Dylan Lesko and the Padres' Draft Risk Management Strategy
A.J. avoided the biggest draft risk of all, and we should all feel good about that.
A.J.’s job is hard. He must make decisions in the face of great uncertainty. At Letters to A.J. we help ease his burden by dissecting the problems before him. When possible we recommend the best path forward.
This is the second letter to A.J.
Who makes a top 6 list?
In 2013, The Bleacher Report wrote an article titled The 6 Worst Drafting Teams in Major League Baseball in which the Padres were declared to be the 6th worst drafting team in major league baseball. A gobsmacked Padres management demanded to know how 5 other teams could be considered worse. The article was a sober reminder to Padres fans of the state of the franchise: the team’s mediocrity had run so deep as to become forgettable, an afterthought to the greater baseball world. Even the choice to do a top 6 list was suspicious, as if Bleacher Report had set out to do a top 5 list then remembered at the print deadline they’d forgotten the obvious top choice and quickly tacked it on. In 2013 the Padres were in their 7th straight year without a playoff appearance. They hadn’t drafted, developed, and retained a superstar position player since 1981. The year after the Bleacher Report article ran, the Padres entered the era of A.J. which brought a different draft strategy. We’ll examine the logic behind the draft strategy that pervaded the pre-A.J. years, and the polarizing strategy that has defined the A.J. era thus far including the 2022 draft.
A brief retrospective of Padres draft history:
The last time the Padres drafted a position player that became a superstar for the Padres was 1981: the incomparable Tony Gwynn. For many that was the high-water mark of Padres draft history up to 2014. Debate still rages over what constitutes the nadir of the Padres draft history. Taking Matt Bush first overall because he wanted to be drafted first, is the obvious Northstar. However, at L2AJ the nadir came later, and was the result of a flawed understanding of risk and reward undergirding a draft strategy commonly held up as conventional wisdom.
Throughout the post-Gwynn/Pre-A.J. years the Padres brain trust did an awkward first round jig. There were a few scattered forays into taking the best prospect available, most notably opening the purse strings for toolsy prep CF Donovan Tate in 2009. But in 2010 they recoiled in horror at the bonus request from Karsten Whitson ultimately letting him walk and using the compensation pick in 2011 on the low-ceiling Cory Spangenberg. This 3 year cycle was emblematic of the overarching theme of the prior 3 decades: Despite the occasional dalliance with paying market rates for top talent, there would follow a gravitational pull towards a focus on signability. The Padres, like many other cash strapped teams, followed the signability siren song out of a belief that it represented a low-risk (if low-reward) strategy that best stewarded the team’s limited resources. No single draft better exemplifies the problem with this signability strategy than the first round of 2007.
6th Worst Team Goes 0 For 6
The Padres went into 2007 draft with six picks combined in the first round and supplemental first round. They emerged with 3 partial seasons from Cory Luebke. How did that happen?
With the 6 first round picks in 2007 the Padres drafted Nick Schmidt, Kellen Kulbacki, Drew Cumberland, Mitch Canham, Cory Luebke, and Danny Payne. What Nick Schmidt lacked in raw talent he made up for with competitiveness… or so the Padres brass claimed. You could squint at Kellen Kulbacki, Drew Cumberland, Cory Luebke, and Mitch Canham and see a handful of major league tools between them. What Danny Payne lacked in power, he also lacked in speed, and bat to ball skills. The brass made no attempts to justify this pick. What these players all had in common were manageable bonus demands proportionate with their status as middling prospects.
High-risk, low-reward
The draft strategy that informed the picks of the infamous 2007 first round was a particular brand of signability: eschewing talent in favor of cheaper signing bonuses. Teams that draft this way believe they are pursuing a low-risk, low-reward strategy. However, this belief is based on a flawed understanding of risk and reward. This strategy is certainly low-reward, on that there is no disagreement. Soft throwing lefties and light hitting outfielders do not yield high rewards. But the strategy is not low-risk at all, it is high-risk. The risk of drafting Danny Payne or Nick Schmidt in the first round is not just the loss of capital spent on signing bonuses, it is also the opportunity cost of not signing a talented draftee that may become a MLB star providing returns of many multiples on the initial investment. It’s similar to buying $50 of lottery tickets with no hope of cashing out, rather than $100 dollars of stock in a company with good fundamentals because if the company goes bust you’d lose more money. The signability fallacy tempts executives because money shows up on the ledger and the hidden costs of these strategies do not. The greatest risk with any draft pick is the risk that the player will not be good enough to make it in the MLB. Players are typically willing to sign for less money because they are less talented. You may pay less up front for these players, but your return on investment is also much worse. What the horrors of the 2007 Padres draft illustrate is just how much more risky it is to sign low ceiling players.
