There is a book, first published in 1981 and updated to a third edition in 2011, that has become the go to introduction to negotiating strategies. Getting To Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury and Bruce Patton.1 The book pushes for a negotiation style based mainly on principles and not on positional or underhanded bargaining. Establishing principles or standards that drive the negotiation are central to this ideal, which goes against the idea that so many of us have about a more contentious style of negotiating in sports.

There are several types of “dirty tricks” in negotiating. Two of the most applicable here are deliberate deception and positional pressure via extreme demands and a refusal to negotiate. This is fairly self-explanatory and unsurprising, but the use of these tactics likely contributed to the problem that Brady Aiken and the Houston Astros now find themselves in.

What Happened?

The deadline for MLB teams to sign their draft picks was Friday, July 18th at 5:00 p.m. EST. For the first time since 1983, when the Minnesota Twins failed to sign RHP Tim Belcher, the first overall pick was left without a contract to sign. The Astros and General Manager Jeff Luhnow could not find a middle ground with LHP Aiken, taken out of Cathedral Catholic High School in California.

Just a couple days after being drafted first overall, the Astros and Aiken’s “advisor”,2 Casey Close of Excel Sports Management,3 came to a verbal agreement on a $6.5 million signing bonus.

1-1 pick Brady Aiken agrees w/@Astros on $6.5 mil. Ties Jameson Taillon's record for largest @MLBDraft bonus given to HS P. — Jim Callis (@jimcallisMLB) June 7, 2014

The slot value of the first overall pick for the 2014 draft was just over $7.9 million.4 While Aiken had one of the highest upsides in the draft, high school pitchers are rarely taken number one overall because of the huge risk associated with taking a young pitcher that hasn’t gotten past the “injury nexus” associated with pitchers blowing out their elbows. By taking the 17-year-old lefty, the Astros continued their tact of taking a player at the top of the draft that they can sign under slot value and the use the excess elsewhere. The $1.4 million+ they planned to save would prove to be crucial.

Before signing an official contract, Aiken had to go through the usual physical. After he was examined, no deal was signed and the world was left in the dark. According to those with sources, the Astros claimed to have found “significant abnormalities” in Aiken’s elbow that increased his injury risk.5 It should be noted that Houston didn’t necessarily find an injury, but rather an increased chance of an injury because of something in his medicals.

This “abnormality” was enough for Luhnow to rescind the original $6.5 million offer and drop it to the minimum they could offer while retaining their right to a compensation pick in the 2015 MLB draft; roughly $3.1 million.6

Fast forward to the signing deadline and still no deal had been reached. Close had uncharacteristically gone public with his dislike of the Astros negotiating tactics and the way the current draft rules are structured and talks had stalled almost entirely. Finally, news broke that a new offer was on the table. The Astros had gone up from the minimum they were realistically willing to offer, $3.1 million, to a $5 million signing bonus. This was $1.5 million less than the original offer and represented a bonus commensurate with the slot value of a third or fourth overall pick.

#astros made 3 offers friday, the 2nd w/30 mins to go, the 3rd, at $5M, w/5 mins. aiken side: no counters. he just said no — Jon Heyman (@JonHeymanCBS) July 18, 2014

No deal was reached and the Astros failed to sign 1-1 pick Aiken and 5-1 (#136 overall) pick Jacob Nix. Other players went unsigned, and Mac Marshall was implicated in the Aiken saga, but the two above are the two that matter the most.

Astros MLB Draft Strategy

Several teams that have been picking near the top of the draft ever since the new CBA was enacted in 2012 have used a specific strategy. If at all possible, sign your top draft pick for below slot value, even if that means picking the second or third best player first, and use that extra money to sign a signability issue player with your second pick.

The Astros took SS Carlos Correa in the 2012 MLB draft and signed him for $4.8 million, $2.4 million below the $7.2 million slot value for the first overall pick that year. This allowed them to pick and sign RHP Lance McCullers for $2.5 million or roughly double the $1.25 million slot value.7

In 2013, the Astros continued this strategy by signing senior RHP Mark Appel for $6.35 million or $1.44 million under the slot value of $7.8 million. The draft likely didn’t fall in a way that Houston could take full effect of this strategy,8 but in the 10th round they drafted LHP Austin Nicely out of high school and signed him for $610,000 or $470,000 above the slot value of $140,000.

Finally, 2014. Luhnow planned to sign Aiken for roughly $1.4 million below slot value and use that money on their fifth rounder, RHP Jacob Nix. Pending the signing of Aiken, the Astros agreed to sign Nix for $1.5 million which was roughly $1.3 million above slot value.

