The Brady Aiken Situation Could Have Future Consequences for the Astros

As numerous sources have reported, the first overall pick in this year’s Major League Baseball draft, Brady Aiken, remains unsigned as Friday’s signing deadline quickly approaches.  The stated reason for this predicament is that, after agreeing upon a deal, a potential “elbow ligament” issue which was discovered during a routine physical.  Since the agreement was not yet finalized, the Astros – citing the team’s concern regarding the potential injury – drastically lowered their offer to Aiken.

Such a situation is certainly not unprecedented (see R.A. Dickey, Barret Loux), and many people believe that the Astros are negotiating as any other club would do under the circumstances.    Others believe that the Astros are using this alleged “medical issue” to strong-arm Aiken into taking a lesser deal, which would free up money to sign other draft picks.

The reality is that it really does not matter what the truth is; all that matters is how the Astros’ actions are perceived because, to borrow a phrase from Lee Atwater, “Perception is reality.”

Background

Preliminarily, to fully understand the situation, some context is necessary.  (If you know the general rules regarding how the Rule 4 draft works, you can just skip ahead to the next section.)

For the Rule 4 draft, each team has a finite amount of money it can utilize to sign drafted players.  Major League Baseball assigns bonus pools to each team, which constitutes the total monetary allotment a team is permitted to use towards bonuses for signing players drafted in the first 10 rounds.1   This budget is a sum of the monetary value assigned by the league to each pick in the first ten rounds.  The “slot values” assigned are not hard caps but, instead, are to be utilized as guideposts for teams and players in negotiating bonuses.

1  Additionally, after the first ten rounds, any signing bonus that exceeds $100,000 will     also count towards the team’s bonus pool.

If a team exceeds its bonus pool allotment, then very draconian penalties are assessed, which include being taxed and forfeiting future draft picks.  The underlying idea was to achieve competitive balance so that small market teams are not at a disadvantage when attempting to sign players.

Additionally, if a team fails to sign a player who was drafted in the ten rounds, there are two major ramifications.  First, the money associated with that slot is subtracted from the team’s overall bonus pool  For example, if a team’s total draft pool allotment was $12 million and the team failed to sign its 10th pick, which had a slot value of $4 million, the team’s allotment would therefore be $8 million.

Second, if a player who fails to sign was drafted in the first two rounds, the team is awarded a compensation pick the following season.  If a player in the first round is not signed, then the team will be awarded a compensation pick in the next year’s draft one slot behind this season’s pick.  In other words, if you do not sign the 15th overall pick, next season you would receive the 16th overall pick as compensation.  (The rules for failing to sign a second round pick are different as teams receive supplemental picks after the completion of the third round.)  The major caveat to this rule is that in order to be eligible to receive the compensatory pick for an unsigned player, the team must have offered the unsigned player at least forty percent of the assigned slot value

In this year’s draft, the Astros’ pool allotment was $13,363,300.  The slot value assigned for the first overall pick was $7,922,100, and forty percent of that amount would be $3,168,840.

Timeline of Events

  • On June 7th, Jim Callis reported that Aiken and the Houston Astros had agreed upon a contract, which included a $6.5 million bonus.  While the bonus equaled the largest bonus ever given to a high school pitcher, the amount was more than $1.4 million below the allotment for that pick.  This savings was significant because the Astros drafted other players with known signability issues due to strong college commitments (Jacob Nix, Mac Marshall).  The savings from Aiken’s deal could theoretically be utilized to offer bonuses to other players above the slotted value.
  • On June 17th, the Astros and fifth-round pick Nix agreed to a deal with a $1.5 million signing bonus, which greatly exceeded the assigned slot value of $370,500.  Nix, a high school pitcher, committed to UCLA, and even he seemed stunned as he told MLB.com, “It’s pretty crazy we were able to come to an agreement in the fifth round.”
  • On July 7th, one month after originally agreeing to the deal, John Heyman reported that Aiken had “an elbow ligament issue” and that the Astros were looking to revise the deal.  Heyman originally reported that the revised offer was approximately $5 million.
  • On July 15th, Ken Rosenthal revealed that the revised offer was actually $3.16 million, which was the minimum amount the Astros could offer to guarantee receiving a compensatory draft pick if Aiken failed to sign.
  • Despite passing his physical, the Astros informed Nix that the team’s prior offer was being rescinded, at least until the deal with Aiken is completed.  In other words, the Astros have made Nix’s deal contingent upon Aiken’s deal.

