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Staturday: Pays your dues and takes your chances

When last we met I was defending Billy Beane’s track record in turning 1st round picks into big league starters. From 2002-2006 the A's have had twice as much success in converting their 1st round picks into big league starters. Drafting is not an exact science, focusing on the draft picks that failed to turn out is to ignore the obvious: Billy Beane and his staff have been better at this task then every other front office in baseball.

In spite of that success, the A’s ended the 2007 season needing to rebuild and the farm system was completely inadequate to the task. How could that be? Why did Beane have to trade two young, talented and inexpensive players in Dan Haren and Nick Swisher to procure the bushel of prospects necessary to revive the team? Somewhere, something must have gone horribly wrong for things to have ended up like they have. Injuries, of course, ruined Oakland’s 2007 season but that doesn’t fully explain what caused the overall weakness within the farm system. Every organization has prospects get hurt, draft picks that don’t pan out... it’s the nature of the beast. So why was Oakland’s farm system so unprepared to help the big league team?

Continued after the jump.

Here's my theory:

Billy Beane has been a penny-pinching fool and his lack of foresight wrecked the farm system. He methodically engineered the crisis that compelled him to trade two of his best players for prospects in an attempt to revitalize a franchise that only a year ago was poised to become the dominant entity in a split market. Beane foolishly threw away this golden opportunity because he seemed to forget one of the most basic rules of sports... talent wins. The cold, hard truth is talent costs money and Beane turned his back on two crucial sources for acquiring amateur talent under the guise of frugality or stupidity, take your pick. The result is the Oakland A’s team you see today, a rebuild project expected to take 2-3 years if all goes right.

A couple weeks ago I asked myself "How do teams acquire the talent they need to succeed?" Being an A’s fan, I focused my efforts on prospects and how various teams acquired them. To narrow the scope of my search I focused on the Top 10 prospects within each organization as compiled by Baseball America. To make sure I didn’t pick a fluke year I’ve reviewed BA’s Top 10 lists for every team from 2005-2008. That’s a sample size of 1200 prospect rankings (not to be confused with 1200 players, several players appear in multiple Top 10 lists) and I then divided that sample group into methods of acquisition.

I ended up dividing the data into 6 separate means of acquisition. Based on previous research we’ve seen that 1st round picks have the highest chance of turning into big league regulars so all 1st round picks, including supplemental 1st round picks, were grouped into one column. Again, based on previous work we’ve seen that there is very little difference in the success rates of 2nd and 3rd round picks therefore I grouped them together. All draft picks from the 4th round on were grouped into a third column. Already there was a potential problem. What about draft picks that signed for bonus money well beyond slotted money? What about draft-and-follow signings? So I created a 4th column to take care of the "Bonus Babies". Borrowing (and slightly modifying) from Nate Silver’s work at Baseball Prospectus, any player drafted in the 1st round and who received a signing bonus at least $500K over the recommended slot is considered a bonus baby. That means a player like Justin Upton, who was drafted 1st overall in 2005 but signed for $2.1 million over slot, is counted as a bonus baby and not as a typical 1st round pick. Outside of the 1st round, any player that received a bonus at least 25% higher then the recommended slot would be counted as a bonus baby.

Then I created a column for all the Free Agents teams sign out of Latin America and Asia. The vast majority of this group was amateur talent but a few veterans from Japan’s professional league made it here as well. Lastly I created a grouping of Top 10 players who were acquired via trade, which only seemed fitting since 7 of Oakland’s 2008 Top 10 came via trade. Which segues nicely to my next point: This study does not factor in the recent trades of Johan Santana and Erik Bedard. Sorry, but the study was done before these deals went down.

What I found was a little surprising and more then justifies my harshness towards Beane. I wish I knew how to paste a spread sheet to a diary but since I don’t, hopefully this won’t get too screwed up in the formatting.

How the Top 10 Prospects were Acquired

Year 1st Rnd 2nd/3rd Rnd 4th> Rnd Bonus Free Agent Trade

2008 32.7% 16% 14% 16% 12.7% 8.7%
2007 29 % 22% 16.3% 15.7% 12.7% 4.3%
2006 28.7% 19% 17% 12.3% 16.7% 6.3%
2005 24% 17.7% 20.3% 10% 18% 10%

A couple minor items of interest before I go back to condemning Billy Beane. The reason why I stopped at 2005 was because Baseball America’s records for signing bonuses were very limited prior to the 2003 draft. Several players from the 2002 and earlier drafts had prominent spots in the 2005 book and while I instinctively knew that some of the later round picks had received above slot bonuses it became harder and harder to find that information. I strongly suspect the 20.3% figure in the 4th> Rnd column is partially inflated by players who should be in the Bonus category. Another tidbit: 1st, 2nd and 3rd round picks made up roughly 50% of the 300 Top 10 prospects over the past 3 years.

But the real story to come out of my research was the percentage of Top 10 prospects that came from the Free Agent and Bonus columns. Although the edge has shifted between the two categories, combined they consistently make up 28-29 percent of the Top 10 lists. This is where Beane has failed the A’s. In the 4 years I studied the A’s have had 6 of their 40 Top 10 selections (15%) come from the Free Agent column and they’ve had ZERO prospects in the Bonus column. The rest of baseball has been twice as effective in tapping these two sources of talent and it is entirely because the A’s have not devoted financial resources towards these ends. The blame for that lies completely with Billy Beane. He’s the guy that decides where the money goes and it wasn’t going towards splurging on amateur talent.

