Maybe not everybody, but the top hundred prospects would make significantly more money.
If you aren’t one of the few hundred best prospects, then yes you won’t make much. If you are a top prospect, and you get out of the draft via a loophole, you will get more money every time.
Standards set by MLB. Amatuers have very little leverage, since they don’t have any alternatives. Hence the problem.
There is a giant difference between what “can’t miss” players get paid when they are drafted and what they would make in free agency. The top drafted guy this year got somewhere in the neighborhood of six and a half million (After a renegotiation due to baseball breaking its collective bargained agreement regarding the draft. And you wonder why I don’t fully trust the owners?) As a free agent he might have gotten quadruple that. Perhaps more. If you are a major league team would you rather sign the best prospect in baseball for $40 million or give it to Kyle Lohse? Just look at how much the Red Sox were willing to pay to get the rights to sign Dice-K cheaply. That is how much these prospects are being underpaid.
They are still going to paid reasonably well, but that isn’t the point. They aren’t receiving a fair market value. For a lot these guys this the only contract they will ever sign. The difference between 5 million and 20 million could be the difference between being set for life, and being broke right after leaving the game.