The annual draft is the easiest way for a baseball team to add talent cheaply. To keep things cheap, Major League Baseball has limited the amount of money teams can spend on signing bonuses, with penalties in place for anyone who goes over their limits. The San Francisco Giants are in a unique position this season to defy those rules and stock up on a lot of young talent by spending a lot of money and taking the punishment.
Let us preface this article with a caveat: The San Francisco Giants are unlikely to “blow up the draft” as Jarrett Seidler of Baseball Prospectus suggests. It’s an expensive strategy and a risky one. The league might really hate it. And it relies on a team developing high school draftees into successful major leaguers, something the Giants have not excelled at in the last decade.
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The general concept is that the Giants go over their allotted bonus pool. Like, way over. Teams get to spend a certain amount of money on all their draft choices, based on where their draft picks are. When the Giants traded Patrick Bailey for the No. 29 pick, they added $3,720,200 to their draft pool and now have $17,350,600 to spend on their draftees, which is the 4th-most in baseball.
What happens if a team spends over its pool? If they go 1-5% over that number, they pay a 75% tax on the overage. Go 5-10% over the pool and they forfeit a first-round pick, along with paying the 75% tax. 10-15% over means the team loses a first- and a second-rounder and pays a 100% tax on the excess, and anything more than 15% over the drat pool costs two first-rounders and the 100% tax.
So teams are disincentivized towards overspending. However, the nature of the penalties means that if a team is going 15% over their pool, going 100% over the pool just costs them money.
Say the Giants spent $20M on signing bonuses. That would mean they’d lose their first-round picks in 2027 and 2028 and pay a penalty of $2,649,200. Pretty harsh! But if they spent $50M on bonuses, they would have to pay $32,649,400 in penalties — but still only lose the two picks. That’s what BP called “burning the drafting ships,” named after what conquistador Hernan Cortes did upon reaching the New World, to let his crew know there was no going back to Spain. It’s also what Los Angeles Rams general manager Les Snead simply calls “F—- them picks.”
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The nature of the draft means that’s a high-risk strategy, but New York Mets owner Steve Cohen believes high draft picks are highly undervalued.
A dollar-for-dollar tax is expensive, but the draft pick penalty for the Giants this season would be unusually low-risk. Since they moved up in the draft lottery this season, they can pick no higher than 10th in 2027, no matter how the rest of the year goes. They might be bad in 2027, though recent history suggests the team will still try to be good. If the Giants were to make any other trades like the Bailey deal, they could theoretically add more picks and increase their bonus pool further.
Essentially, the Giants would commit to meeting the demands of hard-to-sign players. These would primarily be high school players, who have more leverage than a college junior since they can threaten to simply go to college and collect that sweet NIL money. Rolling the rice and returning to college as a senior is riskier.
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There has been chatter that the Giants are interested in “floating” UCLA shortstop Roch Cholowsky down to their No. 4 pick by offering a record-setting bonus, though he’s facing the same risk of one of the top three teams taking him instead and daring him to go back to school. For context, the biggest signing bonus in MLB draft history is $9.25M, which is what No. 2 pick Chase Burns and No. 3 pick Charlie Condon both signed for in 2024.
The San Diego Padres employed a similar strategy in the 2016-17 international signing period. They paid out $40.8M in bonuses, which cost them $37.4M in penalties, and limited how much they could spend on international free agents the following season. It also got them a boatload of young talent.
Will the Giants do this? Almost certainly not. It seems like it would deeply unpopular with the league and other teams, and the prize — a lot of very talented, very young players — is unreliable. Baseball would probably change the draft rules if a team like the Giants went rogue.
The Padres’ haul was impressive on paper but most of the players washed out, with the biggest success story being Adrian Orejon, who was an All-Star reliever last season. Still, San Diego was able to use some of these players in trades for players like Blake Snell, Adam Frazier, and Mike Clevinger, even if they didn’t pan out in the Plymouth of the West.
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Still, it’s only money, and whatever else you can say about them, the Giants have shown they’re willing to spend. Whether they’re willing to upset the structure of the baseball draft is another thing.
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