Head over to AOL Fanhouse to see Tom Krasovic’s piece on Yankees’ 2008 1st round pick and current UCLA Bruin Gerrit Cole. Cole, famous for his spurning of the Yankees at the behest of Cash Money Millionaire (no relation to GM Brian Cashman) father Mark, is excelling in Los Angeles and is expected to be among the first names called in the 2011 draft.

According to Cole, there’s no ill will toward the Yankees, who were understandably jilted by not even being met at the bargaining table. He mentions that he’s still a Yankee fan and called Damon Oppenheimer “a great guy.” Oppenheimer seems a bit more vexed on the matter.

“We were led to believe by the family that he was not interested in signing with everybody, but he would be very interested in signing with us because we were his favorite team and a lot of things like that,” Yankees scouting director Damon Oppenheimer told FanHouse on Wednesday. “Over the course of the summer, they obviously had a change of heart.

“We were never even afforded the opportunity to come in and present the opportunity as to what the Yankees were about, and where he could be. It was a little bit strange.

“But I don’t hold any ill will toward him,” Oppenheimer added. “They made a decision based on a level where he needed to go — three years of college, for whatever reason, whether it was a maturing factor. I just wish that we would have been told that going up to the draft. Then there wouldn’t have been an issue on our side of drafting a player who didn’t sign.”

Publicly, Oppenheimer says how happy the team is to have gotten ultra-athletic outfielder Slade Heathcott the following year as a consolation, and that may be true, but the loss of Cole is a huge one. While the farm may have some arms with a decent mix of upside and probability — Jose Ramirez and Manny Banuelos — having a fireballer that profiles as an ace if developed would have been a huge boon to the club, which lacks little high-end talent outside its catching prospects.

I don’t fault Cole or his family for pushing him to go to college, particularly one as well-regarded as UCLA. The family is alleged to be wealthy, negating some of the need for Cole to jump to professional ball directly out of high school, and there were reports that Cole had makeup and attitude issues. Perhaps going to college, getting a quality education and taking a different path will be more fruitful for Gerrit Cole in his development as a player and person. But it does seem strange. Clearly, the Yankees were willing to pay a large sum of money, as they knew Cole’s talent and questions would render him a tough sign. But if Cole really had no intention to sign, regardless of the money, why stay in the draft?

It’s like going to the bar/club and you spot a cute girl. She starts flirting with you and telling you how much she likes you and how impressed she is by your successes in life. You reasonably think, “Hey, this is great. She seems fun, sensual, smart. Man, I hit the jackpot.” So you buy her a few expensive drinks and have a good conversation. Then, just as things appear to be going well she says, “Oh by the way, I’m married but maybe I’ll be divorced in a few years. However, by then, there’s no way you’ll get me.” You’re stuck with Blue’s Clues balls, a $100 bar tab and a fake phone number. You get a nice lady next year, but in your heart you know Gerrit Cole is the one that got away. And you never had a chance.

Whether it be to use them as trade chips, use as depth in case of injury, provide great value as a regular and/or to lessen the blow of higher-priced disappointments, developing players is key for organizations big and small. We witnessed the perils of shunning development in the 2000s. Failure to build at least in part organically can result in a team like the 2009 Mets, a perfect storm of inflexibility, poor use of fiscal resources, few young impact players and what appears to have been monumentally bad luck with injuries.

The Yankees’ payroll allows them some tremendous advantages in not needing to rely as heavily on player development as teams with much lower revenue. However, as we’ve seen over the past few years under Brian Cashman, the Yankees very much value getting high-upside, cost-controlled talent.

Even the Yankees have a budget, big as it may be. In practicality and theory, devoting $7 million to a slew of young players should yield more than that total value over the course of their time under contract with the organization. It doesn’t always happen but as former Yankee pitcher and Princeton grad Ross Ohlendorf shows, the return on investment for drafts and young players is very, very high. Of course, the operating budget is separated into smaller sub-budgets. I’m going to assume there’s a budget in place for the 25-man and 40-man roster, the players in the minors not on the 40-man, the amateur draft, international free agency, coaches, trainers/medical staff, administrative and general management. Each sub-budget has a cap, though we’re only really privy to the 40-man as public knowledge. For this post, we’re going to look into the implications and happenings of the budget regarding IFA and to a lesser extent, the amateur draft.

