The Phillies drafted Oregon State junior LHP Ben Wetzler in the 5th round and Washington State junior OF Jason Monda in the 6th round of the MLB Draft last June. There was some acrimony in both negotiations: there are rumors that both players backed out of verbal deals and in Wetzler’s case, an above slot deal. Both players ended up not signing and returning to school for their senior seasons, which started last weekend.
Baseball America reported earlier this week that the Phillies turned in both players to the NCAA for having an agent negotiate on their behalf. Monda was cleared of any wrongdoing and is already playing while Wetzler got an 11-game suspension on Friday. The Phillies commented just moments ago, but didn't say much: "The Phillies did participate in the NCAA investigation and a ruling has been issued. We believe it is inappropriate to comment further on either the negotiation with the player or the action taken by the NCAA."
Also see: July 2nd Explainer, July 2nd Index, 2014 MLB Draft Rankings, Rankings Index & My Twitter
Why Does This Matter?
This matters because this no-agent rule is normally only enforced when the player accidently admits to using an agent or an MLB executive accidently admits to negotiating with a player’s agent. The only other time an MLB team intentionally turned the player in was in 1992, when the White Sox turned in A.J. Hinch. The NCAA couldn’t find enough evidence to punish Hinch, who ended up playing four years at Stanford.
What Did the Phillies Stand To Gain?
At first glance, all it appears that the Phillies could gain is the temporary schadenfreude of a player losing his senior season because he backed out of a deal, along with the small benefit of future draftees knowing this is what happens if you back out of a deal with the Phillies. That said, backing out of a verbal deal doesn’t happen often enough that a club could gain anything as being known to be especially punitive towards offending players. Just that in return for appearing appearing vindictive towards two young kids and cowardly in general seems like a bad move, hence the outrage.
What Are The Rules?
Every single player that gets drafted has an agent. To work around the rules, they are called “advisors” but aren’t allowed by NCAA rules to negotiate for the player, only to give the player advice.
No agent actually does just this, they all negotiate and often work out deals before the player is drafted, which is illegal by MLB’s rules, but the rule is almost never enforced. This setup works because clubs would rather deal with agents than uninformed parents, the players need qualified representation to negotiate for them and the clubs often need the cost certainty a pre-draft deal can offer.
Under the new CBA, in the top 10 rounds of the draft, each pick is assigned a value and those values add up to make the club’s bonus signing pool for the draft. If a team fails to sign one of their top 10 round picks, that pick value disappears. The Phillies 5th round pick slot (Wetzler) was worth $315,200 (he was rumored to be offered $400,000 originally) while the 6th round pick slot (Monda) was worth $236,000.
The Phillies lost $551,200 in draft pool space due to these players not signing. Only 8 players in the top 10 rounds didn’t sign in the 2013 MLB draft and the Phillies were the only team with two players that didn’t reach an agreement (some of those 8 failed a physical after agreeing to a deal).
The downside for the Phillies is they now look unfriendly to future draftees, to their scouting peers and, most of all, to agents. That last point is especially crucial given the relatively new Collective Bargaining Agreement (CBA). The new CBA essentially gives teams hard caps on their draft spending. This means the illegal (to both the NCAA and MLB) pre-draft signability discussions and pre-draft verbal deals between agents and clubs are more essential than ever, with a cap to work under and cost certainty at a premium.
If the NCAA’s moronic no-agent rule is what made this situation possible, the new CBA made the Wetzler situation more likely to happen with far more pre-draft deals being cut than ever before—something that MLB’s rules prohibit and encourage at the same time.
How Are Agents Reacting?
I polled agents from most of the top agencies and some smaller outfits to get a feel for their reaction. It broke down into three basic responses:
1) The most popular answer from the bigger agencies was some version of what’s already been reported on twitter by myself, Aaron Fitt, Keith Law and Jim Callis: we won’t let the Phillies in our players’ homes, won’t fill out questionnaires or physiological profiles and won’t give signability information.
2) A more middle of the road response from an agent from one of the big agencies was that they don’t deal in absolutes for situations like this, but they will be more cautious across the board (i.e. leave less of a paper trail in case they get turned in).
3) One smaller outfit said this might be a chance for a market inefficiency: being available to deal with the club that no one wants to deal with.
