In an October 26 on-line chat about the 2007 draft (subscription required to read), Baseball America analyst Jim Callis made this interesting observation:
Q: Jerred Gracey from York, Pa asks:
Why don’t more teams spend on the draft? It would make sense to get a lot of good young talent, they will play for several years for dirt cheap and you can always trade some of them to get a veteran?
A: Jim Callis: I answer this question all the time, but it keeps coming up because it’s an important question in this era of draft slotting frenzy. I think some teams use the commissioner’s mandate as an excuse to not spend on the draft, but the real answer is that any team that doesn’t take advantage of the system is just hurting itself. MLB has it set up so that anyone who wants more than slot money will fall to a team that will pay the freight, and only a few teams will do so. Why not take advantage? The average big league team spends $70 million on big league salaries and $5 million on the draft. If you made that $65 million and $10 million, you wouldn’t notice much difference at the big league level but you’d grab a ton more talent in the draft. This is the only way for smaller-revenue teams to compete with the larger-revenue teams for talent, but only the larger-revenue teams are taking advantage of slotting.
Bottom line, it’s a lot wiser to invest your money in future talent than it is to stuff it down the rathole for some "name" veteran with a bloated salary.
(This means you, A-Rod.)