Unproven Commodities

Troy Glaus worked hard in college, refining the skills he would need to succeed in his chosen profession. When he left UCLA for the real world this year, a company hired him for its training program, believing he could develop into a consistent producer within several years.

Fortunately for Glaus, his chosen profession is baseball. And, rather than lure Glaus with a starting salary of $50,000 or perks like a company car, the Anaheim Angels paid him a $2.25-million signing bonus, in line with the prevailing rate in the industry.

Is that too much, as many baseball executives believe? Angels president Tony Tavares calls the bonus structure “a moronic trap.”

Not enough, as some player agents and union officials contend? Newport Beach agent Scott Boras, perhaps the nation’s most prominent advisor for amateurs drafted by major league baseball teams, charges owners with “abusing the amateur player.”

Or just confusing, as several major league players suggest? Tim Salmon, the Angels’ best player, made $3.5 million this year, in his fifth major league season.

“What seems out of whack,” Salmon said, “is that players are getting major league money before they’ve proven they’re major league players.”

As the Cleveland Indians and Florida Marlins complete the 1997 World Series, their 28 rivals devise strategies for building a championship team--and affording it. In a sport in which owners claim to bleed red ink, the price of reserving and developing talent for future years sometimes can spell the difference between profit or loss in the current year. In no other industry, perhaps, do buyers and sellers so violently disagree over the cost of raw talent.

Microsoft may dangle stock options in front of a Stanford whiz kid, but bidding wars for college graduates never escalate into the millions. First-year anesthesiologists may earn a $200,000 salary, but they often require years to retire medical school debts, too.

Wall Street law firms may lure a coveted Harvard graduate with a signing bonus atop an $80,000 starting salary, but the bonus typically enables recipients to cover the rent while they prepare for the bar examination, not buy a house and fleet of vehicles.

Professional football and basketball teams pay millions to their top recruits--often, millions more than baseball teams do--but the finest baseball prospects cash in first and then endure an apprenticeship in the minor leagues.

Even if Glaus never plays a game for the Angels, according to University of Chicago economist Allen Sanderson, his $2.25-million bonus reflects the extremely limited supply of potential employees capable of hitting or throwing a 95 mph fastball.

“However exorbitant it may seem to you and me, he may be only getting a fraction of what he’s really worth,” said Sanderson, who teaches on the economics of sports. “It’s hard to sympathize with somebody getting $2 million and saying it’s not enough. But it may well be that’s what the market is for somebody with those skills.”

The Angels paid Glaus, their first-round draft pick and by all accounts a terrific prospect, a bonus that exceeded the annual salary of all but four players on their 25-man Opening Day roster. The Arizona Diamondbacks, who will not begin their first season until next spring, spent four times that much last year on San Diego State’s Travis Lee, a first-round pick who won free agency on a technicality.

With 21 teams in pursuit--the Angels and Dodgers included--the Diamondbacks paid Lee $10 million. Money-back guarantee? Not included. Of every three first-round draft picks, one fails to graduate to the major leagues.

“If you’re trying to find some sanity in all this, there isn’t any,” Tavares said. “What we’ve gotten to in sports is paying what the market value is. It doesn’t matter whether there’s any logic attached to it.”

Sport Wrestles With Growing Problem

As teams burn millions on high-risk investments, baseball fiddles. As pro football and hockey experiment with different restrictions on rookie salaries, baseball officials struggle to identify the problem, not to mention the solution.

Baseball owners adopted a draft three decades ago to answer twin concerns that echo today: How can we distribute talent more evenly and less expensively? In 1964, as owners spent more on amateur bonuses than player salaries, the Yankees advanced to the World Series for the 14th time in 16 years, and the Angels infuriated opponents by lavishing a then-outlandish $205,000 on University of Wisconsin star Rick Reichardt.

Rick Monday, whom the Kansas City Athletics selected as the first-ever No. 1 pick in 1965, signed for $104,000. Ken Griffey Jr., arguably the world’s best baseball player, signed with the Seattle Mariners for $169,000 in 1987.

“This creation of an artificial market stopped the true market dynamic from working,” Boras said.

Not until 1988, when Andy Benes commanded $235,000 from the San Diego Padres, did a No. 1 draft pick receive a bonus greater than Reichardt’s.

Inflation soared in the late 1980s, with Boras encouraging players not to sign--their only leverage--unless teams increased bonuses in line with rising broadcast revenues and franchise values and major league salaries driven skyward by two decades of free agency.

First-round signing bonuses multiplied five times since 1990, with the average first-round bonus this year--$1.2 million--matching the average major league salary.

The Angels spent $1.5 million to sign 27 players they drafted in 1994. They paid $1.575 million to sign Darin Erstad, the first overall pick of the 1995 draft, and half again as much to sign Glaus, the third overall pick in 1997.

“I wasn’t looking to break any records,” Erstad said. “If guys start taking less than the players before them, they’re going to hurt the players coming up.

“But, to say that a guy that gets $2 million deserves more than Ken Griffey Jr. when he was the No. 1 pick, obviously that doesn’t work out.”

Salmon, the Angels’ player representative, and union executive director Donald Fehr each said no player has demanded the union address the escalating bonuses. If nothing else, Salmon said, the union stands for free enterprise.

The case of Lee--and of Matt White, another $10-million free agent last year--indicate, Fehr said, “a suggestion that the value paid to draft choices is considerably understated in most cases.”

