Perhaps a dope/mod will see fit to move related posts from the June MLB News thread (starting here).
Nick Faleris of Baseball Prospectus has a really great review of the disaster, how it unfolded, the failure by the Astros to have a backup plan, the leveraging job pulled on the Orioles by Kevin Gausman & his agent after the 2012 draft, and the enormous dice roll Aiken & Close might have made by passing up a guaranteed $5M payday (see: Whitson, Karsten).
Nick Faleris of Baseball Prospectus has a really great review of the disaster, how it unfolded, the failure by the Astros to have a backup plan, the leveraging job pulled on the Orioles by Kevin Gausman & his agent after the 2012 draft, and the enormous dice roll Aiken & Close might have made by passing up a guaranteed $5M payday (see: Whitson, Karsten).
As the clock struck seven on the evening of June 5th, the Houston Astros stared with wide eyes at a deep draft board. The organization held a handful of early picks and $13,362,200 in available spending, the most of any team, putting it in an position to load up its minor-league system with high-level draft talent. But 42 days and 22 hours after the Astros announced the first selection of the 2014 draft, the front office somehow found itself with one of the lightest pulls of the draft, a bruised reputation, and public scorn from both the MLB Players’ Association and one of the game’s most high profile agents.
Understanding BATNA; Where the Astros Lost Their Leverage
In any high-leverage negotiation—indeed in any “basics of negotiation” class—the first task of the negotiators is to identify their best alternative to a negotiated agreement, or “BATNA.” Essentially, this is a party’s best case scenario if they are unable to come to terms with the person with whom they are negotiating.
At the top of the draft, leverage is fairly balanced, as a general matter. Teams are seldom, if ever, interested in risking the loss of their largest slot allotment and highest valued talent acquisition, while players are highly incentivized to grab the big payday that comes at the top of a draft, rather than risk injury or poor performance in subsequent years. Because both parties are highly incentivized to reach an accord, a great deal of resources are put into vetting potential draftees to make sure their bonus expectations and the drafting team’s spending expectations align.
The Astros seem to have done a solid job of identifying their targets, and the aggregate expense of those targets. The selection of Aiken and Nix, as well as the relatively quick announcement that agreements were reached in principle, indicate that all parties were on the same page. However, Houston’s comfort with its plan was also its undoing.
Because the Astros were so comfortable with the demands of their draftees and the amount of money the organization had to spend, the front office failed to build in an adequate failsafe for a complication that should be foreseeable, especially when selecting a pitcher: What if something unexpected comes back in the medicals?
There is currently no formal mechanism for teams to get access to pre-draft medicals (something that will likely be remedied in future CBAs), so organizations are left to review whatever the player decides to make available. Anything a player elects to be made available to one team must be made available to all teams. Because of this huge unknown hanging over these draft picks—particularly pitchers—it is incumbent on a front office to cover its bases and account for the possibility that the goods they plan to buy might have some unseen defects. To say this game planning is of paramount import when dealing with the no. 1 selection in an entire draft class would be a massive understatement.
As noted above, the Astros had essentially one fallback option in their draft class, and that was Mac Marshall. His demands seemed to match up with those of Nix, making him a fine fit to check the box on that front, but the team had no plan whatsoever to account for the scenario they were actually presented with. What if there was something non-catastrophic in Aiken’s medicals that added to the risk profile?
All medical concerns are not created equal, and while the industry has found some level of consensus that, say, a frayed tendon is a significant concern, there is a large gray area. Multiple medical experts could disagree on the level of risk that should be assigned. That is where Aiken’s “structural issue” falls. The result is additional leverage on the team’s side, but that leverage is limited because the player's side might not agree on the level of risk—and, therefore, might not agree on how much leverage was lost. So long as there is relative uncertainty there, parties have to be reasonable as to the extent to which leverage in the negotiations has shifted.
The final piece here is the idea that simply saving money on the pick has limited utility. We will flesh this out below, but the best case scenario when additional risk surfaces with respect to a drafted player is that player is willing to take a discount such that you can now sign other players you have drafted, giving you a shot at bringing in and developing another asset that could save your organization millions down the line.
While we can’t be certain that Aiken and the Astros would have reached an agreement at $6 million or $5.5 million, having one or two other backup options willing to sign for various bonus amounts would have given the Astros something else worth pursuing—options that split the difference between the full agreed-upon $6.5 million and a 20 percent slash.
The Astros painted themselves into a corner by not taking the simple step of spending even one additional pick in the top 20 or so rounds on a college bound player whose profile they found interesting and who could potentially be signed for somewhere between maybe $500,000 and $1 million. Instead, they put themselves in a position where only an indisputably significant condition uncovered in Aiken’s medicals would free up enough money for the team to hedge its bets with additional acquisitions. When the Astros neglected to adequately plan for unknown medical complications they ceded any opportunity to leverage the results of those medicals.