The Case for MLB Teams Rebuilding Through Free Agency vs. the Draft

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The Case for MLB Teams Rebuilding Through Free Agency vs. the Draft
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What can other rebuilding teams learn from the Nationals?

When you look around Major League Baseball, it's not hard to spot the teams that are in the middle of a rebuilding phase of some kind.

The Houston Astros and Chicago Cubs definitely stand out. Teams like the Kansas City Royals and the Seattle Mariners are perpetually trying to rebuild. The Boston Red Sox have just entered a rebuilding phase. The Pittsburgh Pirates teased the end of their rebuild this season, but it's clear now that they still need some work.

Generally speaking, rebuilding a baseball team requires patience. To properly rebuild, a team must draft and develop, and this is an effort that takes years to pay off.

But what about free agency? Sure, not every team can afford players like Albert Pujols and Prince Fielder, but is there some sort of way for rebuilding teams to use free agency as a means to speed up their rebuilding processes?

Conventional wisdom tells us that teams are better off staying patient. In the baseball lexicon, the word "rebuilding" is practically synonymous with drafting and developing, and history tells us that teams that draft and develop well tend to start winning games and keep winning games before long.

Teams that rely on free-agent spending sprees, on the other hand, have a decidedly mixed track record. It's too hard to get the bang for your buck when you're spending millions of dollars on free agents.

However, there's an argument to be made for both sides of this particular coin, and you know what that means.

Yup, it's time for an immediate discussion.

 

Drafting and Developing: If Done Well, It Really Works

Back in July, I did a little study of the last 10 World Series winners that was meant to determine the best way to build a championship baseball team.

The conclusion of that study, such as it was, was that it makes a hell of a lot more sense for teams to develop their own star players than it does to buy them off the free-agent market. Teams that develop their own stars tend to spend a lot less money on more good players, and the wins tend to follow swiftly.

For example, the Philadelphia Phillies were able to win it all in 2008 largely because they killed it with their draft picks in the years leading up to their championship season. According to Baseball-Reference.com, four of Philly's top six position players by WAR in 2008 were draftees. Their names: Chase Utley, Jimmy Rollins, Pat Burrell and Ryan Howard. Cole Hamels, their top pitcher in 2008, was another draftee.

Justin Sullivan/Getty Images
Lincecum was the 10th overall pick in the 2006 draft. Cain was the 25th overall pick of the 2002 draft. Wilson was a 24th-round pick in 2003.

The San Francisco Giants also built a championship team by drafting and developing. Per Baseball-Reference.com, their top pitchers in 2010 were Matt Cain, Tim Lincecum, Jonathan Sanchez, Brian Wilson, Madison Bumgarner and Sergio Romo, all six of whom were draftees.

San Francisco's offense was a pretty diverse mix of free agents and trade acquisitions in 2010, but by far the best position player the Giants had was Buster Posey. He was the fifth overall pick of the 2008 draft.

The 2011 St. Louis Cardinals also owed much of their success to drafting and developing. They drafted Albert Pujols way back in 1999, and subsequent years saw them draft Yadier Molina, Allen Craig, Jon Jay, Jason Motte and Jaime Garcia. They were, and still are, an example of a consistent winner that knows how to successfully integrate the fruits of their drafts.

The Boston Red Sox pulled off this very same trick back in 2007, when they won the World Series with a mix of veterans left over from their championship season back in 2004 and a mix of young players that included Dustin Pedroia, Kevin Youkilis, Jacoby Ellsbury, Jon Lester and Jonathan Papelbon.

In subsequent years, the presence of these players effectively helped the Red Sox avoid the kind of rebuilding phase they now find themselves in.

These teams go to show how huge of an impact draftees can have on a team if they're chosen and developed with care. Likewise, this is a point that can be proved by the two best teams in baseball this year: The Washington Nationals and the Cincinnati Reds.

The Reds went 15 years without making the playoffs between 1995 and 2010, finishing fourth or lower in the NL Central eight times. Things have turned around for them largely thanks to the players they've brought up through their farm system in recent years.

