Baseball Debates the Cost of the Future

Troy Glaus worked hard in college, refining the skills he would need to succeed in his chosen profession. When he left UCLA for the real world this year, a company hired him for its training program, believing that he could develop into a consistent producer within several years.

Fortunately for Glaus, his chosen profession is baseball. And rather than lure Glaus with a starting salary of $50,000 or perks like a company car, the Anaheim Angels paid him a $2.25-million signing bonus, in line with the prevailing rate in the industry.

The Angels signed the check, then dispatched Glaus to the minors, hoping he can join their lineup in two or three years.

Is that too much, as many baseball executives say? Angel President Tony Tavares calls the bonus structure “a moronic trap.”

Not enough, as some player agents and officials of the players’ union contend? Newport Beach agent Scott Boras, a prominent advisor for amateurs drafted by major league baseball teams, charges owners with “abusing the amateur player.”

Or just confusing, as several major league players suggest? Tim Salmon, probably the Angels’ best player, made $3.5 million this year, in his fifth major league season.

“What seems out of whack is that players are getting major league money before they’ve proven they’re major league players,” Salmon said.

Trip to the Minors Is Always First Stop

As the Cleveland Indians and Florida Marlins complete the 1997 World Series, the 28 other teams are devising strategies for building--and affording--championship teams. In a sport in which owners claim to bleed red ink, the price of reserving and developing talent for the future sometimes can spell the difference between profit and loss this year. In no other industry is it common for buyers and sellers to so violently disagree over the cost of raw talent.

Professional football and basketball teams pay millions of dollars to their top recruits--often millions more than baseball teams do--but the finest baseball prospects cash in first and then endure an apprenticeship in the minor leagues.

The San Antonio Spurs paid top NBA draft pick Tim Duncan $10 million to play alongside David Robinson for three years.

The St. Louis Rams signed top NFL draft pick Orlando Pace to a seven-year, $29.4-million contract that included a $6.3-million signing bonus, but the Rams pushed him into their starting lineup five games into the season.

Even if Glaus never plays a game for the Angels, according to University of Chicago economist Allen Sanderson, his $2.25-million bonus reflects the extremely limited supply of potential employees capable of hitting or throwing a 95-mph fastball.

“However exorbitant it may seem to you and me, he may be only getting a fraction of what he’s really worth,” said Sanderson, who teaches on the economics of sports. “It’s hard to sympathize with somebody getting $2 million and saying it’s not enough. But it may well be that’s what the market is for somebody with those skills.”

The Angels paid Glaus, their first-round draft pick, a bonus that exceeded the annual salary of all but four players on their 25-man opening-day roster. The Arizona Diamondbacks, who will begin their first season next spring, spent four times that much last year on San Diego State’s Travis Lee, a first-round pick who won free agency on a technicality.

With 21 teams in pursuit--the Angels and Dodgers included--the Diamondbacks paid Lee $10 million. Money-back guarantee? Not included. Of every three first-round picks, one fails to graduate to the major leagues.

“If you’re trying to find some sanity in all this, there isn’t any,” Tavares said. “What we’ve gotten to in sports is paying what the market value is. It doesn’t matter whether there’s any logic attached to it.”

Sport Wrestles With Growing Problem

As teams burn millions of dollars on high-risk investments, baseball fiddles. As pro football and hockey experiment with restrictions on rookie salaries, baseball officials struggle to identify the problem.

Baseball owners adopted a draft three decades ago to answer twin concerns that echo today: How can we distribute talent more evenly and less expensively? In 1964, as owners spent more on amateur bonuses than player salaries, the Yankees advanced to the World Series for the 14th time in 16 years, and the Angels infuriated opponents by lavishing a then-outlandish $205,000 on University of Wisconsin star Rick Reichardt.

Rick Monday, whom the Kansas City Athletics selected as the first-ever No. 1 pick in 1965, signed for $104,000. Ken Griffey Jr., arguably the world’s best baseball player, signed with the Seattle Mariners for $169,000 in 1987.