What Should Agents Do?
It seems reactionary and childish, though understandable to react in way #1. Trust has been exploited in a very trust-dependent industry, so you lash out to punish the offender. The problem is that the agent is representing a player, and taking a team off the table isn’t helping the player; it may not be helping the agent, either. Response #3 could be an interesting one to monitor. I think there may be some major agencies that privately and publicly condemn the Phillies but would cut a deal with them if it were advantageous for their client.
Who Specifically With The Phillies Reported The Players?
We don’t know yet. Scouting Director Marti Wolever gave Baseball America a no comment while GM Ruben Amaro told Matt Gelb that he wouldn’t comment on an ongoing NCAA investigation and to direct any questions to Wolever. Since the NCAA has no power over Amaro, that makes it seem like this was Wolever’s idea, but no one with knowledge of what happened has commented on or off the record about who exactly turned the players in and why.
Some have suggested the Phillies reported the players by accident, but that doesn’t explain why Monda was turned in as well (two identical accidents?). Some said it was a punishment for an agent’s behavior, but the two players had different agents and the decision to not sign appeared to be the players’ choice, not that of a meddling agent. It’s also been mentioned that since both players are from the Northwest, the Phillies scout(s) for that region could’ve turned in the players without the club’s knowledge. That makes some sense at first blush, but is an obviously fireable offense and would be easy for Amaro/Wolever to track down, so who would really be taught a lesson?
UPDATE, SUNDAY MORNING: Amaro spoke to reporters about the incident and my tweet sums up what was learned, with a link to the comments:
So, Why Did The Phillies Do It?
Here’s where it gets interesting: nobody knows.
It doesn’t make rational sense at first and second glance, so I then tried to dream up a scenario where doing this actually made sense and was done intentionally. When I twisted myself into a mental pretzel, I realized there are actually some benefits for the Phillies here and it makes logical sense if you consider how they operate in the draft.
The Phillies don’t do anything too creative in the draft—they typically draft high school athlete types, pay them about slot and (relative to other clubs) don’t sign too many well above or under slot deals. They’re trying to play the draft straight and they got burned last year, losing over $500,000 in prospect value after two verbal deals fell through.
So, what if the Phillies wanted to make sure this wouldn’t happen again?
A Theory: Part One
By reporting Monda and Wetzler, the Phillies alienate some agents and players, but they are still going to have millions to spend every year and no qualms about offering slot bonuses to prospects, as usual. Prospects looking for slot may not like what the Phillies did, but will take their money, particularly when it is in their best interests.
Thus, most of the agents/players that the Phillies are alienating are those looking for above slot bonuses and agents who are more emotional/punitive than pragmatic. These are the guys looking to work the system for the highest possible bonus where a lot of trust and negotiating is necessary, but the Phillies don’t usually draft/sign those types of players and probably don’t want to deal with those types of agents if they don’t have to.
You may ask how the Phillies know what the signability numbers will be for players, since many agents have said they won’t give the Phillies any information. The lack of information is information in itself and actually saves the Phillies some effort deciphering how far above slot a certain player's demands are.
How Does The NCAA Look?
The NCAA is completely wrong here, but as I noted on twitter earlier this week, everyone knows this and has for a while. Their no agent rule is what caused this problem (and some similar recent cases like with lefties Andy Oliver and James Paxton), it’s been ruled illegal by the courts (but the NCAA settled with Oliver to erase that ruling).
If this keeps up much longer, someone will challenge it in court again and get it struck down, possibly soon. I get the feeling that the NCAA won’t do this voluntarily as their free labor amateurism house of cards cartel can’t start admitting fault to their infallible process without it possibly leading to more changes.
There’s a reason Wetzler’s case got settled for less than the expected suspension and soon after it got leaked: the NCAA knows they have a losing hand and are trying to manage the PR to keep the money hose flowing as long as possible.
There might be a player willing to sign for slot that has an agent that refuses to deal with the Phillies, but then we’re talking about an agent not taking the best deal and harming his client. We can’t assume, bluster aside, that this would actually happen in any significant way.
