Drafting by Revenue

Jonathan Dyer-USA TODAY Sports

Is the MLB Draft unfair to low-revenue teams?

Rays principal owner Stuart Sternberg was quoted on the record as saying the current draft order in baseball is essentially hogwash. Here's the quote as captured by the great Howard Bryant:

"There's one issue that trumps everything, and we've been banging the table on it... It's all about the amateur draft. God bless everybody, but for the Cubs to pick second this year, and the Red Sox to pick sixth? Draft order should be based on revenue. We and others get penalized for success. We've had six years of not having a pick in the top 20. I'm not saying we need the No. 1 pick every year, but really?"

There's much to be said about inequality in baseball. There's something about the structure of the game and the gross disadvantages of teams like the A's and Rays that brings the best and brightest out of people. You could offer that such inequalities are the reason baseball has become so great to watch at a macro level, or you might even offer it as the reason you are a Rays fan. David and Goliath appeals to us all.

Still, baseball has made great strides toward equality. Revenue sharing, for instance, is a brilliant institution that kept the sport thriving and growing to 30 teams during the last fifty years. Without that system in place, it's arguable that the Rays never come to Tampa Bay.

Then again, there are other measures that hurt the Rays when they try to fly under the radar, like penalties for overspending internationally. Now the Rays can no longer spend as freely as they would wish, and an unwanted light has been shown on places strategies they'd rather keep in the dark. The Rays dropped a ton of cash overseas during the 2012-2013 season, and took penalties for doing. Teams took notice and followed suit when they thought the following draft class might be weak, and some even started trading for cap space on the international market. Now the Rays are once again the little guy, in an area where they were previously landing arms like Jose Mujica and Jose Castillo without much notice.

All of this is to say that MLB does a lot of good and some bad in leveling the playing field; but MLB tries, and that's important. So let's talk about the draft. Should draft order be based on something other than the previous year's record, like revenue?

2013 Revenue by Team

The two leading organizations that provide details on team revenue are Forbes and Bloomberg. Those figures are graphed below, provided in millions for 2013:

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There are only five teams where the lists differ by more than $40M: The Yankees, whose revenue streams are the most difficult to publicly identify between concessions, merchandising, and international investments, the Cubs, the Phillies, the Red Sox, and curiously the Marlins.

Forbes in particular thinks St. Louis and Atlanta have higher streams than Bloomberg identified, but otherwise the list chart pretty closely.

Simple Draft Order

To look at how revenue could impact draft order, I will use a simple draft order of listing teams by wins, from least to most. This will not account for situations where teams forfeited picks or added new ones, and will thus include all 30 teams.

Team 2013 Avg. Rev.
HOU 1 195.5
MIA 2 179.5
CHW 3 217.5
CHC 4 293
MIN 5 218
SEA 6 217.5
PHI 7 290
NYM 8 251.5
TOR 9 214
COL 10 196
MIL 11 201
SFG 12 308
SDP 13 201
LAA 14 264
ARI 15 193.5
NYY 16 515.5
BAL 17 204
WAS 18 237
KCR 19 179
CIN 20 207
TEX 21 258.5
LAD 22 309
CLE 23 193
TBR 24 178
DET 25 253.5
PIT 26 194.5
ATL 27 239
OAK 28 181
STL 29 266.5
BOS 30 381

This is the simple draft order as a result of wins and losses last season, and includes an average of the Forbes and Bloomberg reported revenue for 2013. If you were to average each team's 2013 simple draft order position with it's ranking in the revenue listing, you would get the following:

Team 2013 Avg. Rev. New Order
MIA 2 179.5 1
HOU 1 195.5 2
COL 10 196 3
CHW 3 217.5 4
MIL 11 201 5
MIN 5 218 6
SEA 6 217.5 7
ARI 15 193.5 8
KCR 19 179 9
SDP 13 201 10
TOR 9 214 11
TBR 24 178 12
NYM 8 251.5 13
BAL 17 204 14
CLE 23 193 15
CHC 4 293 16
OAK 28 181 17
PHI 7 290 18
CIN 20 207 19
PIT 26 194.5 20
LAA 14 264 21
WAS 18 237 22
SFG 12 308 23
TEX 21 258.5 24
NYY 16 515.5 25
ATL 27 239 26
DET 25 253.5 27
LAD 22 309 28
STL 29 266.5 29
BOS 30 381 30

Using this perspective, where revenue and wins are weighted equally, the Rays rise 12 slots in the draft order this summer. Other high risers are the Athletics (11) and the Royals (10); meanwhile, the biggest drops belong to the Cubs (-12), Phillies (-11), and Giants (-11). Half of the teams moved more than five slots in either direction.