“This creation of an artificial market stopped the true market dynamic from working,” Boras said.

Not until 1988, when Andy Benes commanded $235,000 from the San Diego Padres, did a No. 1 draft pick receive a bonus greater than Reichardt’s.

Inflation soared in the late 1980s, with Boras encouraging players not to sign--their only leverage--unless teams increased bonuses in line with rising broadcast revenues, franchise values and major league salaries driven skyward by two decades of free agency.

First-round signing bonuses have multiplied five times since 1990, with the average first-round bonus this year--$1.2 million--matching the average major league salary.

The Angels spent $1.5 million to sign 27 players they drafted in 1994. They paid $1.575 million to sign Darin Erstad, the first overall pick of the 1995 draft, and half again as much to sign Glaus, the third overall pick in 1997.

“I wasn’t looking to break any records,” Erstad said. “If guys start taking less than the players before them, they’re going to hurt the players coming up.

“But to say that a guy that gets $2 million deserves more than Ken Griffey Jr. when he was the No. 1 pick, obviously that doesn’t work out.”

Salmon, the Angels’ player representative, and union Executive Director Donald Fehr each said no player has demanded the union address the escalating bonuses. If nothing else, Salmon said, the union stands for free enterprise.

The cases of Lee and of Matt White, another $10-million free agent last year--suggest, Fehr said, “that the value paid to draft choices is considerably understated in most cases.”

However, for those major leaguers in search of a line, J.D. Drew has drawn it. The Philadelphia Phillies initially offered $2.05 million to Drew, the No. 2 pick in this year’s draft, just above the $2 million the Pittsburgh Pirates paid Kris Benson, the No. 1 pick in 1996. Drew remains unsigned.

Boras, his advisor, said Drew wants $11 million, not just because Lee got $10 million last year but because two teams told Boras they would pay $11 million. Boras, who would not identify the teams, has cited technical violations in filing two grievances that could render Drew a free agent.

“The free-agent stuff, where they get $10 million, that’s entirely too much money,” Erstad said.

Said Doug DeCinces, Glaus’ agent and a former all-star third baseman for the Angels, “Do I think J.D. Drew is worth $10 million? Honestly, no.

“But, if he gets it, he is. Who are we to say he isn’t? If an organization thinks he’s that good, they’ll take the risk, and it’s all business.”

Insurance Is Not the Answer

And just as a record company eventually would fire an executive who signed a string of bands that failed to become stars, Boras said teams should fire scouts who sign players who don’t develop.

Can teams minimize that risk? From 1983-90, the Dodgers selected six pitchers in the first round of the draft. All flopped, four because of injury, but Executive Vice President Fred Claire said the team did not carry insurance on any of them.

“It makes more sense to insure a player with a high salary as opposed to a player with high hopes,” Claire said.

Teams cannot ensure the success of players, Tavares said, and often find the cost to insure health prohibitive, particularly for pitchers, for whom an arm injury can restrict--or end--a career. Players risk losing the only career they may have prepared for, and teams risk writing off millions of dollars.

“There is a very simple reason why far fewer of baseball’s draft choices make it than in football or basketball,” Fehr said. “We tend to draft at 18 or 19, not at 22 or 23.”

The New York Mets signed Ryan Jaroncyk for $850,000 two years ago. He quit last summer, at 20.

Courts would prohibit baseball from limiting its draft to college graduates, but assessing talent, character and physical maturity is far easier in college than amid wildly uneven competition and conditions in high school. No team, after all, drafted Lee out of high school.

In an era when an NBA team commits $126 million to one player--all-star Kevin Garnett, who first rejected $103 million from the Minnesota Timberwolves--baseball’s problem appears almost quaint.

Said Claire, “Somebody turned down, what, $100 million? Can anybody truly relate to that?”

