or lose the slot money altogether. If the player knows the team is counting on using most of “his” slot money on a high-profile first rounder, he’ll have a great deal of leverage. Overdrafting thus may not be a viable strategy and, in fact, the Pirates don’t seem to be pursuing it. At the time I’m writing this, the only other pick they’ve made is Barnes, but that pick represents a big chunk of their remaining pool. BA rated Barnes the #41 talent in the draft. The Pirates took him with the 45th pick, so he wasn’t overdrafted and isn’t likely to sign for much, if any, below slot.

Of course, another possibility is simply to go far over slot. I don’t doubt the Pirates would be willing to go up to 5% over and pay the 75% tax. They may be able to add a little more above slot for Appel by signing some of their later picks at just a little under slot. I can’t, however, see them going far over slot because I can’t see this front office forfeiting a first round pick. I also don’t think Appel is worth forfeiting the pick. He’s a better talent than the Pirates figured to get with the 8th pick in this draft, but he’s not Stephen Strasburg. Considering that this is a very weak draft pool and that BA rated Appel the 4th best talent, in a normal draft it’s likely he would have gone somewhere around the spot where the Pirates actually drafted him. Stated simply, in the grand scheme of things he’s not a world-altering pick.

Neil Huntington has already implied that the Pirates will try to stare down Boras. He stated after making the pick that the worst case scenario is that the team gets the 9th pick next year as compensation. The best case is that they get Appel. This is the most realistic approach and, Boras or no Boras, it has a good chance of working. If Appel goes back to Stanford for his senior year or goes to independent ball—threats that Boras undoubtedly will make—he still has to face the same system next year. For all the reasons I stated above, it’s probably going to be very hard for teams to go far over slot for top picks. Furthermore, there won’t be as many teams with large draft pools next year due to compensation picks because the compensation system has been greatly curtailed starting next year. Consequently, it’ll be hard for Appel to get a bonus dramatically higher than what the Pirates can offer unless he’s one of the top three picks. He can’t count on that. In fact, given the risks of injury and weak performance, he’d risk falling much farther. Pitchers can drop rapidly in the draft at the slightest sign of trouble.

The Pirates will have a tough time signing Appel, but it’s doable, and the best approach probably will be simply to offer only a modest amount above the slot. It’ll be best if they take the approach Huntington has already suggested and go in with the attitude that the 9th pick next year is an acceptable alternative. The surest way to botch a negotiation is to go in with an unwillingness to walk away from the table.

About WTM

Wilbur Miller joined the site in July 2010. He has long been known for his excellent Player Profiles, which he brought to the site in February 2011, combining them with the existing Pirates Prospects Player Pages. Wilbur maintains the player pages section of the site, and provides regular articles to the main portion of the site, including a weekly Prospects Trend piece, featuring the best and worst prospects from the previous week.
  • http://twitter.com/the_wizardofwoz Steven Wozniak

    I don’t know if they will exceed the pool at all. Losing the chance at a competitive balance pick is a pretty major loss as well. Due to the Pirate’s market size, I believe that they are guaranteed an entry into that lottery every year, regardless of record. I think Apel may get a couple $100k over slot, but that would be about it.

    • Lee Young

      agree….and having that #9 pick in next year’s stronger draft won’t be bad either. I think it is lose/lose for Appel and Boras.

    • wtmiller

      A couple $100K — That’s about what I figure.

  • burgh_fan

    Pretty much my opinion. I see them sticking at the 2.9 million or maybe bumping it up slightly into the 3-3.2 million range but that is it.

  • Baes

    Do you think Giolito signs with Washington? Giolito is a CAA guy, and the Nats only have $4.4MM in total pool money. Is it a foregone conclusion that he’s going to UCLA? Furthermore, what (if any) effect do you think this has on Appel? I think it’ll be tempting for Boras to (very uncharacteristically) get a deal done quickly so that he can claim he was the first one to get an overslot bonus in the new CBA. If Giolito signs first, Boras is going to want more money; though whether or not he’ll want a higher number overslot (i.e. Giolito signs for $1.5MM over his $2.1MM slot, so Boras wants $2MM over Appel’s $2.9MM slot) or just a bigger bonus overall I couldn’t speculate on.

    • wtmiller

      I have no earthly idea. Even under the old system he’d be a tough sign. He’s got way more leverage than Appel.

      I don’t think he’ll affect Appel. For one thing, both will probably go down to the 11th hour.

      • Baes

        I don’t know; CAA guys don’t always do the last minute thing like Boras does. Brodie Van Wagenen, specifically, “advises” him; his client Ryan Zimmerman signed right away after going 4th and he negotiated that weird “we’re allowing him to go to Stanford” deal, also with the Nationals. Mike Rizzo just negotiated Zimmerman’s extension with Van Wagenen and paid hefty ransoms for his two Boras prizes (Harper and Strasburg). Hultzen was a Van Wagenen guy and went to the last day last year before signing the largest bonus of 2011 (5th highest all time).
        I’m with you, though: completely in the dark as to whether or not Giolito gets done and agree that he has a ton of leverage (is the Nats pick protected?). I think he could affect Appel, but I’m probably grasping at straws.

        • wtmiller

          Interesting info. Thanks.

  • gonfalon

    Nice article, WTM. I tried to rate it with as many stars as possible, but it looks like I accidentally had the opposite effect… my apologies.

    • wtmiller

      I didn’t know we had ratings. (:

  • Matt Beam

    Given what the #1 and #5 picks have now signed for, $4.8MM and $3.0MM, Boras’ leverage is beginning to dry up… If I was the Pirates, I would not willingly go over $3.0MM and I think the take it or leave it number would be absolutely no more than $3.5MM

  • http://profiles.google.com/crpope10 Chris Pope

    What kind of bargaining chips do think they have? “I’m going to college?” That’s not leverage anymore. That’s saying, “I rather sign for with another team for nearly nothing in a couple of years….if my arm doesn’t fall off.” HS seniors’ values drop to nothing if they go to college. So suck it up. Take the $2 million offered. It’s the most money you’re going to see before you reach free agency.