Great Free Agent > Top Draft Pick

Scott Boras produces a range of largely disgruntled and heated reactions within baseball front offices. He is the game's pre-eminent super-agent, and as such knows how to manipulate MLB's system for mountains of cash that would make Scrooge McDuck blush.

Scrooge McDuck. Animated gif posted by user jazzyana at
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There are countless examples of Scott Boras's expertise. One of his better jobs in recent memory is Prince Fielder. Boras created a glitzy binder all about Fielder and sent it to all MLB general managers and owners. There appeared to be no market for him until Victor Martinez got injured January. Then, all of a sudden, the Tigers found $214 million they could spare the slugger.

It is easy to see why Boras is often painted as a necessarily evil in baseball. Teams consistently balk at his demands, but at the end of the day he is too good at what he does. He represents premium talent, knows it, and demands astronomical sums. Boras drives hard bargains, but inevitably some team seems willing to pony up.

By the way, the Tigers, after stunning baseball with the $214 million Fielder contract, went to the World Series this past season. It is safe to assume that Scott Boras notices when such things happen.

January has rolled around again, like it does this time every year. Boras clients dominate the remaining free agents once again. However, free agency rules have changed from last season, as Jeff Passan at Yahoo! sports writes about. Teams are reluctant to sign quality free agents because they will lose their first round draft pick (unless it is in the top 10), and it is virtually impossible to overspend in later rounds for talent that slipped through with the new draft spending caps. Quoting Passan directly:
In the old draft system, even when teams lost their first-round picks for free agents, they could overspend in later rounds to pluck players who slipped because of signability concerns. The pool system limits flexibility and creativity, leaving teams even more reticent to plunge into an already-inflated free-agent market when it's tied to the draft. 
"We'd love any of them if we didn't have to give up our pick and pool money," one GM said this week, and others have echoed his sentiment, frustrated that two disparate entities commingle in such fashion. Players are even angrier, and agents say they've had trouble explaining how stars in the future could be hindered by a rule that MLB promises it did not implement to create a false market.
I am not a fan or proponent of the way MLB structures free agency, but that is a topic for another post. The system is what it is for the moment, and it appears that teams are valuing their first round draft picks more than the remaining free agents available.

Scott Boras clients dominate the January landscape though. When was the last time Boras misjudged the free agent market so badly that a handful of his clients had to take whatever a team was willing to give them?*

*Rhetorical question, but if you are wondering the answer I just whispered to myself in my head, it's never.

Michael Bourn, according to WAR, is the best free agent available. He is among the remaining Boras clients. Bourn seems to be the poster child for great players penalized under MLB's new free agent system.

If teams prefer their draft pick to Bourn, then they must see the potential future production of the draft pick as superior to what Bourn can give them right now. Price matters too, and there is no doubt that the draft pick will be much cheaper.

I wondered if MLB teams are valuing the marketplace correctly. Picks 11-30, along with the first 10 picks of the second round, are the ones that teams give up when they sign a free agent like Michael Bourn. Not all of these picks will produce players better than Bourn, and teams know this. The picks are also cheaper than Bourn though - much, much cheaper.

So, has Boras overestimated the value of his remaining clients, or are MLB teams overvaluing their top draft picks? A little anecdotal analysis sheds some light on who is judging the marketplace better.

Only 12 hitters and 1 pitcher in all of baseball last season produced more WAR than Michael Bourn. Four of those players were signed as international free agents, which means nine were acquired in the MLB draft. Below is the entire list, with players in bold being the ones picked within the range of selections that a team would have to give up:
Among all the players better than Bourn, only three were picked in the amateur draft within the range of picks that teams give up in the current MLB system. Seven different drafts are also represented. That means a total of 210 picks that teams would potentially have to give up if they signed Michael Bourn were made, with only 3 of those yielding a player more productive than Bourn in 2012.

In other words, 1.4% of picks that a team might have to give up in the new system produced picks superior to Bourn, or conversely, 98.6% of picks did not.

This brief anecdotal look is far from enough to nail down a perfect valuation between draft picks and free agents. A team's roster and outlook for the 2013 season matter. The odds of Bourn continuing to produce at his current level matter. The 98.6% of prospects "worse" than Bourn vary greatly, all the way from never reaching the majors, to playing every day, to potentially outproducing him as early as next year.

Still, even this small sampling rife with shortcomings begins to paint the picture. It is really, really hard to find players better than Michael Bourn in the draft. The overwhelming odds are that a team will get more out of Michael Bourn than the draft pick they give up, and they most certainly will get more out of him in the next 2-3 years than a 2013 draft pick.

So how much more is Bourn worth to a team than a lost draft pick? That depends some on a team's context, but the short answer is quite a bit more; likely enough to warrant a handsome contract.

I am surprised that teams are treating a lost draft pick like such a poison pill. History suggests that Scott Boras understands the MLB marketplace for players better than anyone else, and I bet he also sees lost draft picks as less of a loss than many are making them out to be. His clients are going to get paid, and there is a good chance the teams that pay up get what they want.