All that being said, Squawking Baseball is self proclaimed as "Wall Street analysis of Major League Baseball's player market". Furthermore, the stated purpose of Squawking Baseball is,
This is precisely what drew me to Squawking Baseball and has continued to draw me in. That is, the discovery of baseball through an economic perspective. There are plenty of rumor websites, plenty of team blogs, plenty of sabermetric websites, but very few that are dedicated to understanding how and why managers exploit the market-although, isn't the 'why' obvious?
[To]stay in front of the trends, play the cards right, and, hopefully, stay in contention.
That’s where we come in. We are baseball people first and foremost. Despite tender ages (mostly early to mid-20s), everyone on our staff has experience in a Major League front office, as well as outside businesses. Some of us also happen to be Wall Street junkies, consistently beating the stock market by staying ahead of the curve. What we hope to create with this blog is an outlet for us, and others, to look at the market for baseball talent with the same kind of thoughtful, diligent outlook.
This week's article of the week is a look back on Major League Baseball's Rule IV draft. Shawn of Squawking Baseball asks, 'Is the Draft Efficient?'
In this post, the author (Shawn) discusses the merits of baseball's current draft system. Shawn acknowledges the system which allows the players to make up their salary demands, which in some cases results in inferior players being selected due to signability. However, this is only a partial flaw, as for the most part, the best players in the draft are going with the top picks.
But there’s another facet to this that I think is pretty interesting: the draft inherently changes the sport’s incentive-structure, as it rewards the league’s worst teams. In other words, if you’re not going to be good, you may as well try to be awful. Does this lower the quality of play, and therefore hurt the product? It’s very tough to say.While a valid point, the baseball draft is unlike any other of the professional sports. That is, most even the very best draft picks, take several years before they make it to the majors, and even longer before they are truly impact players. Furthermore, when one considers that there is a 2 in 50 chance of selecting a meaningful player in the draft, those best players become even more of a rare breed. While 2 in 50 might be somewhat of an exaggeration, consider that many of the players on a MLB roster were not selected in the draft as they were considered international.
However, the author concludes,
But overall, I think the draft accomplishes its goals. Top-tier amateur talent is distributed to the teams that need it (or value it) the most, in effect allowing bad teams to shorten their success cycles. As we’ve learned from the expanded playoff system, any mechanism that allows more teams to be competitive without shaving significant dollars off of big market teams’ top lines is generally good for the sport.It is tough to argue with this sentiment. While the poor teams will struggle to be annual threats, if they play their cards correctly and make intelligent and timely moves, it is tough to imagine the teams are without hope.