This study uses a unique data set and valuation method to quantify returns to teams in baseball’s high-stakes, high-risk amateur draft. Thanks to teams’ monopsony power over draftees and low-seniority players, payoffs on successful picks far outweigh losses on unsuccessful ones: the expected annual yield on the median first-round draftee is 44%. However, the pattern of returns is inconsistent with market efficiency. Expected yields are lower for high school draftees than collegians (36% vs. 57%), lower for pitchers than position players (34% vs. 52%), and decline for later-round long shots.
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