“Hoyer won’t automatically rule out signing a free agent who declines a qualifying offer, but the Cubs aren’t planning to give up a high second-round pick and the extra money in the bonus pools for the draft and international signings.”Sahadev Sharma of The Athletic
As someone who looks forward to every single Cubs selection in the MLB draft, it may be a surprise to see a piece where I even consider recommending the Cubs give up a second-round pick, the bonus pool money associated with the selection, and $500,000 in international free agency money that comes with the signing of a player issued a qualifying offer (QO). However, it’s worth a deeper dive into how valuable a second-round selection is to the 2022 Chicago Cubs.
First, let’s get the obvious out of the way: the upcoming Collective Bargaining Agreement may significantly affect the MLB Draft. According to reports by Even Drellich of the Athletic, both the Owners and MLB Player’s Association have proposed changes to the MLB draft order selection. And these changes could significantly affect the 2022 draft.
The 2011 CBA completely overhauled the MLB draft by instituting bonus pools and slot values in the next draft (2012). Could the Cubs simply prefer to wait till after the ink dries on the CBA and the organization has had time to evaluate the unfamiliar landscape in baseball? They’ll have to during the lockout, but while the baseball world waits for the official word let’s look at where things stand right now.
A 5-year WAR Projection
During Dan Kantrovitz’s post-2021 draft discussion (previously published at Ivy Futures and now archived here at North Side Bound), Kantrovitz specifically referenced the Cubs should bring in “15-18 WAR in the first five years” of play from the draft class according to historical data of where the Cubs selected in each round. While the specifics of that information are proprietary, it provided insights into how teams value draft picks, namely how much value does each player bring to the organization in his first five major league seasons?
It’s expected the Cubs’ 2022 second-round draft selection will sit at 43rd overall provided there are no drastic CBA changes to the order. I evaluated the 41-45th overall draft picks from 2012 (the first year of the MLB draft in its more recognizable format with bonus pools) to 2015 in order to give picks a full five years of minor league development time.
Twelve of the 20 selections made it to the major leagues, however, the impact overall was minor. A team selecting in this range could expect an average of 1.38 bWAR cumulative after the player’s first five seasons in the majors. Using an $8 million/WAR with 1.38 bWAR puts the value in terms of dollars at $11,040,000.
Of course, prospects have value to an organization even if they never make an impact at the big league level. How did the draft picks look while they were minor league prospects? Seven of the 20 draft selections (McCullers, Johnson, McMahon, Reed, Adams, Riley, and McKenzie) made a Top 100 prospect list by Baseball America. Of those, the average peak ranking was approximately 48th.
There is a limitation to consider here. It would be better to examine the players after a much longer stretch (ten years after being drafted, for instance) to assess the longer development time needed for younger players more accurately. This wasn’t possible since 2012 was the first draft to use the bonus pool system. This led to multiple players drafted in 2015 (Austin Riley and Triston McKenzie) being incompletely evaluated. They are both well on their way to being successful -even all-star- players in baseball.
Considering this limitation, I evaluated what the numbers would look like if both players continued to progress at realistic levels over the next several years. Of the remaining players who haven’t completed five full seasons, I project only Riley and McKenzie to continue to accrue bWAR in the next three seasons. Let’s evaluate what the numbers look like if each player continues to progress. I used the 2022 ZiPS projection for McKenzie and a basic projection for Riley’s 2022-2023 and McKenzie’s 2023-2024 bWAR (all in red).
Even with this future projection for Riley and McKenzie, the average production only increased to 2.28 bWAR, which would be $17,840,000 with the $8 million/WAR estimate above.
Cost Value – What About the Bonus Pool?
While Kantrovitz’s evaluation of WAR projection is proprietary, what isn’t secret is the information provided by New York Mets’ owner Steve Cohen. His Twitter reveal that “draft picks are worth up to 5x their slot value to clubs” said the quiet part rather loud with respect to the valuation of MLB draft picks. In 2021, the 43rd selection had a slot value of $1,729,800 (overage value added $86,490). Using the Cohen coefficient (TM) of five times the slot value we arrive at a figure of $9,081,450.
Putting This in Context
Now that we have three figures ($11.04 M, $17.84 M, and $9.08 M) approximating the value of the 2022 Cubs second-round selection, it’s important to address the most important question “should the Cubs sign a free agent tied to a qualifying offer?”. For an all-star caliber player, I offer the opinion that it shouldn’t prevent the Cubs from signing that player. The obvious example is Carlos Correa who is expected to top Corey Seager’s 10 year/$325 million contract. Even using the most aggressive value estimate of $17.84 million, it only represents 5.6% of the $325 million in Correa’s contract.
|Player||Contract w/ MLBTR Estimate||% Contract with $9.08M Estimate||% Contract with $11.04M Estimate||% Contract with $17.84M Estimate|
|Carlos Correa||10 yrs/$320M||2.8%||3.5%||5.6%|
|Trevor Story||6 yrs/$126M||7.2%||8.8%||14.2%|
|Eduardo Rodríguez||5 yrs/$77M (signed)||11.8%||14.3%||23.2%|
If an organization is dishing out a mega contract, the QO penalty serves as a small tax on the contract. For players whose market “crashes” and they sign for below the projected figures, the QO carries a higher hit percentage-wise. Every team in baseball has an internal projection system for what each player will produce in value over future seasons. In the event that a QO-tied player signs a shorter, lower total cost deal, the team needs to weigh that higher percentage penalty against the opportunity to bring in surplus value and flexibility.
It’s hard to fault the Detroit Tigers for splurging with the Eduardo Rodríguez signing. As an organization on the rise, the Tigers incurred a significant penalty but brought in a pitcher to supplement the young players on the roster. It was a move that I was glad the Chicago Cubs did not pursue. Trevor Story offers an interesting middle ground. Depending on his contract length and structure, he may be completely worth the additional QO penalty, but it is a line that Jed Hoyer and Carter Hawkins need to be committed to ink the deal.
The Baseball World Waits
While the Cubs look to be aggressive and “spend intelligently”, signing a QO player is unlikely. In the event that players like Carlos Correa or Trevor Story’s markets dip post-lockout and where the Cubs’ projections identify the contract as providing surplus value, you can bet that the organization will be aggressive in negotiations. Until then, the baseball world watches and waits for the lockout to end and the free agency frenzy to begin again.