Monday, June 4, 2012

Financial aspect of the 2012 draft

With help from Bleacher Nation, here's a quick summary of the financial parameters of the 2012 draft:

*The Astros have $11.2m to spend on their first ten rounds (11 picks).

*If the Astros don't sign Lance McCullers, they lose the value of the 41st overall pick, which in this case is $1.26m, out of their pool. If they do sign him

*If they go over, they pay a penalty. How steep a penalty?

*If they go over by 0.1 - 5.0%, they pay a 75% overage tax. Which, for the Astros purposes, means if they go over by 5% ($560,000), they pay a $420,000 fine.

*If they go over by 5-10% ($560K - $1.12m), they pay the 75% overage tax ($420K - $840K) and lose a 1st Round pick.

*If they go over by 10-15% ($1.12m - $1.68m), they pay a 100% overage tax, and lose a 1st and 2nd round pick.

*If they go over by 15%+, they pay a 100% overage tax and lose two 1st round picks.

*Now, the Astros can save some money by signing other picks for less than slot, and put that toward McCullers, but they can spend $11.76m without losing any future draft picks (but will pay the tax).

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