It would likely surprise no one to learn that players who reach free agency are the ones who make the most money. The owners and players together have devised a system wherein players at the beginning of their careers make the league minimum, players in their next few years earn a little bit more, and players who possess six-plus years of service time… they make a ton of money. That system has made it so that clubs with greater payrolls typically employ more of this last type of player, while teams on the lower end of the spectrum rely on more minimum-salary players. Let’s examine that gap and which teams are the most reliant on free-agent veterans to fill their rosters.

To illustrate the effects of the system, let’s begin by looking at all MLB player salaries along with service time. The graph below (courtesy of Sean Dolinar) includes 750 data points, each one representing a player likely to appear on a major-league Opening Day roster. While service time is often presented as in years and days, I’ve used a slightly different format here. For the purposes of a better-looking graph, days were divided by 172 (a season’s worth of service time) to get a more accurate picture of how close each player is to having recorded another full season in the majors.

We see a great number of points clustered near the bottom left of the table. Those represent the players who’ve recorded the least service time and are (mostly as a result) also earning the least money. The few outliers on the left of the graph are composed mostly of Asian and Cuban free agents whose situations more closely resemble players with at least six years of service time. Next, there’s another cluster at Year Three. That’s when players become eligible for arbitration. Salaries rise at that point, but only a little. After that, it’s all over the place.

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When a team invests money in a player, the general idea is that the player in question will generate value by actually playing for the team by whom he’s been signed or acquired. Of course, that’s not always the case. There are multiple reasons why a team might end up cutting ties with a player but agree to continue paying part or all of his salary: to complete a trade that enables that club to get better prospects in return, to open a 40-man spot for a player of greater value, or to offset the salary of an overpaid player to make him more enticing in a trade.

For a club to spend money on players absent from their roster isn’t necessarily a bad thing. Last season, for example, the Cubs, Dodgers, and Indians all had more than $10 million in dead money. They clearly had no problems competing.

As for why a team would want a player so easily discarded by his original team, our old friend Moneyball covered that pretty well when it came to the A’s acquisition of David Justice:

In his prime, Justice had been the sort of sensational hitter the Oakland A’s could never have afforded to buy on the open market. They could afford him now only because no one else wanted him: the rest of baseball looked at Justice and saw a has-been. Billy Beane had cut a deal with the Yankees thtat left the A’s with Justice for one year at a salary of $3.5 million, half what they Yankees had paid him the year before. The Yankees picked up the other half. The Yankees were, in effect, paying David Justice to play against them.

It was a little more dramatic in the movie (and as Ken Davidoff mentioned to me, it was the Mets, not the Yankees), but in any event, the opportunity to potentially buy low on a player is enticing. Nor is the strategy limited merely to low budget teams taking on players from high-budget ones. All teams — or, at least, almost all teams — have a pretty good amount of money, so almost every team can afford to give up or take on a player depending on their needs. Last season, there was around $136 million in dead money on payroll. This season, that amount has doubled. In terms of teams paying the most, the Dodgers have a healthy lead, with the Padres and Yankees also devoting some payroll to players not contributing to the current club.

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With free agency more or less in the books and all arbitration cases having been decided, the projected payrolls for Major League Baseball teams are becoming more clear. A few moves could occur before the start of the season — maybe some contract extensions, maybe some trades — but given the information we have, we can come pretty close to projecting Opening Day payrolls for all 30 teams.

Overall, spending has increased moderately since last season. A year ago, the average Opening Day payroll was right around $128 million, which itself represented a very small increase over 2015 despite big spending in free agency. This year, the average payroll is up to $133 million, a 4% increase despite uncertainty with the new Collective Bargaining Agreement and a weak free-agent class.

In what follows, I’ll consider the league’s payrolls in a few different ways. Salary information has been collected from Cot’s Contracts, while the equivalent of the MLB-minimum salary has been attached to open roster spots, bringing each team to 25 players. Money for players not on a club’s roster roster — as in the case of the Reds, for example, who are paying $13 million for Brandon Phillips to play in the Atlanta suburbs — is included in the payroll for the team actually paying the money.

To nobody’s surprise, the Los Angeles Dodgers have the highest payroll in baseball.

The Dodgers come in at around $235 million, which is roughly $40 million clear of the second-place Detroit Tigers. Even after accounting for the competitive-balance tax, it appears as though the Dodgers are still looking at a reduction of more than $30 million from last season. Even if they need to cut payroll more, the result should hardly be debilitating for the health of the team.

The tax amount for this season is $195 million. When you account for the $15 million or so that gets added for benefits and the rest of the 40-man roster, it would appear that the Tigers and Yankees will pay between $5 million and $10 million, the Giants will be right on the borderline, and the Red Sox might actually be under, as Allen Craig and Rusney Castillo don’t count for tax purposes.