Those players with slot expectations and pragmatic agents looking for the best fit for their client will be the only ones that will deal with the Phillies (or so I’m assuming). I think that’s exactly the way the Phillies want it; I’m just not sure if this was the reason they turned in Wetzler and Monda.
A Theory: Part Two
When the Phillies talk to agents before the draft this year, they now know the Phillies won’t tolerate reneging on a verbal pre-draft deal.
I’ve talked to agents in the past that have told me they know there is a real value to having a high-profile high school prospect that sets a number, gets drafted, is offered something close to but below their number and then turn down the seven figure offer and go to school.
This makes the agent look like a tough negotiator and one that sticks to his number, as well as the kind of agent that represents high-profile kids and isn’t distracted by an immediate big commission. This is a great marketing tool for an agent and the big thing that separates Scott Boras the most from other agents, as he dogmatically sticks to his number come hell or high water.
So, now the Phillies are eliminating the type of player and agent they don’t want to deal with (and haven’t really dealt with in the past) while also gaining the reputation of no-nonsense negotiators that aren’t afraid of a pre-draft deal and will hold you to your word. Isn’t that exactly how a team that drafts like the Phillies would want to be viewed?
Let’s imagine the Phillies brass got together and wanted to figure out a way to not have $500,000 in bonus pool fly out the window again and someone suggested that they only deal kids that want slot bonuses and agents that are reasonable/pragmatic. I’m not saying what they did is the best way to accomplish this, but doesn’t it seem like a reasonable way to achieve their perceived goals?
A Theory: Part Three
This is all contingent on the world knowing that the Phillies are the ones who turned in the player. If the NCAA investigates Wetzler and Monda for having agents negotiate for them, it isn’t immediately clear who dropped the dime. If the Phillies did this on purpose to get some perceptual advantages as I’m suggesting they may have, they need to make sure everyone knows they turned the players in; they would need to leak the story. I’m not saying they did or didn’t, but someone would have to for this plan to make sense.
Okay, That Makes Some Sense, But Isn’t The Price Too High?
Some have suggested this is too high a price to pay for that sort of intangible benefit, because the perception of the Phillies by the industry is now tainted. If the Phillies just do what they always do and take those same types of players and get them all signed for the next two drafts, no one will talk about this again; a couple agents and scouts have admitted this to me in the last few days.
As for the two players, Monda didn’t miss any time and Wetzler is missing what amounts to the first two starts of his senior season. Some speculated Wetzler’s suspension was shorter than the evidence suggested because the NCAA was doing some PR management on this issue, but there isn’t any proof of this. See the NCAA sidebar above for my thoughts on why Wetzler didn’t get a half or full season suspension, as many anticipated.
Lastly, we have the agencies whose clients won’t supply signability information, allow in-home visits or answer questionnaires for the Phillies. That will obviously cause headaches in the draft room this year, but, as mentioned above, while those players are talented, I don’t think the Phillies are trying to draft many of them (and can only draft a few of those types per year, anyway).
The Phillies have the 7th overall pick this year and it looks like the slam dunk top tier of players with high-powered agents will be off the board before their pick, so I’m sure a suitable talent will be willing to talk to them before the draft. If they get a top 5 pick in future years, agents may say they won’t deal with them, but would be foolish to rule out a team with a top pick, given how quickly slot values fall in the current CBA.
We can’t be sure about it this early, but the collateral damage here is looking surprisingly low for all the bluster and shocking nature of the story when it broke. Some analysts (myself included) gave the Phillies some grief on twitter and there will likely be barbs directed at them in the industry for another year or two, but nothing that significantly damages how the Phillies do their jobs.
Was It Worth It?
We still don’t have all the information because, even though the Phillies issued a statement, we don't know what their intentions were with this move. I’ll reserve judgment until I can see the full impact and intention of what they were trying to do, but it seems like a neutral move long-term and negative, but not strongly so, in the short-term. The team looks like jerks (though the kids were barely punished) and piss off some powerful people, but it’ll wear off as long as the Phillies do their job. Though it looks like they won’t have necessary information about many top players for this year’s draft, for the short to medium term, they’ve weeded out the troublesome signability player (a player they don't sign) and that lack of information in and of itself is information.
Follow Kiley McDaniel on Twitter for more baseball news on the draft, the minor leagues, the big leagues and July 2nd.