Reaction to the Situation

In response to this series of events, both Casey Close, the family adviser (hopefully, not agent) to Nix and Aiken, and Tony Clark, the head of Major League Baseball Players Union, have cried foul.  Close, a well-respected agent who does not normally issue comments on the status of contract negotiations, harshly criticized the Astros’ tactics:

“We are extremely disappointed that Major League Baseball is allowing the Astros to conduct business in this manner with a complete disregard for the rules governing the draft and the 29 other clubs who have followed those same rules.”

Clark echoed these sentiments:  “We believe that it is a clear violation of the rules being attempted solely to avoid penalty.  The Astros made a deal with Jacob Nix and should honor that agreement.”

For their part, Major League Baseball and Astros general manager Jeff Lunhow maintain that no rules have been violated.  “[W]e are adhering to the rules at every point and we are confident that this has been the case,” Lunhow reportedly said.  A spokesman for Major League Baseball offered that the league “is comfortable that the Houston Astros have acted in complete accord with major league rules.”

What it All Means

There may be a legitimate disagreement regarding the condition of Aiken’s elbow; it certainly would not be the first time that doctors have disagreed over a diagnosis.  The Astros may be taking a position that any team would under the circumstances.  (See the Orioles and Grant Balfour this past offseason.)  This situation could also be driven by Close’s desire to preserve his client’s reputation as Aiken’s future value make take a significant hit if teams view him as an injury risk.

Furthermore, from a purely numbers standpoint, it makes sense that the Astros must now condition Nix’s deal on Aiken signing.

The Astros have already signed nine of the team’s eleven picks in the top ten rounds, spending about $5,000,000.  The only two players drafted in the top ten rounds who have not signed are Aiken and Nix.  In order to stay under  the draft pool allotment, the Astros can only spend $8,471,500 on these two remaining players.

The slot values for Aiken ($7,922,100) and Nix ($370,500) totaled $8,292,600.  In June, the Astros agreed to pay Nix ($1.5 million) and Aiken ($6.5 million) for a combined total of $8 million, which is below full slot value for these two combined picks.  However, by lowering their offer to Aiken in the wake of injury concerns, there is a greater likelihood that Aiken does not sign.  If Aiken does not sign, then his full slot value of $7,922,100 would be assessed against the Astros draft pool, which combined with Nix’s deal, would total $9,422,100 against the cap.  In that situation, the Astros would exceed their pool allotment and be subject to penalties.

Having said all that, it must be remembered that baseball does not exist in a vacuum.  Therefore, while the Astros’ position may be logical and within the rules, this situation may have some very serious unintended ramifications going forward.  Indeed, from a larger picture perspective, the Astros are walking a very fine line.

Current players, agents, and potential future draft picks are all watching this saga play out.  The Astros are attempting to rebuild the team into a contender through savvy signings and smart draft picks.  However, will a future free agent want to come to Houston?  Will a future potential draft pick even want to be selected by the Astros?  Or, are the Astros setting themselves up for an Eli Manning-San Diego Chargers situation where, due to concerns about the team’s management, a player refuses to play for the team?

The Astros front office already took some heat earlier this season due to the perceived strong-arming of prospect Jonathan Singleton.  Singleton was promoted only after signing a multi-year contract, which caused some current and former players to criticize the deal.  Again, there was nothing per se wrong with that deal and it did not violate any rule.  (And, from a lot of perspectives, the deal made sense for both the player and the team.)  But, at the end of the day, it is all about how the team is perceived.  And, right now, many see these situations as examples of the Astros’ front office manipulating the system through loopholes and doing so at the expense of young players who have little leverage.  This is not a good look for a franchise looking to rebuild after three straight 100-loss seasons.

The Astros’ front office may view themselves as the smartest guys in the room, but they best tread lightly in this situation.   Alienating the MLB Players’ Union and potential future draftees is not a great way to lay the foundation for future success.

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