Published July 04, 2012
NEW YORK – At 5-foot-11, Kyle Kraus didn't expect to be a high pick in the Major League Baseball draft after going 7-6 with a 2.03 ERA as a senior at the University of Portland.
Then about 2 hours before second-day selections started June 7, his telephone rang. On the line with the 22-year-old right-hander was Pat Portugal, a Northwest area scout for the Boston Red Sox.
"They called me that Tuesday morning and said, 'Hey, we want a senior in the seventh round or the 10th round that will sign for $1,000. Would you do it?'" Kraus recalled. "I said: Yeah.'"
Signing bonuses have dropped for many top picks in this year's amateur draft, the first under restrictive rules adopted in baseball's new collective bargaining agreement. Teams face penalties if they exceed specified totals for their bonuses.
As a result, some clubs selected players they knew they could sign for close to nothing.
Kraus was taken with the 241st pick overall, assigned a value of $143,000 in baseball's labor contract. If he had not signed, the Red Sox would have seen the cash from his slot deducted from their total.
With the money saved, the Red Sox were able to sign their top pick, Arizona State shortstop Deven Marrero, for $2.05 million — $300,000 over the amount slotted for the 24th selection overall.
"My whole thing was, I'm not 6-5 and I don't throw 95 (mph), and so I'm not going to make a whole lot of money being a senior out of college," said Kraus, who has made two relief appearances for Lowell, Boston's Class-A affiliate in the New York-Penn League. "I figured I can't turn down $1,000 in the seventh round when I don't even know if I'll get picked up later on for the same amount. It's a dream come true. Yeah, I would have liked to have slot money, but for me money is not the reason why I'm playing this game."
Marrero's selection helped push the Red Sox into picking Kraus.
"As the draft is developing and the players end up being there and you know what their signability roughly is going to be, then you need to start making adjustments," said Mike Hazen, a Boston assistant general manager. "We sort of had to adjust in the seventh and 10th round this year, among other rounds, to sort of make the cap work."
Each team has a different threshold, which triggers varying strategies. Two picks after the Red Sox chose Kraus, Arizona used the 243rd selection on Andrew Velazquez, a shortstop from Fordham Prep in the Bronx. He signed for $200,000.
Facing a July 13 deadline, 22 of the 31 first-round picks last month already have signed, and their bonuses total $51.8 million, according to a review by The Associated Press. Last year, 32 of the 33 first-round selections signed for a total of $91.6 million in guaranteed money.
Among the four players in the top nine who have reached agreements, all received less than the equivalent pick last year. Toward the end of the first round, some players did get slightly more than last season's selections.
Because of penalties for exceeding a threshold in the first 10 rounds, several clubs drafted players they could sign on the cheap in order to shift money to other selections.
A trio of 10th-round picks also signed for $1,000 apiece: pitcher Paul Sewald (New York Mets), outfielder Alex Azor (Toronto Blue Jays) and catcher James Watkins (Red Sox). Their slot values were $125,000 each.
"We sort of knew what we needed in the way of slot money to satisfy our other picks," Mets general manager Sandy Alderson said.
Baseball's labor contract, agreed to by players and teams in November, assigns a value to all picks in the first 10 rounds, starting at $7.2 million for the top selection and dwindling to $125,000 for No. 300 and remaining 10th-round picks. The values of a team's picks in the first 10 rounds are added up and form a signing bonus pool.
Clubs exceeding their total face escalating penalties, starting with a 75 percent tax on the overage, graduating to a 100 percent tax and the loss of its next two first-round picks. For the 11th through 40th rounds, the amounts of bonuses exceeding $100,000 per pick are added to a team's total for calculating the tax.
Top pick Carlos Correa, a shortstop from the Puerto Rico Baseball Academy, signed with Houston for $4.8 million, nearly half the $8 million Gerrit Cole received from Pittsburgh after the Pirates took him first last year.
Just two first-round picks have signed over slot, and both are clients of agent Scott Boras: Marrero and high school shortstop Corey Seager, who got $2.35 million — $400,000 over slot — from the Los Angeles Dodgers as the 18th pick.
Stanford right-hander Mark Appel, also represented by Boras, was thought to be a possible top draft pick by some but instead went to Pittsburgh with the eighth pick — which has a slot value of $2.9 million. Appel remains unsigned.
"The real mockery of the draft is no longer are the top 10-round picks the best-talented players, particularly rounds 6-10, where clubs were choosing players with less ability so they could sign them at well below slot," said Boras, a frequent critic of the new rules.
According to figures compiled by Boras' staff, the average bonus dropped from $232,000 to $172,000 for sixth-round picks this year and from $112,000 to $53,000 for 10th-round selections.
"This wasn't just a setback for the high end," agent Tom Reich said. "But with respect to the whole universe of the draft, it's just a disaster for the young players."
Management expected team behavior would change under the agreement.
"You have a pool, and spend it as you want," said Dan Halem, MLB's senior vice president for labor relations. "When we designed the system, we recognized that clubs may allocate to some players more than their signing bonus value and other players significantly less than their signing bonus value. The system was designed to give clubs that flexibility and to decide on a strategy that works best for the club."
Union head Michael Weiner declined comment, preferring not to make his thoughts public until after next week's deadline for picks to sign — a month earlier than under the old deal.
Some agents have claimed pre-draft discussions between players and clubs over signability may have violated major league rules. Halem wouldn't address that possibility.
"That's been going on for as long as the draft's been going on," Hazen said. "We're always making those phones calls, and go like, 'Hey, what's your signability going to be? What's it going to take?'"
As part of the labor deal, players also are signing earlier. Last year, just 10 first-round picks had reached deals with an hour left before the Aug. 15 deadline. According to MLB figures, 45 percent of picks in the first 10 rounds had signed through July 3 last year. This year, 89 percent had signed through Sunday.
"I don't think anyone could disagree with the notion that getting drafted players onto the field in June and early July benefits the club and the player from a developmental standpoint," Halem said. "That was a very important objective of the draft reforms, and we have seen a vast improvement on that issue this year compared to prior years."
Obtaining the restrictions on amateur player costs was one of the top goals of teams in bargaining for a new labor contract. Similar restraints were placed on foreign amateur signings, with a team facing penalties if it exceeds $3.2 million in the year that began Monday.
There was a rush to get in signings before the rules change this week. In the year ending Sunday, the 30 clubs combined to spend $186 million on players from the Dominican Republic and Venezuela, up from $85 million in the year ending July 1, 2011, according to figures compiled by MLB. The amount spent on Cuban defectors increased from $27 million to $108 million, inflated by big-money deals for outfielders Yasiel Puig ($42 million over seven seasons with the Dodgers), Yoenis Cespedes ($36 million over four years with Oakland) and Andy Soler ($30 million over nine years with the Chicago Cubs).
Teams did not attempt to institute a foreign draft for 2013, a possibility under the labor contract. Instead, a management-union committee continues to examine starting an international draft in 2014.
Changes to the rules have been designed to give smaller markets a better chance to compete. The overhaul started with revenue sharing and the luxury tax that began after the 1994-95 strike and expanded with the new amateur regulations.
Commissioner Bud Selig, watching Pittsburgh vie for the NL Central lead, said all the new policies helped spread the talent wealth.
"If this were still in the late '90s, this couldn't happen. But it is happening today," he said. "It's a manifestation of all the economic changes we have made — and all for the better, I may add."
Associated Press researcher Julie Reed contributed to this report.