I found Deacons blog on Arbitration very interesting, so if you have the time I would head over to the blog and read it. I have my own way of handling Arbitration but it follows his way of thinking. If I want to keep a player, I will offer what he asking long term in most cases. There are some if, ands and buts to go with that however. Some of the things I look at are health, decline risks, available replacements and asking salary. If I don't want to keep them long term then I will let them become a FA and usually let them go right before the hearings start. If I let one go that would have been nice to keep but not long term I set the watch button on the player, if at the end of the FA period he is still available then I might tender an offer to the player. If they clear FA, you might be able to lock the player for a much cheaper long term period even. By the way, I never go into arbitration with a player regardless and I won't go after him in FA either as his asking price is usuaully more than his arbitration demands were.
Some things I have seen that are bad usually involve huge long term salaries where the player has declined or injury has ruined the player. Another is a GM that back-loads a contract, rising salaries as the player gets older, this usually hurts a team more than helps long term. I would rather see a front-loaded contract and would be more beneficial down the road, even on a FA by the way. These types of players usually end up on the trade block and you have to give up a good prospect to get rid of him.
I used to try and put 20M into prospect payroll, but the recent discussion gave me a little pause and I went and checked my other worlds as to how I spent the cash on IFA's. I have been putting less and less into IFA's by the way in all my worlds. In my thinking 10M+ for 1 player is a bit much when I can get 3 or 4 specialty players for the same money to start with. After analyzing what I did in the IFA market I came to some conclusions of how I usually spent the money. A relief pitcher that cost 6M (for ML long) and in most cases less than 3M (ML setup). A defensive 2B, SS or CF that cost less than 7M (ML hitting quality) and normally around 3M (ML defensive only). And the big prize is a defensive PC catcher for about 500K to 1M. Most of the pitchers I go for early in the season as most will wait because they are looking for the big guy. The catcher can be had almost anytime as most pay them no heed waiting on a bigger fish. The others usually come after everyone has spent their money already. At or near the end of the season, I will buy up the remaining cheap IFA's so I can move players out of rookie ball or just to spend the remaining money or move it to player salary and lock up a FA for next season if possible.
As for spending money on scouting, it actually dictates how many and how well you see the players in all realms. I have been spending less and less on scouting IFA's as a matter of fact. There was an article in the forum a few months back where they did a study with IFA scouting from 10M to 20M spent. The 20M saw about 50% more players and about 85+% of all players than the 10M and those in between. The ability accuracy was not enough to warrant a big difference in most cases.
I have done my own study on the amateur draft. I usually spend 18M on college and 14 on HS. I once did 18M on both and was thoroughly disappointed at the results. But I may reverse this trend as I have noticed that HS players are more apt to be the better players overall. With a 18M - 14M split I see about 100+ HS players, less than I expected. At 18M I saw 250 each by the way, I do remember that and the pool wasn't any better. I usually spend 18M on college because they will reach the ML level faster and match my advanced scouting so there is no surprises in abilities. I used to do 16M each, but I never paid attention if I got a 250 even split or not. I may go back to the 16M split again. I know at 14M the trade off could be as much as + or - 4 on the overalls and 16 would be a + or -2 with 18 advanced. The trend I noticed with my current setup is that a HS player might have a higher overall but is placed lower in the rankings. That tells me that player has skewed abilities and caution should be taken. It doesn't happen with every HS player, so to me that means if a HS player is placed first in an OVR weight class, he could be moved up because his abilities are seen lower than they actually are. As for the super players, the 90+ ones, I really don't see much of a difference, though for some reason I tend to see more of them the later I draft which really upsets me..lol