Process vs Outcome
A secret of management is you always need luck to succeed. The manager’s dilemma is that you are judged by outcomes, which are a composite of decisions and luck, but you cannot control luck, and hence your success to some degree is in fact a matter of fate. There is a simple matrix to demonstrate this:
We regularly judge GM’s tenures based on the outcomes of their decisions. That’s only natural. We’re programmed to think of good or bad outcomes as proxies for good or bad processes. It’s very hard to break away from this type of thinking in part because in many situations luck plays a small role and the quality of outcomes very closely tracks the quality of processes. But in endeavors such as drafting amateur baseball players there is an unavoidable large component of luck. GM’s do not control luck and hence to some degree the outcomes of their decisions are in fact a matter of fate. So if we cannot judge GM’s strictly by outcomes what can judge them by?
Judging process
Judging a GM’s process is challenging because so much of what goes into a GM’s assessment is not knowable to fans. When a GM drafts a player that they have rated as the top available prospect, we fans don’t have access to their rubric. However, GMs who draft based on signability are, by definition, not drafting the players they think are the best. And we can certainly judge that.
A fait accompli
A GM’s job in the first round of the draft is to follow a process that creates the conditions where a stroke of luck can lead to a good outcome. When a GM drafts players that have marginal tools they are likely foreclosing on the possibility that good luck can lead to a good outcome. The ‘jewel’ of the 2007 draft was Nick Schmidt, a soft throwing lefty who’s 99th percentile outcome was a number 4 or number 5 starter. He never made it close to his 99th percentile outcome. His elbow somehow exploded despite barely topping 87 MPH on his fastball. While the injury may be considered bad luck, the failure of the draft strategy was a fait accompli. When we analyze the Padres 2007 first round draft picks through the process/outcomes matrix the results all look something like this:
A better variant of signability
There’s a variant to the classic signability strategy that walks a fine line between the pursuit of maximal talent and limiting downside risk: supremely talented players with injury concerns. This is a classic high-risk, high-reward strategy.
The A.J. era started in 2014 but he didn’t oversee a first round draft selection until 2016 when the Padres took Cal Quantrill, a top talent with a recent injury. Quantrill agreed to sign for less than it would normally cost to acquire a player with top tier physical tools. Quantrill’s tempered signing bonus allowed A.J. and Co. to pursue higher end talent lower down in the draft. This pick was a quintessential example of the variant approach to signability drafting: pursuing loud tools in a player with injury risk limiting the bonus they can command.
Entering 2022 A.J. was coming off 6 straight drafts where the resounding strategy was pursuing loud tools. The player with the loudest tools in the 2022 draft was (arguably) Dylan Lesko, a prospect largely agreed to be the best high school pitching prospect this year, and perhaps in the past 20 years. Lesko throws with great velocity, command, a high spin rate, and shows a changeup that at times was graded an 80 (not to be confused with the velocity of a Nick Schmidt fastball). He also sustained an injury requiring Tommy John Surgery this spring. The Padres picked him at 15, even though several top prep arms without the injury concerns were still on the board. Most media outlets immediately jumped to the Quantrill comparisons. But was the pick of Lesko another signability variant? A repeat of the strategy behind picking Quantrill? We’re actually not so sure it is.
There is little indication that Lesko is looking to sign a bargain contract. He’s younger than Quantrill was when he was drafted and has committed to NCAA powerhouse Vanderbilt giving him an ideal arena to return to top 5 form and the ensuant payday. Coincidentally a recent Vanderbilt grad, Kumar Rocker, triumphantly earned a large payday being drafted 3rd overall this year after the Mets declined to offer a contract due to injury concerns after drafting him 10th overall a year ago. Lesko has options. It’s entirely possible that Lesko was the pick, not because he was expected to sign cheap, but simply because A.J. felt there was a market inefficiency and Lesko was the best player available. Players with Lesko’s upside just aren’t available at pick 15 in a normal draft. He was there because even though around one-third of MLB pitchers have previously undergone Tommy John surgery, this injury is still considered a red flag on draft boards, but should it be? Which was the riskier pick, Dylan Lesko or Nick Schmidt?
Signability or BPA?
The Padres drafted another top talent in Henry Williams from Duke in the third round who is also recovering from Tommy John surgery and would otherwise not have been available. What Lesko and Williams command in signing bonuses remains to be seen, and what they ultimately get may answer the question of whether A.J.’s strategy was weighted towards signability, or if it was driven by a pursuit of loud tools and the best player available.
Now it’s a matter of fate
Any draft pick is fraught with risk, and every success story requires luck. Padres executives of yesteryear too often forclosed on the possibility of a lucky outcome by drafting players with virtually no chance of reaching stardom due to hard caps on their skillset. We at L2AJ believe that in drafting Dylan Lesko, A.J. avoided the biggest draft risk of all: that a player doesn’t have the tools to ever reach MLB stardom. The ultimate outcome is now a matter of fate.
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As a bonus exercise the staff at L2AJ filled in our the all-time MLB draft Process/Outcomes matrix:
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