5th-rder Jacob Nix agrees w/@Astros on $1.5 mil (pick 136 value = $370,500). Calif HS RHP inconsistent as senior but also up to 96 @MLBDraft — Jim Callis (@jimcallisMLB) June 18, 2014

The numbers match up a bit too well, showing us that the Astros needed Aiken at $6.5 million or less to fit Nix into their total pool. It wouldn’t fit if they failed to sign Aiken because failing to sign a pick sacrifices the full slot value from your pool. $7.9 million in the case of Aiken and the Astros.

The Fallout

It’s been popular to point out that Nix and Aiken share Close as their agent and that both sides were using Nix as the bargaining chip to raise or lower the bonus of Aiken. That Close was telling the Astros they would lose out on both Aiken and Nix if they didn’t raise their offer. That Luhnow told Close that if they didn’t succumb to their price, Close would miss out on getting Nix signed as well. However, the brass tax of the situation is that Nix simply could not sign if Aiken didn’t sign. Without the wiggle room provided with a below slot deal, the Astros didn’t have the draft pool dollars to honor their verbal agreement with Nix.

The interesting situation is that we have data of players that have elbow issues and how much they sign for. It should be noted that these players invariably fall to much lower draft slots than Aiken at number one. Comparing their total signing bonus to Aiken’s offered bonus may not be a one-to-one comparison because the starting point is the slot value of whatever pick that player is taken.

Nonetheless, let’s take a look. Lucas Giolito was taken by the Washington Nationals in 2012 with the 16th overall pick.9 He suffered a UCL injury that ended his season and was scheduled for Tommy John surgery less than a month after signing. Washington signed Giolito, now a big time pitching prospect with ace potential, for $2,925,000 or $800,000 over the slot value of $2,125,000.

The Nationals struck again this year when they drafted college pitcher Erick Fedde at 18th overall despite Fedde having Tommy John surgery in May, 2014. The value of that pick was $2.15 million and Washington signed Fedde at the deadline for $2.5 million. Once again over slot value by roughly $400,000.

The Toronto Blue Jays also made a foray into Tommy John territory by selecting RHP Jeff Hoffman ninth overall this year. Hoffman had TJ surgery prior to the draft and signed for $3.08 million; exactly the slot value of the ninth pick in this draft.

It would appear that the Astros were using the previous elbow injury pitchers in recent seasons near the top of drafts as a test case for the value of Aiken. Yes, the $3.1 million was exactly the minimum that the Astros could offer and still receive a compensatory pick if they failed to sign him. But, it would have been idiotic for the Astros to offer less than that and jeopardize their chances of receiving compensation if they didn’t sign him.

If the above is true, the issue is that Houston used the value of players that already received TJ surgery to assess the value of a player that is merely at increased risk for an elbow injury. Furthermore, the fact that they upped their offer to $5 million shows a more realistic number of their value of Aiken.

Getting To Yes warns about this type of bargaining; making extreme demands. This puts both sides into positional bargaining instead of negotiating on principles. By the time Houston offered a more palatable $5 million, Close and Aiken were locked into their position of demanding the full $6.5 million that was verbally agreed to prior to the physical. Negotiating on principles likely would have lead the two sides to somewhere around $5-$5.5 million for a signing bonus.

The agreement shouldn’t be expected to be honored when information of health issues arises at the physical. This is precisely what the physical is designed to protect against. The verbal agreement is contingent on the physical. But, when the Astros decided to low-ball Aiken, it likely entrenched both sides into their most extreme bonus value.

Where Both Sides Go From Here

The MLB Player’s Association has made it clear that they will look at all legal options in this case. But do they have standing on this issue? They’ve made it very clear that they don’t value the draft and the players in it until they become part of the professional sphere and encompassed by the MLBPA. They’ve stated that the only reason the MLBPA is interested in how the draft is constructed is because it relates to compensation for qualify offers and MLB players.

Aiken and Nix will likely have a strong desire to be named free agents, one major reason being that they may end up being disqualified by the NCAA because they were clearly and publicly represented by Close and his agency. Making this $1.5 million disagreement over bonus interesting is what many people believe that Aiken is worth as a free agent.

Team officials guesstimated this week that if Brady Aiken was a free agent, he'd get something in the range of $30m-$40m. What a system. — Buster Olney (@Buster_ESPN) July 18, 2014

The reality of the situation is that this number is irrelevant to the previous negotiations. Both sides were negotiating based on the rules of the draft, not based on free agency, for better or worse. It is foolish to rule anything out in this story. It has already surprised many. But the likely outcome is that the Astros pick second overall on top of their actual draft spot next year and Aiken either goes to UCLA or to a Junior College and re-enters the draft when eligible. Will he be picked number one overall again? Probably not. But his next draft position might be worth more than the $5 million offered at the last minute.

Both sides likely fell into positional bargaining during this process. Both sides don’t have the best alternative to striking a deal somewhere in the middle ground. But, in the end, both sides decided on their alternative route and it will likely be to both of their detriments in the end.