According to Baseball-Reference.com, three of Cincinnati's top four players by WAR this season were draftees: Joey Votto, Zack Cozart and Todd Frazier. Jay Bruce, who has 34 home runs this season, is another Reds draftee who has turned into a very good major league player.

Cincinnati's good work in recent drafts has paid off in other ways too. Case in point, they traded two former first-round picks in Yonder Alonso and Yasmani Grandal to the San Diego Padres as part of a package that netted them Mat Latos. He's 13-4 with a 3.52 ERA this season, and those numbers don't come close to reflecting how good he's been over the last few months of the regular season.

For their part, the Nationals had made exactly one postseason appearance in over 40 years of existence before this season. Upon moving to Washington from Montreal in 2005, they finished in last place in the NL East five times in six seasons.

Greg Fiume/Getty Images
Harper was the No. 1 overall pick in 2010. Strasburg was the No. 1 overall pick in 2009.

They currently have the best record in baseball, and it's almost entirely thanks to the fruits of recent drafts. Bryce Harper, Ryan Zimmerman, Ian Desmond and Danny Espinosa were all drafted by the Nationals, as were Stephen Strasburg, Jordan Zimmermann, Ross Detwiler and Drew Storen.

Washington's farm system was deep enough this offseason to allow them to trade four prospects—all originally Nationals draftees—to the Oakland A's for Gio Gonzalez. He won his 21st game of the season on Thursday night, and he could very well win the Cy Young Award when all is said and done.

Not too bad for a team whose farm system was ranked as the 26th best in all of baseball by Baseball America back in December of 2009. 

Lest you take that as a sign that publications like Baseball America never know what they're talking about, that year BA had the farm systems of the Texas Rangers, Tampa Bay Rays and San Francisco Giants ranked as the best in baseball. At last check, all three of them are doing pretty well, in no small part thanks to their young players.

We could go on and on (and on and on and on) about all the various organizations that have built great teams by drafting and developing over the years, but you get the idea. It's incredibly hard to gauge which prospects are going to turn into star players and when, but the teams that show good eyes for talent tend to benefit from their foresight in the long run.

However, this shouldn't be taken to mean that drafting and developing is the only way to achieve and maintain success at the major league level. Spending a few bucks in the right places can have a big payoff.

 

Finding Good Free-Agent Value: Hard, But Not Impossible

Teams that are smack in the middle of rebuilding phases don't tend to go out and make big free-agent signings. They often lack the funds, for one, and they're also deterred by the reality that a single really good player can only make so much of a difference in baseball.

This doesn't mean that poor teams can't use free agency to get to where they want to be. They just need to know where the best value is located, and it's not always located in the same place where players like Pujols and Fielder are found.

Oddly enough, two teams that know where to look for great value better than most are two teams that have the envy of the rest of the league: The New York Yankees and the Texas Rangers.

The Yankees have been the most consistently successful team in baseball over the last two decades. As far as most baseball fans are concerned, though, the only reason the Yankees have been so successful for so long is because of their bottomless pockets.

This is by no means an unfair perception. The Yankees would not have won the World Series in 2009 without signing CC Sabathia, Mark Teixeira and A.J. Burnett the previous offseason. Their deep pockets also netted them players like Alex Rodriguez (who opted out of his contract after the 2007 season), Johnny Damon and Hideki Matsui in years prior.

One thing people have to realize about the Yankees, however, is that it's not so easy for them to draft and develop talent. Their consistent success is great, but it means they're always picking lower in the order when the draft rolls around.

Since the Yankees miss out on the top talent in the draft every year, they're forced to find good young talent elsewhere. To this end, they're pretty good at finding talent on the international amateur free-agent market.

Case in point, Mariano Rivera, the greatest relief pitcher in the history of the game, was signed as an amateur free agent way back in 1990. He went on to become a very expensive player, but he was originally picked up by the Yankees for pennies.

Elsa/Getty Images
The Yankees can't draft the best young players, so they go and sign young players like Robinson Cano. Clever devils.

Robinson Cano was also signed as an amateur free agent way back in 2001. That same year, the Yankees signed Melky Cabrera as an amateur free agent.

