Should Baseball have a Worldwide Draft?

I recently came across a very thoughtful law review article by Daniel Hauptman arguing that Major League Baseball (MLB) should have a worldwide draft. Currently, MLB only drafts players from the United States of America, Canada, Puerto Rico and other U.S. territories.

The crux of Hauptman's argument is that since MLB does not have a worldwide draft, they are engaged in a type of reverse discrimination.

Background
The MLB draft acts as an orderly way for teams to bring in new talent. It has the effect of reducing competition for a particular player. Normally this would be an anti-trust violation, but MLB enjoys a long-standing exemption from the anti-trust laws.

No super talented player actually wants to be drafted. MLB has rules, both formal and informal, that dictate how much a drafted player should be compensated. If a players signed as a free agent, the player would be have more control over the team he signs with, the salary and the contract terms. The effect of this for very talented players is that they could earn a lot more money if there were no draft because there would be competition for their services.

Since the MLB draft only affects players from the United States of America, Canada, Puerto Rico and other U.S. territories, they are at a competitive disadvantage compared to players from other parts of the world who can sign as free agents.

To be clear though, free agency really only helps top athletes. Everyone else has to take what they can get and teams will not bid up these players.

The Law
The draft, as it stands, is something that arrived at as part of the collective bargaining agreement between MLB and the Major League Baseball Player's Association (MLBPA). It is important to note that players who have not signed a major league contract can not be part of the union.

Collective bargaining agreements are governed by federal labor law and it has been traditionally very difficult for individuals who are not a party to the agreement to affect them. Read Hauptman's article for more details.

One argument that can be made to challenge the agreement is that the draft violates a federal or state employment discrimination law. However, these anti-discrimination laws may be preempted by the national labor law which encourages employers and employees to come up with their own agreements - i.e. the collective bargaining agreement.

Non-Legal Issues
Hauptman goes to great lengths in discussing the history of the draft and the effect of the draft on the economies of Latin American countries. In particular, MLB teams used to spend a lot of money developing players in Puerto Rico. Once teams could draft players from Puerto Rico instead of having to bid on their services, teams stopped investing time and resources there and moved to places like the Dominican Republic.

In these Latin American countries where there is no draft, teams are able to sign many players as free agents, but terms and conditions highly favorable to the teams and at very low cost. It also gives large market teams a tremendous advantage because they can sign more players hoping a tiny fraction of them work out.

What a Worldwide Draft Would Accomplish
In the end, Hauptman argues it would be a good idea to have a worldwide draft. He thinks it would result in players being treated equally regardless of where they are from. He also believes it would result in better competition on the field. This is not to say that the draft itself is fair, but it would level the playing field for teams and the individual players.

What if we Did Not Have a Draft?
If a draft bad for the players, many argue we should get rid of it. After all, it suppresses competition for the player's services. The problem with getting rid of the draft is that it serves one very important legitimate purpose - it provides for competitive balance. For that reason alone, MLB will never give it up. The fact that they use it to keep salaries down and provide an orderly method of hiring players is merely a great side benefit.

Final Thoughts
Although MLB and the MLBPA has stated publicly since 2002 that they want a worldwide draft, there are no plans at this time to introduce one. I personally don't see anyone challenging baseball's draft because of the cost of a suit and the potentially deleterious affect it might have on the player filing the suit.