However, for those major leaguers in search of a line, J.D. Drew has drawn it. The Philadelphia Phillies initially offered $2.05 million to Drew, the No. 2 pick in this year’s draft, just above the $2 million the Pittsburgh Pirates paid to Kris Benson, the No. 1 pick in 1996. Drew remains unsigned.

Boras, his advisor, said Drew wants $11 million not just because Lee got $10 million last year but because two teams told Boras they would pay $11 million. Boras, who would not identify the teams, has cited technical violations in filing two grievances that could render Drew a free agent.

“The free agent stuff where they get $10 million, that’s entirely too much money,” Erstad said.

Said Doug DeCinces, the agent for Glaus and a former All-Star third baseman for the Angels: “Do I think J.D. Drew is worth $10 million? Honestly, no.

“But, if he gets it, he is. Who are we to say he isn’t? If an organization thinks he’s that good, they’ll take the risk, and it’s all business.”

Insurance Is Not the Answer

And just as a record company eventually would fire an executive who signed a string of bands that fail to become stars, Boras said teams should fire scouts who sign players who don’t develop.

Can teams minimize that risk? From 1983-90, the Dodgers selected six pitchers in the first round of the draft. All flopped, four because of injury, but executive vice president Fred Claire said the team did not carry insurance on any of them.

“It makes more sense to insure a player with a high salary as opposed to a player with high hopes,” Claire said.

Teams cannot insure the success of players, Tavares said, and often find the cost to insure health prohibitive, particularly for pitchers, for whom one arm injury can hamper--or end--a career. Players risk losing out on the only career they may have prepared for, and teams risk writing off millions.

“There is a very simple reason why far fewer of baseball’s draft choices make it than in football or basketball,” Fehr said. “We tend to draft at 18 or 19, not at 22 or 23.”

The New York Mets signed Ryan Jaroncyk for $850,000 two years ago. He quit this summer, at 20.

Courts would prohibit baseball from limiting its draft to college graduates, but assessing talent, character and physical maturity is far easier in college than amid wildly uneven competition and conditions in high school. No team, after all, drafted Lee out of high school.

In an era when an NBA team commits $126 million to one player--All-Star Kevin Garnett, who first rejected $103 million from the Minnesota Timberwolves--baseball’s dilemma appears almost quaint.

Said Claire: “Somebody turned down, what, $100 million? Can anybody truly relate to that?”

The Timberwolves’ fans may not be able to relate, but at least they can watch Garnett play. Why should the Angels pay Glaus $2.25 million--or the Diamondbacks pay Lee $10 million--before they reach the majors?

“Everyone thinks they’re paying them for performance. They are not,” Boras said. “They are paying for rights acquisition.”

NBA players like Garnett generally leap from the draft onto the varsity, with free agency available after three years. But, after about 40,000 baseball draft choices in 34 years, only 17 players started their careers in the major leagues, and only three--Bob Horner, John Olerud and Dave Winfield--avoided a subsequent detour to the minors.

Minor league salaries start at $850 per month, and top draft picks usually require one to four years in the minors. Players must complete six seasons in the majors before they can declare free agency.

Jaret Wright, who pitched Cleveland to victory Wednesday in Game 4 of the World Series, signed out of Katella High for a $1.2-million bonus in 1994. The Indians, however, reserve the right to unilaterally determine his salary through 2000 and need not worry about losing him to free agency until 2003.

“The player’s services are not available to anyone else in the industry,” Boras said. “It makes you that much stronger and your competitors that much weaker.”

But, as bonuses get larger and market values rise, some teams feel compelled to select players as much for their signability as for their ability. No longer do the worst teams automatically select the best players, defeating a primary purpose of the draft.

“You have to look at all the morons on all the teams--and I include us in that--for paying the [amounts] we pay,” Tavares said. “It is a moronic trap. All it takes is one of us to act like a moron and the rest of us are forced to follow.”

Sanderson considers the owners monopolists, not morons. According to Sanderson, studies indicate free agency affects competitive balance far more than does the draft.

“All that does is redistribute money from players to owners,” Sanderson said.

Consider the Marlins, whose roster includes only one of their first-round picks, catcher Charles Johnson. The Marlins advanced to the World Series after spending $89 million on free agents last winter.

American businesses--particularly in law, finance, engineering and computer science--often lure college students with signing bonuses. Of course, if that Stanford engineer can’t stand the rain at Microsoft’s suburban Seattle headquarters, he can accept a job offer from a Silicon Valley company.

In major league baseball, as in the NFL and NBA, you must negotiate exclusively with a team that drafts you. In that context, Fehr said, cries of protest against spiraling bonuses ring hollow.

“That’s like complaining about competition,” Fehr said. “I’m sure the utility companies think their rates are too low. I’m sure GM would rather not have Ford and Chrysler.”

And so the Diamondbacks roll the dice with Lee, and the Angels with Glaus. Winning bets pay off at, oh, the turn of the century.

“Until you’ve played the game for five or six years, I don’t think you’ve proven anything,” Erstad said. “There’s a lot of guys who get a lot of money in the first round and don’t turn into a major league player.

“That’s the way it is, but that’s not fair. What is?”

Bill Shaikin writes about the connections between sport and society for the Times Orange County. You can reach him at bill.shaikin@latimes.com or phone (714) 966-5847.