Here's that same logic applied to the infamous draft from last summer. As a reference point, I will continue to use the current year rankings in revenue:

Team 2012 Avg. Rev. New Order
HOU 1 195.5 1
KCR 8 179 2
COL 3 196 3
CLE 5 193 4
MIA 6 179.5 5
MIN 4 218 6
PIT 13 194.5 7
ARI 15 193.5 8
SDP 12 201 9
TOR 9 214 10
TBR 22 178 11
MIL 16 201 12
SEA 11 217.5 13
CHC 2 293 14
NYM 10 251.5 15
OAK 27 181 16
CHW 17 217.5 17
BAL 23 204 18
BOS 7 381 19
PHI 14 290 20
DET 19 253.5 21
CIN 29 207 22
STL 20 266.5 23
LAA 21 264 24
ATL 26 239 25
LAD 18 309 26
TEX 24 258.5 27
WAS 30 237 28
SFG 25 308 29
NYY 28 515.5 30

In this situation, the Rays and Athletics have the most to gain, each rising 11 slots in the draft order, while the Red Sox and Cubs each fall heavily (-12). In this year, however, only twelve teams deviate by five or more slots.

Three Year Averages

When a certain team is having an outlier season, it's interesting to at least see a running average of draft position over a three year window.

Team 2012 3yr '12
HOU 1 3.7
CHC 2 5.0
SEA 11 5.3
KCR 8 6.3
PIT 13 7.7
MIA 6 8.7
CLE 5 8.7
COL 3 10.0
BAL 23 10.3
MIN 4 11.0
NYM 10 11.0
SDP 12 13.7
ARI 15 14.3
TOR 9 14.7
LAD 18 16.3
CHW 17 16.7
BOS 7 16.7
MIL 16 17.7
WAS 30 17.7
LAA 21 18.0
OAK 27 18.0
DET 19 20.0
STL 20 20.7
CIN 29 22.7
SFG 25 23.7
ATL 26 23.7
PHI 14 24.7
TBR 22 25.0
TEX 24 25.0
NYY 28 28.3

This immediately causes a distortion of draft position for teams like Boston and Washington, but leaves the Rays and Cubs on opposite ends of the spectrum. If you equally weight current avg. revenue standings with the three year average of draft order positioning, is the list more "fair"?

Team 2012 3yr '12 Avg. Rev. New Order*
KCR 8 4 179 1
HOU 1 1 195.5 2
MIA 6 7 179.5 3
CLE 5 6 193 4
PIT 13 5 194.5 5
COL 3 8 196 6
SEA 11 3 217.5 7
ARI 15 13 193.5 8
BAL 23 9 204 9
SDP 12 12 201 10
OAK 27 21 181 11
MIN 4 10 218 12
TOR 9 14 214 13
CHC 2 2 293 14
TBR 22 28 178 15
MIL 16 18 201 16
NYM 10 11 251.5 17
CHW 17 17 217.5 18
CIN 29 24 207 19
WAS 30 19 237 20
DET 19 22 253.5 21
LAA 21 20 264 22
LAD 18 15 309 23
ATL 26 26 239 24
BOS 7 16 381 25
STL 20 23 266.5 26
TEX 24 29 258.5 27
PHI 14 27 290 28
SFG 25 25 308 29
NYY 28 30 515.5 30

Here we have an even starker contrast when comparing actual simple-draft order placement to what is the New Order* -- again, equally weighting average revenue performance with a three year average of draft order performance.

In this situation, the Red Sox now fall 18 slots in the draft order, while Oakland rises 16 slots. The Phillies fall 14, while Baltimore rises 14 slots, Washington and Cincinnati rise 10 slots, and the Rays rise 7 slots based on 2012.

By comparison, here are three year averages for 2013:

Team 2013 3yr '13
HOU 1 1.0
CHC 4 3.7
MIN 5 3.7
MIA 2 5.3
SEA 6 6.7
COL 10 7.7
NYM 8 10.0
SDP 13 10.7
CHW 3 11.0
KCR 19 11.0
TOR 9 11.7
CLE 23 14.3
BAL 17 14.7
PIT 26 16.0
PHI 7 17.0
LAA 14 18.0
MIL 11 18.0
ARI 15 18.3
SFG 12 19.0
LAD 22 19.3
BOS 30 19.7
CIN 20 21.0
WAS 18 21.3
OAK 28 22.0
DET 25 23.3
TBR 24 23.3
STL 29 24.0
TEX 21 24.3
NYY 16 24.3
ATL 27 24.7

We already see some more telling averages for Pittsburgh, Philadelphia, and Boston. Here's what happens when you equally weight the 2013 three year average with the revenue listing:

Team 2013 3yr '13 Avg. Rev. New Order*
MIA 2 5.3 179.5 1
HOU 1 1.0 195.5 2
KCR 19 11.3 179 3
COL 10 7.7 196 4
CLE 23 14.3 193 5
SDP 13 10.3 201 6
MIN 5 3.7 218 7
SEA 6 6.7 217.5 8
PIT 26 16.0 194.5 9
ARI 15 18.3 193.5 10
BAL 17 14.7 204 11
TOR 9 11.7 214 12
CHW 3 11.0 217.5 13
TBR 24 23.3 178 14
MIL 11 18.0 201 15
NYM 8 10.0 251.5 16
OAK 28 22.0 181 17
CHC 4 3.7 293 18
CIN 20 21.0 207 19
LAA 14 18.0 264 20
PHI 7 17.0 290 21
WAS 18 21.3 237 22
SFG 12 19.0 308 23
DET 25 23.3 253.5 24
LAD 22 19.3 309 25
ATL 27 24.7 239 26
TEX 21 24.3 258.5 27
BOS 30 19.7 381 28
STL 29 24.0 266.5 29
NYY 16 24.3 515.5 30

Now you might say Boston is back where they belong, and in truth the New Order* only moves the Red Sox by two draft slots. The Cubs, Phillies, and Yankees have the farthest to fall (-14), while the Giants (-11) and the White Sox (-10) drop double digits, while the Indians have the most to gain (18). Other heavy risers would be the Pirates (17), Royals (16), Athletics (11), and Rays (10).

Under this method for 2013, ten teams would change draft position by ten or more slots, and seventeen would move by five or more slots in either direction.

Does this double count success?

I've already acknowledged that this is an incredibly simplistic approach, and one that I think paints an accurate enough portrayal of disparity in the draft order, but there is a relationship between revenue and wins that I haven't discussed above.

Wins brings playoff runs, and the playoffs bring more revenue. It's a compounding factor for the biggest earners. When you order teams by revenue, you're catching some of the record, but only on the high end of the spectrum.

Even if the Rays win 95 games and win the World Series three years in a row, they still won't make as much money as an 85-win Yankees team. Only for teams with more similar revenue streams to New York will the "make money by winning" effect matter. That's why it's probably a good idea to factor in the three-year record.

It would be a shame to penalize teams for having one good year that they may not be able to sustain. To do so would provide an incentive not to make a playoff push. By looking at one-year revenue and three-year success, you're capturing two different things:

  1. A team with an influx of money can (and from the fan's perspective should) use that money to make themselves better. Therefore they need less help in the draft.
  2. A team that wins consistently needs less help in the draft than a team that wins for one year (perhaps due to career years from several players, or from a weak division).

Combine the two, and I don't think anyone gets penalized too harshly. Then again, Mike Trout was drafted 25th overall in 2009, so picking near the end of the draft won't preclude teams from acquiring talent. (Trivia: 2009 was the third year in a row the Angels had finished in the top three in wins. Using a three year average, weighted equally with revenue, the Cubs would have picked 25th that season, and the Angels 28th.)

Coda: A final example

The best way to summarize this is to focus on four teams in particular: Boston, Chicago (NL), Oakland, and Tampa Bay.

2013 average reported revenue:

- Boston: $381M (2nd)
- Chicago: $293M (5th)
- Oakland: $181M (27th)
- Tampa Bay: $178M (30th)

Simple draft order for the last three years: ('11, '12, '13)

- Boston: 27th, 7th, 30th
- Chicago: 7th, 2nd, 4th
- Oakland: 11th, 27th, 28th
- Tampa Bay: 24th, 22nd, 24th

Simple draft order for the last three years, weighted equally with revenue:

Boston: 28th, 19th, 30th
Chicago: 17th, 14th, 16th
Oakland: 4th, 16th, 17th
Tampa Bay: 12th, 10th, 12th

Three-year average record simple draft order for the last three years:

- Boston: 28th, 16th, 21st
- Chicago: 9th, 2nd, 2nd
- Oakland: 11th, 21st, 24th
- Tampa Bay: 26th, 28th, 26th

Three-year average record, equally weighted against current revenue listing:

- Boston: 29th, 25th, 28th
- Chicago: 20th, 14th, 18th
- Oakland: 6th, 11th, 17th
- Tampa Bay: 14th, 15th, 14th

What method is the most fair seems quite subjective, but when as many teams seem to have something to lose as they do something to gain by incorporating revenue even at the most simplistic levels, it's doubtful owners would ever be able to vote through a change in the draft order.

A decision would have to be made by the Commissioner's Office, to be sure, and there is no clear winner for a method by which that would be accomplished.

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