More recently, the Yankees signed Jesus Montero as an amateur free agent in 2006. He was ranked as the No. 9 prospect in all of baseball in 2011 by MLB.com, and his reputation as a great young hitter allowed the Yankees to trade him to the Seattle Mariners for a talented young pitcher in Michael Pineda, who was signed as an amateur free agent in 2005.

The Yankees were no doubt hoping that their trade of a former amateur free-agent signee would work out like the deal the Texas Rangers made in 2007.

That year, the Rangers traded Edinson Volquez, who signed with the Rangers as an amateur free agent in 2001, to the Reds for Josh Hamilton. All he's done since joining the Rangers is win an MVP award and hit 142 home runs in five seasons. 

Going forward, we're probably going to see players such as Jurickson Profar, Martin Perez and Leonys Martin become everyday players in the majors with the Rangers. All three of them are top prospects, and all three were signed as amateur free agents.

Both the Yankees and the Rangers haven't just had success with cheap international free agents. They've also had success with just plain cheap free agents.

For the Yankees, you can take Eric Chavez and Russell Martin as good examples. Both of them have enjoyed nice career rebirths in pinstripes over the last couple of seasons, and this year they're combining to make just south of $9 million, according to Cot's Baseball Contracts. That's the kind of money that virtually any team can spend.

The Rangers, meanwhile, are getting an excellent season out of Joe Nathan, who is only making $7 million this season. Colby Lewis was having a very good season before he got hurt, and he's only making $3.25 million this year. The Rangers picked him up as a free agent in 2010 after he had pitched in Japan in 2009.

The Rangers are thus showing that they are very much capable of duplicating a trick that the Yankees have been pulling for years. Yes, they are going to spend a lot of money on established players, but they're also going to be very active in trying to find cheap players who will contribute either immediately or down the road. As long as they're able to do so successfully, they'll be able to avoid having to go into a full-on rebuilding mode.

Granted, we're talking about one team that is never rebuilding and another that won't have to rebuild for quite some time, but a team doesn't need to be as rich, powerful or successful as either the Yankees or Rangers in order to wisely spend money on cheap players.

Andy Lyons/Getty Images
Aroldis Chapman suddenly probably isn't being paid enough.

We can go back to the Reds, for example. They don't and likely never will have a track record for making huge free-agent signings, but they were aggressive in going after Aroldis Chapman in 2010. That deal has ended up working out pretty well for them this season.

Elsewhere, the Oakland A's have gotten better-than-expected production out of Yoenis Cespedes, whose $36 million deal is already looking like a steal. The small-market A's have thus proved that even they can score on the free-agent market.

In Minnesota, Josh Willingham has been a huge bright spot in what has otherwise been a horrid season for the Twins. He's only making $7 million, and he'll only make $7 million in 2013 and 2014 too. The Twins could be a quality team again by the time the 2014 season rolls around, at which point he could be a star player on a contender. 

Maybe the best free-agent signing of the past offseason was the Rays' signing of Fernando Rodney. They're paying him less than $2 million this season, and he's turned out to be the best closer in the American League.

The point of all this is that the term "free agent" shouldn't necessarily be associated with huge Pujols and Fielder-like signings that not every team can make. The big contracts are the exception to the rule when it comes to MLB free agency.

There's really good free-agent value out there. All teams have to do is find it.

Of course, we could be having a different discussion a few years down the line. Major League Baseball's finances are changing every day, fortunately for the better. And as a result, there's going to be more money for teams to spend.

 

New TV Deals: More Money for Everyone!

If we learned anything from the movie Moneyball, it's that Major League Baseball's economic structure just isn't fair, man. The rich teams buy all the good players, and the poor teams can't buy squat.

As I outlined above, that's not entirely true. The rich teams can indeed afford all the star players, but both rich and poor teams alike can find star players for cheap if they play their cards right. For teams at both ends of the spectrum, it all boils down to a very simple reality: It's not how much money you spend, but how you spend it.

