Drafting by Revenue

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:

R = 0.95157

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.