Wednesday, December 20, 2006

Giants Drafting Strategy: Bonuses On Par

{First a note: I'm on vacation for the last two weeks of the year, so postings will be sporadic, depending on what I'm doing. I had planned to do more this week but unfortunately my wife caught the flu, right when we got sitters for the kids so that we could have some quiet time together for our anniversary. Best laid plans yadda yadda... So I haven't been, and I'll probably not be, checking my e-mail for comments posted and won't be replying until after the New Year. I had a number of posts in various stages of completion and will try to get them out before the year ends. But just in case: Happy Holidays to everyone and a Happy New Year!}

I have seen some fans complain that the Giants tend to draft "down" in order to pay less in bonuses to the draftees, and thus save money. In other words, they draft a lesser player - say, 5th round talent in the 3rd round - in order to save money in bonuses for that player by pre-arranging the bonus amount, a lesser amount, with the player ahead of time.

From the times I had seen the numbers, I never got that impression but it's not like I systematically looked at each bonus and determined "yea" or "nay". So I decided to check things out, like I am wont to do.

Methodology

So I checked the data that I had collected before on bonuses for the Giants and calculated the ratio of the bonus paid the player against the average bonus paid the next five paid draftees, then subtracted 100% to get the difference between the Giants bonus and the average bonus for the next five draftees. If the Giants were really paying that much less, the ratio should be under 100%. I chose the next five average because then people cannot accuse me of picking and chosing the data to fit one hypothesis or another, if I say the data say above or under paid. If the theory of under-drafting held, then the bonus should be clearly below the bonuses paid for the average of the bonuses for the five draftees after the Giants pick.

Now, there were some exceptions because sometimes there would be a high school draftee that another team would overpay for because they wanted him to sign. First off, out of the five draftees ahead of the Giants pick and the five draftees after the Giants pick, that is, of those 10 picks, the highest bonus was automatically excluded from the data. That tended to get rid of these high school draftee exceptions.

Next, if any of the next five draftees got paid a bonus that was higher than the bonus of half of the five draftees ahead of the Giants pick plus the Giants pick (i.e. 3 of these 6 picks), that bonus was deemed to be an exception bonus and was not included in the average. This covered any other draftees that also got a high bonus, obviously it is not within the average range if a back 5 draftee got a bonus that is higher than the bonuses for a majority of the front 5 plus the Giants pick.

Similarly, if any of the next five draftees got a bonus that was half that of the Giants bonus, that would be taken out of the average as well. That would bring down the average greatly and make it seem like the Giants are more generous with their bonus than they really were. And if the amount was half that of the others, then clearly that team was probably drafting higher to save money as well.

I only covered the first five rounds as that's when the bonuses get pretty small, relatively, and underpaying won't really save much. As I found out, I probably could have cut it off at the 3rd round, but since I did the work, I thought I would present it anyhow. Besides, for some of the drafts, I only had data up to the 3rd round anyhow.

Giants Bonuses for First Five Rounds from 2001 to 2006

2001: Data for first three rounds showed that the Giants did not underpay anyone except for one. 3 were paid over 10% more than the average back five draftees and the 1 was underpaid about 5%. While I will count this as an underpaid, I believe that this was an exception because it was Todd Linden who was underpaid.

What happened for him, for those who don't recall the details, his first agent dickered around with the Giants and for some reason Linden didn't realize what was happening. Finally Linden fired the agent but I can't remember if he got another agent or started negotiating himself. Either way, Linden really wanted to sign and by then the Giants had more of the leverage (or perhaps had spent their money elsewhere already) and offered him less than what picks around him was getting. He accepted because he wanted to start his professional career. He did not get the lowest bonus of the 11 picks, though, there were 3 lower bonuses paid, once I took out the exceptions and took in more picks.

So for 2001, only 1 out of 4 were underpaid.

2002: Only had data for three picks and all 3 were paid above the average, about 5% above the back five picks. Thus far, the Giants appear to overpay more for 1st round picks, but that could just be something every team does.

2003: OK, this is the year that apparently seared into people's minds that the Giants are cheap. Out of seven picks that I had data for in the first five rounds, four were underpaid, though again, the first round picks got paid within range, about 7% above the back five picks. After that, four of the next five picks got underpaid, with only Schierholtz getting 5% above the average. I point him out because I had noticed that someone had pointed out Schierholtz as a player we drafted ahead in order to save money, probably because he was an "out of the blue" pick that no one expected, I don't think he was on anyone's draft list of top amateur prospects.