There’s a popular but fatally-flawed mantra that the Yankees’ big-spending ways also take root in international free agency and the amateur draft. “All those tyrants do is outbid helpless small fish,” some say. Part of this is due to perception that large bonuses doled out to Andrew Brackman, Gary Sanchez, Jesus Montero, Jackson Melian, Willy Mo Pena, Carmen Angelini, Dellin Betances is something only the Yankees do. Other clubs shy away from such tactics. False.

The narrative states that if the Yankees really want a player, they’ll grab him, cost be damned. However, the high-bonus players acquired in the amateur draft were either signability or injury guys with high upside. The amateur draft essentially relegates the Yankees to the last pick of each round — and they often forfeit even those top picks due to signing Type-A free agents — where it’s difficult to assemble top talent. This led their approach to take high-upside players with injury concerns (such as Brackman) and signability guys in later rounds (Angelini, Betances, Mitchell). Since 2006, the amateur draft has been between $6.7-8.0 million. Certainly not the lowest, but not the largest by any means.

While you can find excellent players throughout the draft, the probability of consistently adding MLB regulars is lessened as the available talent up for bidding isn’t that of a true free market system. This means for the Yankees to acquire talent in the minors they must (obviously) be able to scout and identify talent and also pay for it. And yet, even though they seem unconcerned with cries of their MLB budget, they don’t teeter on the edge for their amateur budget. In tandem, they can take full advantage of the IFA to nullify their amateur draft obstacles. So then, is it true that the Yanks pull their weight in IFA, bullying other teams for the best every year?

Beyond the Boxscore‘s Patrick Clarke listed the highest bonuses issued in IFA and we can see some of the Yankees on the list. (Note: Cubans and Japanese do not appear on the list, though Chapman, Hechevarria and Iglesias would rank among the top three when including guys under the age of 25.)

Michael Ynoa, 16, RHP, 2008, Athletics, D.R., $4,250,000
Miguel Sano, 16, SS, 2009, Twins, D.R., $3,150,000
Gary Sanchez, 16, C, 2009, Yankees, D.R., $3,000,000
Rafael Rodriguez, 16, OF, 2008, Giants, D.R., $2,550,000
Yorman Rodriguez, 16, OF, 2008, Reds, VZA, $2,500,000
Wily Mo Peña, 17, OF, 1999, Yankees, D.R., $2,440,000
Joel Guzman, 16, SS, 2001, Dodgers, D.R., $2,255,000
Angel Villalona, 16, 3B, 2006, Giants, D.R., $2,100,00
Juan Duran, 16, OF, 2008, Reds, D.R., $2,000,000
Adys Portillo, 16, RHP, 2008, Padres, VZA, $2,000,000
Guillermo Pimental, 16, CF, 2009, Mariners, D.R., $2,000,000
Jose Vincio, 16, SS, 2009, Red Sox, D.R., $1,950,000
Miguel Cabrera, 16, IF, 1999, Marlins, VZA, $1,800,000

Jesus Montero, 16, C, 2006, Yankees, VZA, $1,650,000
Jackson Melian, 16, OF, 1996, Yankees, VZA, $1,600,000

Edward Salcedo, 17, OF, 2009, Braves, D.R., $1,600,000
Jurickson Profar, 16, SS, 2009, Rangers, Curaçao, $1,550,000
Ricardo Aramboles, 16, RHP, 1998, Yankees, D.R., $1,520,000
Luis Sardinas, 16, SS, 2009, Rangers, VZA, $1,500,000
Michael Almanzar, 16, SS, 2007, Red Sox, D.R., $1,500,000
Esmailyn Gonzalez, 16, SS, 2006, Nationals, D.R., $1,400,000
Fernando Martinez, 16, OF, 2005, Mets, D.R., $1,400,000
Willy Aybar, 16, IF, 2000, Dodgers, D.R., $1,400,000
Carlos Triunfel, 16, SS, 2006, Mariners, D.R., $1,300,000
Luis Domoromo, 16, OF, 2008, Padres, VZA, $1,250,000
Juan Urbina, 16, LHP, 2009, Mets, VZA, $1,250,000
Chesler Cuthbert, 16, 3B, 2009, Royals, Nicaragua, $1,200,000
Roberto De la Cruz, 16, 3B, 2008, Cardinals, D.R., $1,100,000
Julio Morban, 16, OF, 2008, Mariners, D.R., $1,100,000
Kelvin De Leon, 16, OF, 2007, Yankees, D.R., $1,100,000
Alvaro Aristy, 17, SS, 2008, Padres, D.R., $1,000,000
Jharmidy De Jesus, 17, SS, 2007, Mariners, D.R., $1,000,000

While there certainly are a number of Yankees on the list, including busts like Melian, Aramboles and to a lesser extent Willy Mo Pena, the list shows a fair mix of Reds, Giants, Mariners, Red Sox, Padres and Rangers among other teams dispersed throughout. This is not a battle of the haves and have-nots of big-money baseball.