But I get that this isn't what fans of poor teams want to hear. What you guys want to hear from me is how the heck your team can make free-agent signings that provide instant gratification. Because, you know, there are only so many Josh Willinghams out there, and there's no way in heck teams like the Kansas City Royals and Seattle Mariners can afford players like Fielder and Pujols.

...Or can they?

In the very near future, they just might. There's a lot of TV money floating around Major League Baseball these days, and more is coming very soon.

As John Ourand of Sports Business Daily reported in August, ESPN and MLB have agreed to a new eight-year deal worth $5.6 billion. The league will thus get $700 million per season from ESPN starting in 2014, more than double the $306 million per year that the league is getting from ESPN now.

Because national TV revenue is split evenly among MLB's 30 teams, each team will go from getting around $10 million per season to roughly $23 million per season just from ESPN's broadcasting rights. That's money they can put into payroll.

It gets better. Ronald Blum of the Associated Press has reported that MLB is nearing new deals with Fox and Turner Sports that will double the amount of money the league gets from both networks to around $800 million per season.

That's almost $27 million per team if these deals come to fruition. Combined, the new TV deals could put roughly $50 million per season in each team's pocket.

Now, this could lead to a couple different scenarios.

Jim Rogash/Getty Images
MLB has also worked out a deal to have all new cameramen shooting the games (No, not really).

One, the poor teams will use their newfound TV riches to go out and try to compete with the rich teams on the free-agent market. It's possible that we'll see teams like the Indians and Twins trying to outbid the Yankees and Red Sox for a star player.

It's either that, or agents will see all this extra money floating around and jack up their clients' prices. If it comes to that, it will be like nothing changed. The rich teams will still have more money to spend on free agents than the poor teams, and they'll keep getting all the best free agents. The only real deterrent will be the luxury tax threshold.

However, this is assuming that there will still be top-notch free agents out there for rich teams to buy in the not-too-distant future. As Joe Sheehan of Sports Illustrated pointed out (h/t CBSSports.com), all of the extra TV money could keep players from hitting the free-agent market in the first place:

This is already starting to happen. The Reds signed Joey Votto to a big contract before they had to worry about him hitting free agency, and the Pittsburgh Pirates did the same thing with Andrew McCutchen.

Whether they spend all this new money on free agents or their own soon-to-be free agents, the point is that teams are going to have money to spend. Going forward, it's going to be a lot harder for teams to cry poor while keeping a straight face.

 

The Grand Conclusion

So which is the best way for teams to rebuild: Via the draft or via free-agent signings?

The most obvious answer, and indeed the most correct answer, is a little bit of everything. It's imperative for all teams, whether we're talking rebuilding teams or non-rebuilding teams, to put a lot of work into the draft, and no team can afford to slack off when it comes to the scouting of international prospects.

On the regular free-agent market, there's always good value to be had if teams know where to look.

None of this should be news. "A little bit of everything" is exactly what every team in MLB does, and that's not changing anytime soon.

But if the question is whether a team should lean heavily one way or the other, there's no question in my mind that building a consistent winner by drafting and developing is the way to go.

Let's face it. The Nationals and the Reds aren't where they are now without the draft, and recent World Series winners like the Phillies and Giants wouldn't have gotten to celebrate without their own efforts in drafting and developing. 

The best part about drafting and developing is that it's a game in which the rebuilding teams have an advantage over the teams that have tons of money and tons of wins on their records every year. The bad teams draft higher in the order, and that means more talent for them.

The way in which MLB's financial situation is changing makes drafting quality players even more preferable than ever before.

With so much money being spent on high draft picks these days, we're seeing more and more high draft picks rushed to the majors more quickly than they may have been in years past. Teams want to make sure they're not wasting their million-dollar players in the minors.

The sooner teams get their best young prospects contributing in the majors, the more grounds they have to lock them up long term before they hit free agency. The new TV money is going to make it a lot easier for them to do that.

Thus, teams that draft and develop well in the near-to-distant future ideally won't have to worry about improving via free agency. They'll have all the good players they need at prices they like.

 

If you want to talk baseball, hit me up on Twitter.

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