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Dellin Betances made medium-level news a week ago when he lost his arbitration case. He’d been asking for $5 million — less, for example, than Trevor Rosenthal had made in his first crack at arbitration the season before. The Yankees, meanwhile, submitted a $3 million figure. The case went to arbitration, and the Yankees won. Randy Levine then took the medium-sized news and turned into big news by acting like a fool. While the $2 million difference might not seem like a big deal for Betances when he’s still guaranteed to receive $3 million, the affect on Betances’ finances in the coming years will be significantly greater.

Arbitration isn’t exactly the simplest of systems. Teams submit blind amounts, and if the parties can’t agree on a deal beforehand, they go to hearing. The FanGraphs glossary explains the process in slightly more detail, but if the player and team go to hearing, the arbitration panel decides on either the team’s figure or the player’s figure, with no option to choose a number in between. This makes the arbitration a winner-take-all scenario. If arbitrators could choose a number in the middle, settlements would be even more likely, simplifying the process and lead to far less debate. They can’t, though, and that means that arbitration decisions have a significant impact.

Also relevant is how service time fits into the process. Players’ salaries gradually increase based on service time, rendering the previous season’s salary quite relevant, as it represents the starting point for a raise. A few different researchers have gone through and figured out exactly how much salaries increase during arbitration. (Here’s a good one, for example.) As a general rule, though, it comes to something like a 50% increase in salary every year. Small differences, especially early in the arbitration process, compound to make bigger differences over time.

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You’re probably aware of the Dellin Betances arbitration case and the interesting comments Yankees president Randy Levine made afterward. FanGraphs’ Nicolas Stellini wrote about the situation over the weekend.

No player or team likes going through the arbitration. Both parties try to avoid the process if at all possible, as it can create animosity between the camps.

And if you’re a player, you’re perhaps increasingly motivated to avoid allowing a panel of arbitrators determine your salary. Historically, teams beat players in the majority of arbitration cases, according to data compiled by Maury Brown:

Moreover, Brown reported this week that the advantage in favor of the owners has widened in recent years. The process increasingly seems to favor clubs — in part, perhaps, because arbitrators remain behind the times in how they evaluate performance.

Consider this David Laurila Baseball Prospectus Q&A from 2012 with long-time arbitrator Roger Abrams. Abrams suggests that the information presented to arbitrators is typically “not quite sabermetrics” and that arbitrators are not “baseball specialists.”

DL: You used the phrase “not quite sabermetrics,” but can it be assumed that more advanced statistics are presented today than in years past?

RA: It’s a mixed bag. What you don’t want to do is confuse the arbitrators, and some of the sabermetric stuff can be rather confusing. On the other hand, arbitrators can understand the importance of a strikeout-to-walk ratio. They can understand why ERA is a critical stat as opposed to wins and losses, which are meaningless–the pitcher doesn’t win or lose the game; the club wins or loses the game. The pitcher is responsible for earned runs. That is very simple-minded sabermetrics, and that is helpful in salary arbitration. Of course, it’s all glossied up in the submissions, which, frankly, you don’t have enough time to read within 24 hours, let alone digest.

Now, maybe arbitrators are slowly changing how they evaluate performance, but, at best, it’s a slow process that’s probably not caught up to better ways of understanding and measuring player value.

At a time when owners are making gains in percentage of revenue share, the arbitration process — especially in early arbitration years — is one more force working against players.

So does that mean everybody would be OK just eliminating the arbitration system? I’m guessing the answer is “No,” but I do think the players union would benefit from replacing the current system with something that exists in other major pro sports — namely, restricted free agency.

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Five years ago, the Los Angeles Dodgers and San Diego Padres were sold to new owners, both partially spurred on by messy divorces. Since that time, there’s been just one change in Major League Baseball ownership, when John Staunton took control of the Seattle Mariners last season as Nintendo stepped aside. While we don’t know for sure when the next sale will be, there are rumors that Jeffrey Loria could sell the Miami Marlins for $1.6 billion, a massive increase over the 2002 sale price of $158.5 million and more than double Forbes’ current estimate of value. Loria doesn’t have a great reputation as a baseball owner, and he is absolutely going to cash in, but where would this sale rank in MLB history?

Including a potential Marlins sale, there have been by my count, 33 major transfers in ownership over the last 30 years. In taking a look at previous sales, we can compare them to Loria’s potential sale and determine how he did. In terms of a straight profit with sale price minus purchase price, Loria’s is big, but not bigger than Frank McCourt’s when he sold the Dodgers. The graph below shows the 33 sales.

