2023 Amateur Draft - Part 5 - Overspending Your Draft Budget

 Is it wise to overspend your draft budget?  Well, MLB in their collective bargaining agreement will tell you 'no' and that your team will suffer stiff penalties if they do overspend.  Here are some of those penalties:

1. If a team exceeds their draft bonus pool up to 5% they pay a penalty of 75% of the amount above their pre-determined budget
2. If a team exceeds their draft bonus pool by between 5 and 10% they lose a first round draft pick in the next draft AND they pay an penalty of 75% of the amount that they exceeded their bonus pool by.
3. A first round and a second round pick and a 100% penalty if they exceed their budget by between 10 and 15 % 
4. Two first round picks and 100% penalty if they exceed their draft budget by more than 15%

So, do teams actually worry about exceeding their draft budgets, given the penalties they are assessed if they do?

The resounding answer in "NO", up to a point.. 

Let's look at the data from the 2022 draft:

• Only 5 teams (Minnesota, NY Mets, Colorado, Baltimore and Arizona did not exceed their draft budgets.  All of these teams had draft budgets over $10 million, putting their draft budgets within the top 1/3 of all teams for 2022.  
• 16 teams exceeded their draft budget by more than 4%.
• 5 teams paid a higher penalty than the Guardians did, with the Guardians PENALTY for going over their draft budget being about $375,000. 
• 9 teams paid over $300,000 in penalties
• The overages plus penalties for teams who sent over their draft budget by a lot approached $1 million in some cases.
• No team exceeded their draft budget by over 5%, which would have resulted in the loss of the first round pick this year.
• There did not seem to be a pattern for whether a team's initial budget was more likely or less likely to influence whether they overspent although, as said in the first bullet, the teams that did not exceed their draft budges had some of the higher budgets in the 2022 draft.
• Small market clubs, including those with high draft slots, seemed just as likely as teams with large market clubs, with or without a high draft budget.
• There were, as always, bonuses that exceeded the draft slot for a particular pick.  However, only 5 of those exceeded it by anywhere close to $1 million.  

So what does this all mean?

• Most teams are not concerned with paying penalties in the draft budget
• All teams want to, and have, stayed under the 5% over budget number which would cause them to forfeit their draft picks.
• Late round draft flyers are not taking up a large portion of these overages, it seems.
• An artificial cap on draft bonuses has been successfully created but not at the level of the draft bonus pools for each team but, rather, at 5% above those bonuses;  MLB and the Players Association might want to rectify this in the future by just setting the actual budgets at a level where $1 over that budget results in loss of draft picks and a 100% penalty.

So, applied to the Guardians, this simply means that going over your draft bonus budget by up to 5% is simply the cost of doing business in the baseball draft these days.  

I think at this point if the Guardians DO NOT go over their draft budget by close to 5% THAT will be unusual in the upcoming 2023 baseball draft.