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The Rule 5 Draft and Daniel Stumpf’s Problem April 18, 2016

Posted by tomflesher in Baseball, Economics.
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Rookie lefthander Daniel Stumpf was suspended for 80 games following a positive test for steroids. He had appeared in three games and allowed three runs in his first appearance but then made two one-out appearances as a left-handed specialist. Stumpf was a rule 5 draftee.

The Rule 5 draft allows teams to poach players who have been signed for five years (if the player originally signed when he was younger than 18) or four years (if the player signed as an adult) and who are not on any 40-man roster. It was designed to keep teams from signing prospects they had no plan to use in the near future, and to protect those prospects’ chances to make the majors. Current Blue Jay Jose Bautista and financial professional Bobby Bonilla were both rule 5 draftees early in their careers, for example, who may not have made the majors had their progress continued to be blocked.

Stumpf’s positive drug test amounts to a windfall for the team, however: part of the cost of drafting a player under rule 5 is that the player must remain on the team’s 25-man roster, the disabled list, or the restricted list for the entire season, accruing at least 90 days’ service time. The 25-man roster provision is designed to force a team to carry the player all year; if the team trades the rule 5 draftee, he must remain on the new team’s 25-man roster all season as well. Similarly, if he is waived, he must be offered back to his old team. This is designed to make it costly for a team to draft a young prospect: in order to make sense, the team’s expected value over the player’s career must be greater than the expected development value of the marginal player who the draftee will displace.

In Stumpf’s case, 24-year-old lefty Elvis Araujo has been called up to replace him. Araujo pitched 34 2/3 innings in 40 games last year – substantially less than one inning per game – last year, making him a close comparison to how Stumpf was being used. Araujo had a 3.38 ERA, so in order to make it rational to keep Stumpf on the roster over Araujo, the Phillies must have expected Stumpf to develop considerably more than Araujo over the course of the season and to remain valuable for at least a few more years. Stumpf will likely continue baseball activities over the course of the suspension, so his coaching and development will continue albeit without the pressure of major league appearances. Meanwhile, Araujo, a slightly more seasoned player, will make the appearances in the majors that Stumpf would have, allowing the Phillies to accrue the benefit of Stumpf’s rule 5 status with less of the cost. That is: Araujo is a better player now, and the Phillies would ordinarily need to sacrifice that benefit to have Stumpf, the better player in the future.

The disabled list exemption from the 25-man roster rule is sensible, but this rule allows the Phillies a windfall. Major League Baseball should consider a rule that pauses accrual of not only service time but also credit for time on the roster while a player is suspended. This would require Stumpf to spend at least 80 additional games on the Phillies 25-man roster at the beginning of next season, forcing the Phillies to make a tough choice about Stumpf and Araujo again in 2017.

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Comments»

1. Edgar Shawen - April 21, 2016

Barry Bonds was never a Rule 5 selection.

tomflesher - April 22, 2016

You’re correct – just had Bonds on the brain! Should read Bobby Bonilla.


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