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A little over a year ago, Major League Baseball settled a class-action suit against fans who contended that blackout rules violate antitrust laws. The ramifications for not settling could have been massive, as ending the current blackout rules would prevent regional sports networks (RSNs) from claiming exclusivity over territories to air baseball games. This, in turn, would have prevented them from charging cable providers large amounts of money per subscriber to place them in the basic-cable tier — amounts that cable providers still seem (mostly) willing to pay. Instead of risking that potential financial catastrophe, MLB settled. In the process, they lowered the price of MLB.TV and offered single-team solutions. In a less notable development, the deal also included stipulations regarding in-market streaming of baseball games.

As Nathaniel Grow discussed at the time of the settlement, the lawsuit provided incentives for in-market streaming.

Finally, although not mentioned in the plaintiffs’ attorneys’ statement, Eric Fisher of the Sports Business Journal is reporting that the settlement could also pave the way towards allowing subscribers of RSNs owned by Comcast and DirecTV to stream in-market games via MLB.TV. In particular, the settlement agreement will reportedly specify that MLB cannot raise the price of its MLB.TV service until both Comcast and DirecTV reach an in-market streaming deal with MLB for their RSN subscribers.

For a few reasons, this provision wasn’t a big deal at the time at the time of the settlement. For one, preserving blackouts was probably the most important objective the settlement accomplished for MLB. Lowering the price of MLB.TV by 15% and securing lower fees for viewing just a single club’s games was also a bigger priority. Also, MLB had already agreed at the time to in-market streaming for half of the league’s RSNs — namely, those operated by FOX. For all of last season, half the league plus the Toronto Blue Jays had access to in-market streaming. The final reason the provision wasn’t that big of a deal at the time was due to when it would actually matter — i.e. one year later. Of course, that happens to be now.

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Largely overlooked amidst the hoopla surrounding last weekend’s Super Bowl, DeMaurice Smith, the executive director of the National Football League Players Association, weighed in on an obscure bill currently working its way through the Illinois state legislature. If enacted into law, the proposed legislation — presently dubbed Illinois Senate Bill 12 — would amend the state’s workers’ compensation laws to decrease the benefits provided to professional athletes who sustain career-ending injuries on the playing field.

This possibility led Smith to threaten that, if Senate Bill 12 were to be signed into law, the NFLPA would officially encourage players to steer clear of signing with the Chicago Bears. As Smith stated over the weekend, “If you’re a free-agent player and you have an opportunity to go play somewhere else… isn’t a smarter financial decision to go to a team where a bill like this hasn’t passed?”

The fact that the NFLPA would take such a public stance against the proposed Illinois legislation raises the question of what potential impact Senate Bill 12 would have on Major League Baseball players, and, more generally, how workers’ compensation laws affect MLB in the first place.

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If you haven’t heard the news, the St. Louis Cardinals received their punishment from Major League Baseball this week in response to the actions of former director of amateur scouting, Chris Correa. Correa hacked the database of the Houston Astros using some variation of the password Eckstein. As Jeff Sullivan explained, the Cardinals are expected both to pay the Astros $2 million and give them two draft picks, numbers 56 and 75. The consensus seems to be that the Cardinals got off light.

As Grant Brisbee noted, the second of the Cardinals’ picks has actually been given to them in the form of a competitive-balance pick, which provides convenient timing to discuss whether the Cardinals should even have that extra pick to begin with.

Per the recently established CBA, 14 teams will receive competitive-balance picks every year. Teams qualify for these picks by placing among the bottom 10 of major-league teams either by (a) revenue or (b) market size. According to Forbes, the Cardinals actually place among the top 10 of all clubs when it comes to revenue. They rank 24th, however, by market size. Therefore, they qualify for an extra pick.

While there seems to be much consternation about the Cardinals’ hacking penalty right now, wait 18 months. If the club loses Lance Lynn to free agency and then receives a better comp in addition to their own normal pick, they’ll possess three picks among the top-40 selections.

Question of the hacking scandal aside, there are questions about whether the Cards deserve any comp picks in the first place. By one definition, they certainly do: they meet the criteria agreed upon by the league.

There are plausible arguments against the characterization of the club as a “small-market” franchise, however. Most of them begin with a discussion of fanbase. Consider: here are the annual attendance averages per team over the last five years, with data collected from Baseball-Reference.

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Every spring, MLBPA chief Tony Clark travels around Florida and Arizona, visiting with all 30 major-league teams. He travels to learn of concerns and ideas from major-league players, and to communicate matters of importance. Clark also makes himself available to beat writers following major-league clubs.

In the spring of 2015, as collective bargaining talks loomed, I was in Bradenton, Florida, covering the Pirates. When Clark arrived at Pirates camp, I asked him if what players once considered a nonstarter, a salary cap — one that would guarantee a 50-50 revenue split — had become more palatable.

I asked him if any player that spring had expressed concern regarding the owners’ share of revenues, which has continued to increase over the last two decades. The trend has gained some attention in recent years at multiple media outlets.

“You’re the first person to ask,” Clark said.

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