In IFA, contract restrictions do not exist–talent is up for the highest bidder, though outside of more polished pro prospects in Japan and Cuba, players primarily from Venezuela and the Dominican Republic were usually capped out in the low seven figures.

Even with the large bonuses to a select few, the Yankees were in the middle of the pack with draft bonuses over the past few seasons. You’ll notice that salaries have trended upwards within the past few seasons, with 2009 being the crest. Add the figures of Chapman, Iglesias, Hechevarria, Arguellos and we’re seeing IFA salaries can now regularly reach around $10 million or higher. You’ll also notice the Yankees did not acquire one of those players. In fact, you may not believe this, but the Yankees have been outbid for a number of IFA guys lately. Hechevarria caught $10 million from the Jays, Ynoa famously spurned the Yankees for the A’s, small-market Reds outbid the Yankees and others for Chapman, the Yankees expressed interest in Salcedo and Rodriguez as well. The Yankees outbid? Wait, what?

Despite that, what the Yankees have done is aggressively target one big-name player and generally play pretty conservatively otherwise. They’ve been relatively successful too; less-heralded, cheap signs like Aroyds Vizcaino and Manny Banuelos excelled and there’s a lot of talent in the marquee signees (particularly Montero). Other clubs have shown you don’t need to sign seven-figure guys to have success. Look at the success of the Rockies, for instance.

Year-by-year for their top player the Bombers spent $3 million on Dominican catcher Gary Sanchez in 2009, $800k on Ramon Flores in 2008 (the year they “lost” out on Ynoa),  $1.1 mil. on Kelvin DeLeon in 2007, $1.6 mil. to sign Jesus Montero in 2006. (2005 isn’t included as I consider it part of the “Dark Ages” of development with the organization having a phantom limb discombobulation.) They’re not necessarily shy in signing big names, but they appear to be more keen to sign the players in a lower bracket than to just find the top 4 guys each year and just outbid other teams. Why might that be?

We still cannot tell how much of it is they really loved some guys but just didn’t have the money, liked guys but not for their demands,  saw a serious flaw in some, or were hampered by visa/age problems, etc. All of these situations must be dealt within the context of their own unique situations, but could there possibly be a larger theme to this?

We hear rumblings that Hal is a budget guy (and he seems to be given his relatively firm stands), so it’s easy to wonder what his budget for IFA and the draft is, and beyond that, if they’re flexible budgets. Obviously it all comes from the same pool of revenue. So if you increase the IFA budget, you’re decreasing another. They’re not just saying, “Hey, we had $15 mil. for our IFA budget but we only spent $6 million. Let’s put this shit in an IRA or something.” It gets re-allocated or used. Even more to the point, if increasing the IFA budget detracts from the ML budget, you’re possibly taking too big a risk. Even a bench guy or cheap reliever for $3 million has a better chance to help your organization than a single hotshot 16-year-old. However, the flip side to this is that high-upside 16-year old can ultimately save your organization tens of millions of dollars. Clearly some balance must be struck.

While it’s certainly true that in many cases the big-name IFA bonus babies don’t work out and less-heralded signees exceed expectations, the Yankees’ biggest advantage in IFA is the lack of a cap.

I’m sad to say that while I’d love for them to increase their budget by $4 million every year, it’s better that we lose out on high-upside talents like Sano, Ynoa, Hechevarria, Chapman to at least retain the ability to go after a big name when we’re really tickled. Bud Selig has already said he favors a worldwide draft to level competitive balance and recently appointed Sandy Alderson to “reform” Latin America.

The Yankees being the biggest spenders have probably sensed long ago that the value they can add in simply outbidding every other team in IFA isn’t worth the cost of at some point being subject to a worldwide draft, where again they’d be picking at the back and losing out on the top players every year. Instead, lurking in the shadows and grabbing players they really love without drawing too much attention to themselves is the far better strategy. They can find their Monteros every now and then under this M.O.

They can weild their considerable resources where it really counts but they can’t operate carte blanche at every level. It will prompt tremendous change. We may not like losing top-end talent when they provide so much potential value, but it’s a necessary evil to keep baseball operating in a set-up that favors the Yankees.