How Winning and Financial Power Affect Free Agent Spending
Over the past few days, we’ve discussed the cost of a win in free agency and how that cost has been lowered for slightly below-average players. In this post, I want to examine some of the potential driving forces behind these changes. Specifically, I want to take a look at the following assumptions about how teams operate with respect to paying for wins on the free agent market.
- The closer teams get to the playoffs, the more money they will be willing to spend on players because of the monetary benefits that come from making the playoffs.
- The more money a team has, the more they will be willing to spend on a win on the free agent market because they can afford it, and vice versa (i.e. the Rays won’t spend the same dollars per win as the Yankees because the Rays have to hunt for bargains while the Yankees can afford to make the highest offer to any player they want).
We’ll take these assumptions one at a time. While there isn’t a great way to bucket teams by whether they’re “close” to the postseason without some degree of arbitrariness, I opted to look at a team’s projected win totals for each of the last two seasons, plus its current projected WAR for next season. I put teams into three categories: likely playoff teams, teams with a decent shot at the playoffs, and teams with little to no hope of making the playoffs. For the first group, I included teams projected to win at least 86 games, which usually provides a 50% or greater shot at the playoffs. For the second group, I included teams projected to win at least 77 games, but fewer than 86, which is roughly aligns with the 10%-50% range in terms of playoff odds. In the final group, I put teams with fewer than 77 projected wins.
The table below shows how much each group is spending over the last three offseasons, including this one:
| Wins | Teams | Players | Dollars | $/WAR (2018-2020) |
|---|---|---|---|---|
| 86+ | 28 | 84 | $2106 M | $9.0 M |
| 77-86 | 33 | 104 | $2299 M | $8.3 M |
| 77- | 29 | 57 | $656 M | $8.3 M |