Free market value: A discussion

Major League Baseball made an interesting ruling this morning pertaining to Texas A &M pitcher Barret Loux. A little backstory before we get to the talking points...

 

The Arizona Diamondbacks drafted Loux sixth overall in the June amateur draft, a surprising move as most pundits tagged him as a late first rounder. A madly excited Loux reported to the team's doctors for a physical, likely dreaming of a payday in the $2-2.5M range. It was revealed, though that Loux failed the physical---the doctors found issues with both his shoulder and elbow. This heralded ensuing speculation in the following weeks that Arizona's front office knew about the issues all along, purposely picking the pitcher to avoid signing the first round pick---and receiving the seventh pick in next year's (far better thought of) draft as compensation. 

This was obviously a huge blow to Loux. There was speculation the D-Backs would offer him a severely reduced contract--and more rampant rumors that he wouldn't be extended an offer at all. Loux's agent threatened to sue the team, the league and anybody else in the vicinity.

The signing deadline passed last night-- and with it came the news that the Commisioner's office declared Loux could become a free agent on September 1st. This, to me, seems like the most logical compromise for both sides. Why? Because draft picks are almost invariably bargains (in theory). Young players spend their early years bound to one team and severely cost controlled. If Stephen Strasburg had been a free agent, he'd have fetched far more than the 15 million bonus received from the Nationals after being drafted #1 overall in last year's draft. Given the chance to negotiate with all 30 teams, Loux will fetch far more than he would have from the apprehensive Diamondbacks--and may even get more money than his draft slot would have called for.

The same theories don't completely apply to the NFL draft, where the pay scale for top draft picks has ballooned out of control in recent years. But the draft still holds tremendous value in that picks generally remain good values.

My question is this: If an open bidding process were put in place, what do you think the price range would be to sign top five prospects? Late first rounders? Mid-second rounders?

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