Let me paint an even starker picture for you. 3 players accounted for all 6 of those selections for Oakland. Javier Herrera (3 times and looking like a bust) Jairo Garcia (2 times, then he became Santiago Casilla) and in 2008 Henry Rodriguez. Herrera was signed in 2001, Garcia/Casilla in 2000 and Rodriguez in 2003. Has it always been this way? Not at all. In 2002 the A’s had 6 different Latin American signees in their Top 30. Compare that to the 4 year stretch from 2004-2007 when Oakland only had 6 Latin American players TOTAL make their Top 30 lists. Since 2001 the A’s have only signed 2 players that would eventually make a Top 30 list, Rodriguez (2003) and Alexi Ogando (2002). How about bonus babies? The last draft and follow the A’s signed that made Oakland’s Top 30 list was Rich Harden back in 2001. The A’s have not signed a single "bonus baby" in the last 4 drafts and possibly not since they signed Harden. Billy Beane simply has not been willing to pony up the money to go after these types of quality amateur talent.

So what kind of investment are we talking about, anyways? Well, last year the Seattle Mariners spent the second highest amount on signing bonuses in Latin America.

They dropped $2.9 million on 10 players.

The Yankees blew everyone away by investing roughly $6 million on 10 players.

Just for comparison’s sake (and because I shake my head every time I think of it) the A’s have kicked in over $9.5 million to rid themselves of Jason Kendall and Mark Kotsay while acquiring Jerry Blevins, Joey Devine and Jamie Richmond. I know, I know sunk costs and all that but is there any doubt who invested their money better? While it’s true that the A’s have renewed their efforts in Latin America, having signed 8 prospects in the past couple months, it’s going to be a while before we see results in Oakland. P Arnold Leon is the old man of the bunch at 19. Two are 18, three are 17 and the other two are 16. Leon may be fast-tracked after his success in the Summer and Winter Mexican leagues but the rest are at least 4 years away from the Show, if they make it at all. That gap wouldn’t be a problem if Oakland had been seriously investing since 2001 but that hasn’t been the case. An annual $3 million investment in Latin America and the A’s are among the big spenders, why wasn’t this happening for the last 6 years?

Cheap ownership? You might have had a case back in the Schott/Hoffman days but Wolff’s group has controlled the team since April of 2005. In a recent interview with the Chronicle, Wolff said that before the Haren and Swisher trades were made the 2008 player budget was set at $72 million and he had been willing to go up from there. Beane himself has said that he’s had to convince Wolff NOT to spend more money on personnel. Does anyone really want to argue that an owner so inclined would be against spending a few extra million on prospects if Beane had asked for the cash? Spend $3 million a year on 10 players and if even 1 prospect from each group pans out you’ll be ahead of the game. But you’ve got to spend the money to start.

What about the bonus babies? Glad you asked. Guess who spent the most on their draft picks last year? Go on, guess.

The New York Yankees spent a shade over $8 million to sign their 2007 draft class and they gave over-slot bonuses to 5 of their top 10 picks. It isn’t enough that the Yankees can afford any experienced free agent that tickles their fancy, no, they’re willing to spend more then anyone else on amateur talent as well. Sure, they haven’t won a World Series for a while now but dropping $14 million a year on the best amateur talent in the world doesn’t hurt their chances in the long run. $8 million sort of serves as the magical barrier in the draft bonus world. It’s been breached only 3 times in the last 4 drafts, once each by the aforementioned Yankees, the D’Backs and the Cubs. The Marlins and Twins have both come within $500K of reaching the mark and they don’t have any more financial resources then the A’s do. The A’s spent $6.3 million back in 2004 but just $4 million and change last year. It was even worse in 2006 when the A’s spent $1.6 million in the draft. I doubt Oakland spent $1 million in Latin America that year, how can a team that is supposed to live or die on the farm system only invest $2.5 million (if that) on amateur talent in a year? It makes no sense.

So what can the A’s do to help speed up the healing process?

Like Wolff said the A’s originally budgeted $72 million for player salaries. After the trades of Kotsay, Haren and Swisher the expected expenditures total (round numbers) $52 million. That leaves $20 million burning a hole in some bank account somewhere. Set aside $2 million dollars to hire additional scouts and to pay for their travel expenses. These scouts will be used through out North and South America. Set aside another $4 million to use for signing Latin American talent, with the intent of going after the top young talent, the guys that the big money teams try to sign. Traditionally, the premium international prospects are signed between July 2 and August 20. I’m not sure why that is but Baseball America says that’s how things work out.

Take another $4 million and set it aside to use as a supplement to whatever moneys have been allocated for the draft. Better yet, add enough cash to give Beane a cool $8 million to work with for signing his 2008 draft class. I know some people on AN think the A’s will never go over slot to sign draft picks because of Wolff’s relationship with Selig but keep in mind that the Commissioner’s Office has done nothing to punish the teams that went over slot last year. So the A’s options are take advantage of the extra cash and not be penalized by the governing body or hold on to the cash and risk further eroding the fan base by trading more established players in order to acquire the necessary prospects to create a competitive team by the time the new stadium in Fremont is built. And the fear that Selig might do something to stop the A’s from building a new stadium as punishment for offering over slot bonuses is nothing more then a hoax. Bud Selig is going to sabotage a team from having a publicly funded stadium built for their use? Ha! This is a perfect opportunity to maximize the 2008 draft in an effort to further strengthen the farm system and Beane would be a fool to act otherwise.

Beane’s been foolish enough on these matters, thank you very much, and I’d appreciate it if he moved on to a more enlightened phase.