The Timberwolves’ fans may not be able to relate, but at least they can watch Garnett play. Why should the Angels pay Glaus $2.25 million--or the Diamondbacks pay Lee $10 million--before they reach the majors?

“Everyone thinks they’re paying them for performance. They are not,” Boras said. “They are paying for rights acquisition.”

NBA players like Garnett generally leap from the draft onto the varsity, with free agency available after three years. But after about 40,000 baseball draft choices in 34 years, only 17 players started their careers in the major leagues, and only three--Bob Horner, John Olerud and Dave Winfield--avoided a subsequent detour to the minors.

Minor league salaries start at $850 a month, and top draft picks usually require one to four years in the minors. Players must complete six seasons in the majors before they can declare free agency.

Jaret Wright, who pitched Cleveland to victory Wednesday in Game 4 of the World Series, signed as a graduate of Anaheim’s Katella High School for a $1.2-million bonus in 1994. The Indians, however, can unilaterally determine his salary through 2000 and need not worry about losing him to free agency until 2003.

“The player’s services are not available to anyone else in the industry,” Boras said. “It makes you that much stronger and your competitors that much weaker.”

But as bonuses get larger and market values rise, some teams feel compelled to select players as much for their signability as for their ability. No longer do the worst teams automatically select the best players, defeating a primary purpose of the draft.

“You have to look at all the morons on all the teams--and I include us in that--for paying the [amounts] we pay,” Tavares said. “It is a moronic trap. All it takes is one of us to act like a moron and the rest of us are forced to follow.”

Sanderson considers the owners monopolists, not morons. He says his studies indicate that free agency impacts competitive balance far more than does the draft.

“All that does is redistribute money from players to owners,” Sanderson said.

Consider the Marlins, whose roster includes only one of their first-round picks, catcher Charles Johnson. The Marlins advanced to the World Series after spending $89 million on free agents last winter.

American businesses--particularly in law, finance, engineering and computer science--often lure college students with signing bonuses. Of course, if that Stanford University engineer can’t stand the rain at Microsoft’s suburban Seattle headquarters, he can accept a job offer from a Silicon Valley company.

In major league baseball, as in the NFL and NBA, you must negotiate exclusively with the team that drafts you. In that context, Fehr said, cries of protest against spiraling bonuses ring hollow.

“That’s like complaining about competition,” Fehr said. “I’m sure the utility companies think their rates are too low. I’m sure GM would rather not have Ford and Chrysler.”

And so the Diamondbacks roll the dice with Lee, and the Angels with Glaus. Winning bets pay off at, oh, the turn of the century.

“Until you’ve played the game for five or six years, I don’t think you’ve proven anything,” Erstad said. “There’s a lot of guys who get a lot of money in the first round and don’t turn into a major league player.

“That’s the way it is, but that’s not fair. What is?”

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No. 1 Picks

The players picked No. 1 in the major league baseball draft this decade, and how they fared this season:

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Year Player Bonus This Season 1996 Kris Benson $2 million * Pitched in the pitcher, Clemson minors. 1995 Darin Erstad $1.575 million * First baseman for outfielder, Nebraska the Angels. 1994 Paul Wilson $1.55 million * Pitched in the pitcher, Florida State minors, missed almost all of the season after shoulder surgery. 1993 Alex Rodriguez $1 million * Shortstop for infielder, Westminster Seattle Mariners. Christian High, Miami 1992 Phil Nevin $700,000 * Utility player with infielder, Cal State the Detroit Tigers. Fullerton 1991 Brien Taylor $1.55 million * Pitched in the pitcher, East Carteret minors, injured his High, Beaufort, N.C. shoulder in a bar brawl in 1993. 1990 Chipper Jones $275,000 * All-star third infielder, The Bolles baseman with the School, Jacksonville Atlanta Braves. Fla.

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Researched by BILL SHAIKIN / Los Angeles Times