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Tigers could parlay $8 million MLB draft slot bonus into multiple talented prospects

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No player selected first overall has received a bonus within $1 million of the top slot value.

Kansas City Royals v Detroit Tigers Photo by Duane Burleson/Getty Images

The Detroit Tigers will make the first selection in the 2018 major league baseball amateur player draft this Tuesday. Along with that pick comes a “slot bonus” allocation of $8,096,300. The club is not required to give all that money to the first player chosen. Ideally, they can save some of that money to spend in a later round to select a player who otherwise would not sign at that slot.

For example, the Minnesota Twins selected high school shortstop Royce Lewis with the first overall selection last season, and paid him $6.725 million, which was more than a million dollars lower than his slot allocation of $7.77 million. Minnesota then gave a $2 million bonus to their third round selection, a high school pitcher, although the slot value for that pick was just $775,000. The biggest bonus paid in the 2017 draft went to second round selection, Hunter Greene who signed with the Cincinnati Reds for a record $7.23 million, which is $36,000 above slot value.

In fact, no player selected first overall in the draft slotting era, which began in 2012, has received an actual bonus within $1 million of the amount allocated for that slot. Teams picking first overall always have saved some of the cash to spend in later rounds.

The Tigers also reached with their second selection last year by selecting 19-year-old Reynaldo Rivera, a 6’6 first baseman who was tagged as a probable fourth rounder, but with huge power and big upside. They paid Rivera well below slot at $850,000 when the allocation for the slot was $1.15 million. They spent the savings from earlier rounds in the fifth round on high school catcher Sam McMillan, giving him a $1 million bonus when his slot value was just $314,000. At that price, college can wait.

Detroit has a total bonus pool of $12,414,800 for the first 10 rounds of the draft. Last year’s pool for the Tigers was $6,520,100. The slot values start dropping by about half a million dollars per slot at the top of the draft, and go down from there. The assigned slots are 4.2 percent higher than last year, an increase tied to MLB’s annual revenues. Detroit’s No. 1 overall choice is up from $7,770,700 in 2017.

Teams can allocate their bonus pools any way they like in those rounds. However, if a team fails to sign a player, they lose the slot bonus money allocated for that selection. They can not spend it on other draftees.

So let’s say that the Tigers, as expected, select Auburn pitcher Casey Mize with the first overall pick. They don’t have to give Mize the full slot value of $ 8 million plus. They could sign him for less and spend the savings later, to convince a player to turn professional. Early indications this year are that Mize would command a signing bonus closer to the actual top slot value than any player previously drafted first overall.

No team wants to suffer the embarrassment of having the first overall pick in the draft and not being able to sign him, and his agent will be driving a hard bargain, but the player selected first only has so much leverage. If he refuses to sign, he goes back to college if he hasn’t graduated, while the team will receive another pick in next year’s draft that is one slot lower. The Tigers would have the second overall selection in 2019 if they fail to sign their first overall pick in 2018. Fangraphs.com ran a mock draft with this speculation:

“...ultimately we think Detroit will pick Mize and sign him for a bonus between $7.4 million (slot at 2) and $8.1 million (slot at 1), likely toward the lower end of that range.”

Getting a bonus of $ 7.4 million would be quite a nice prize, and establish a new record, even if it is below slot value. Mize would have to be selected first overall again next year in order to improve on the offer.

Having the first overall selection gives Detroit the advantage of being able to negotiate terms with players in advance of the draft, so they can be fairly sure that the player they select will sign. If they’re not happy with a player’s demands, they can select another player and pocket some savings.

The Tigers’ second selection will be 44th overall. After the first round, there will be five compensation picks given to the Tampa Bay Rays and Kansas City Royals, who have two selections each and the Cleveland Indians who have one pick for losing free agents over the winter. In fact, the Royals and the Rays will each have a few more dollars to spend overall than Detroit, because those extra selections come with slot bonuses that are added to their pools.

Next, there are eight “competitive balance” selections, called Round A, given to smaller market teams. There will be six more balance picks in round B, after the second round. Those picks are the only ones that can be traded.

So, let’s say that the Tigers can save $500,000 on their first round bonus. The 44th slot comes with a value of $ 1.625 million. Add a half million dollars to that, and the bonus is about that of the 32nd overall pick in the first round. If a player falls farther than expected and is inclined to stay in school another year, the Tigers could use their extra bonus dollars to convince a player to turn pro.

One thing that will surely not happen is any team spending well beyond their bonus pool amount. That is something that has never happened in the draft slotting era, because, while it is not strictly prohibited, the penalties are far too severe.

Prediction: The Tigers draft Casey Mize first overall, and pay him a record $ 7.5 million bonus, saving almost $600,000 to spend later in the draft.