Still, if look at the underpayments, the only two who were really underpaid were the round 3 and round 4 picks, who got 44% and 55% less than the average for the next five picks. The other two underpaids were just barely under, at -2.7% and -1.5%. So there were really only two who appeared to be paid as if from a latter round. The other two were really within range but I will count them as underpaids.

2004: Had data for four picks and the first three were paid about 10% above the average for the next five, while the fourth was paid at about the same rate, up by only 0.8%. So all four were paid over the average for the next five.

2005: Only had data for two rounds as the Giants had lost most of their early round picks by signing free agents. Both were paid above average, about 7% more.

2006: I had data for five draft picks. All were paid above the average for the next five draft picks, most were in the 7-8% range, with one low and the other much above.

Findings

Out of 24 draft picks , the Giants underpaid 5 of them, or 21% of them. However, as I noted, Linden was a unique situation, plus 2 of the others were barely paid under the average. Only 2 was truly paid significantly lower than the other draftees around that pick.

The average bonus paid by the Giants was 2.4% higher than the five picks after average. If you summed up all the bonuses and divided by the sum of the averages, the Giants paid 9.1% higher than the average for the five picks after their pick.

This reflects the bias in the Giants payment for first round picks (not that other teams don't have the same bias; that would be another study) and/or their first picks. There were four draftees who got more than 10% more. Lincecum (R1; first pick) got 27% more bonus than the five picks afterward averaged. Lowry (R1; second pick) got 16% more. EME (R2; first pick) got 12% more. And Hennessey (R1; first pick) got 11% more. There were also a few more who got in the 9% range: Bowker (R3; second pick), Cain (R1; first pick), Foppert (R2; fourth pick). And four more who got in the 8% range: Timpner (R4; third pick, Griffin (R5; second pick), Burriss (R1S; second pick), and Synder (R4; fourth pick).

Giants Thoughts

So, overall, I would not say that the Giants have ever really pre-arranged lower bonuses in order to save money, except in two specific situations in the 2003 draft. In addition, if you will recall, that is the infamous year that the Giants, in the offseason after the 2003 season, purposefully signed Michael Tucker just before the deadline in order to punt their draft pick to the Royals and instead use that money to have a major league RF starting for them, instead of having no viable alternative if a prospect was used.

If there were any systematic underpayment, it was in the 2003 draft, when four of the instances where the Giants paid under the average bonus of the five following draftees. The only other instance where the Giants paid under was the unusual circumstances where the Giants had an eager and desperate Linden wanting to become professional and he had waited until the Giants probably didn't have much money left to sign him anyhow.

There were also three that appeared to be borderline, possible underpayment. In those instances, the Giants paid above the average only 0.8%, 2.3%, and 3.5%. Even if you add these to the four, that would only be 7 out of 24 picks, or 29% who were underpaid.

Given all this, I would say that the Giants, as was my impression, did not regularly "over draft" prospects with pre-arranged, much reduced bonuses in order to save money. In particular, regarding their first round and early picks, the Giants generally paid much over average, relative to the five picks signed afterward and relative to their picks overall. In particular, the Giants seemed to know when to be relatively generous, as they paid Lincecum, Lowry, EME, Hennessey, Bowker, Cain, and Foppert more over the average than their other picks.

Add to that, if the Giants were really as cheap as some fans think, they would have never paid Ishikawa nearly $1M, the highest bonus ever given for such a late pick (21st round), nor would they have pursued Draft and Follow draftees like Marcus Sanders, and they certainly would not have paid over $2M to sign Angel Villalona recently. These fans want to paint the Giants management as cheap and just want to believe what they want to believe, but bonuses and "over drafting" was not an area where the Giants were being cheap in, just as I showed that giving up the first round draft pick, when it is in the latter part of the draft, is not necessarily always a bad thing to do either, it is not a matter of being cheap, but of chosing your battles and risks.

1 comment:

  1. As usual, great analysis Martin. As your studies have pointed out, I've never really seen the Giants act the "cheapskate" when it comes to the draft. This is especially true with the earlier round picks. As you closed off your statements: it's not a matter of being cheap, its more of assessing the risk versus reward, and I think that Sabean does a pretty good job of that.

    Happy Holidays Martin. Enjoy your vacation.

    ReplyDelete

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