Checking In on the Free Agent Market

On the eve of the winter meetings, a full month and one major holiday into the offseason, it’s a good time to review what we’ve observed on the free agent market thus far and gauge how that activity portends for the rest of the year. It’s always an interesting question, but one that feels particularly relevant now after consecutive cold stoves and increasingly heated rhetoric from both the league and the MLB Players Association about the game’s economic landscape.

Inevitably, most of the action this winter will be viewed through the prism of whether this offseason feels as strange as the last two, which, if you’ve forgotten, were very unusual. Top free agents got their customary nine-figure offers, and we even saw a couple of record-breaking contracts, as Manny Machado and Bryce Harper inked the sport’s first $300 million free agent deals.

But seemingly everyone else had to scramble for work. In an abrupt departure from convention, teams both spent considerably less money than in winters past and waited significantly longer to solidify their roster. Meanwhile, players signed for dimes on the dollars they could have expected in previous years. Nick Markakis made his first All-Star team and took a pay cut to remain in Atlanta, and Mike Moustakas and Yasmani Grandal settled for one-year deals. Useful players like Denard Span faded away entirely. Revenues around the league were up, but teams had less and less to offer free agents.

The reasons why are complex and interrelated. Tanking is certainly a factor, and as roughly a third of the league plays for the future, there are correspondingly fewer teams with any interest in perking up their roster for the upcoming season. On the other end of the standings, many successful clubs are seemingly solidified near the top; for different reasons, and at the risk of complacency, teams like the Dodgers and Indians have not spent big in recent winters. General managers are increasingly (and rightly, to a degree) leery of ponying up for veterans on or nearing the downswing of their careers.

Related to that, as teams get more and more revenue from television and off-field ventures, their profit margins have become less reliant upon winning than ever before, which further limits the incentive to spend additional dollars. Whispers of collusion have percolated for two years as well, though more out of general frustration than any specific charge. And of course, as market conditions solidify and lower contracts become the norm, the feedback loop only intensifies.

Precisely how each of these factors specifically effects the market is unclear and somewhat irrelevant: Whatever the cause, the conditions on the ground don’t appear significantly different in 2019 than they did a year or two ago. A third offseason like the previous two would unmistakably signal a new, uncomfortable long-term reality for free agents, and it’s only natural to question whether that’s the case.

So far, we can’t say definitively. On the one hand, there are still a lot of guys looking for homes. And as in previous years, most of the big fish are still in the water. Only the Braves and White Sox have really raced to address their biggest holes, and even they still have work to do. We’re only now starting to hear rumors surrounding Gerrit Cole, Anthony Rendon, and Stephen Strasburg, which suggests that a lengthy recruitment period for the market-setters may again be in the cards.

Moreover, teams just flooded the market with an unusually talented crop of players who were not offered arbitration. Baltimore earned considerable flack last Wednesday for not offering a contract to Jonathan Villar, who accrued more than 4 WAR last season, but they’re not the only club that skirted paying arbitration salaries to productive players. The Giants non-tendered Kevin Pillar, who earned a down-ballot MVP vote, and the A’s did the same with Blake Treinen, who was arguably the best reliever in baseball eight months ago. Addison Russell’s case is more complicated, given his history of domestic abuse, but it’s notable that he was also non-tendered.

All of this puts downward pressure on the market as a whole, especially to the lower class of free agents. It’s easy to get cynical about the brewing catch-22: Players can’t get a good deal on the market, which makes them cheap for teams, which makes teams less likely to pay arbitration salaries to incumbent personnel, which gluts the market further.

And yet, there are also more than a few signs of a thaw. Of the 12 players on our Top 50 Free Agent list who have put pen to paper thus far — do big leaguers use DocuSign? — eight of them clearly surpassed our contract expectations, some by a healthy margin:

Of the four who haven’t, Gibson’s deal still handily beats the expectations from our contract crowdsourcing estimate, while Wainwright’s has incentives that could take him into the neighborhood we projected. That leaves Hamels and Odorizzi, both of whom opted for one-year deals at a high salary. In Odorizzi’s case, he took the qualifying offer, which gives him a lofty raise and ensures that he won’t have a Q.O. attached to him when he hits the market next winter.

Many of these signings have been unambiguous successes from the players’ perspectives. The big winner is Grandal: After overplaying his hand last winter, he had to settle for a one-year deal barely north of the qualifying offer; now he’s a year older and still able to command the kind of money he wanted last winter. Abreu, his new teammate, also signed a good deal: Already, his contract looks like an outlier, the product of an oddly player-friendly extension from a team that clearly values his presence in the organization.

It’s also worth mentioning that the relative lack of big-ticket signings is not particularly unusual — at least not to this point in the offseason. While MLB’s recent tepid winters contrast starkly with the free agent frenzies we typically see in the early days of the NBA or NFL offseason, baseball has always operated a little differently. Per historical research from Ben Lindbergh, only 20% of the league’s offseason activity happens in November — the lion’s share doesn’t occur until December, and is traditionally kicked off in earnest at the winter meetings. In light of the past two offseasons, a somewhat slow start to the winter looks suspicious on paper, but it isn’t all that unusual when taken in context. The signings of Moustakas, Hamels, and Wheeler indicate that we’re starting to see a surge in activity at the normal time.

More to the point, this isn’t actually a slow start. We’re already well ahead of the pace we’ve seen in recent years, both based on the number of signings and the dollars committed. Per data from Sportrac:

Just as encouraging are the types of players doing well. Relievers, perhaps the one positional group unaffected by the austerity of recent winters, are again getting their money. Pomeranz’s contract is particularly notable, given his lack of experience in relief and that it’s the first four-year deal for a bullpen arm since 2016.

But position players and starting pitchers are getting paid too. Grandal’s signing was the first inkling that this might be a better year for players, but it’s the deal his former teammate signed that seems like a turning point. Moustakas had tested the market each of the past two winters, only to learn there was limited interest in his services; he settled for one-year deals in each case. But in 2019, at 31 years old, he was able to get a four-year deal at nearly double the AAV of his highest previous salary. Wheeler’s contract too will raise morale amongst the free agents left on the pile: Everyone expected him to get a multi-year deal for good money, but it’s hard to imagine a player with only 12 career WAR and zero 200-inning seasons on the ledger signing for $118 million in the harsh climes of recent winters.

Some of this optimism is relative. For anyone sympathetic with the players, it’s encouraging to see so many of the early signees beat their offseason projections – but those projections were built to reflect the conditions we’ve observed on the market the past two years. Had we done the same exercise with this group of players up for free agency in the winter after the 2016 season, those projections would likely have been higher.

And obviously, none of this guarantees that we aren’t in for a frosty finish. Each of the past two years were characterized by a spurt of early activity and then a notable absence of significant transactions as January stretched into February. Perhaps we’ll see that pattern continue as the calendar flips to 2020.

So far though, the market looks more active and we should root for that to continue. A vibrant free agency not only signals that more teams around the circuit are playing to win in 2020, but that the league itself is perhaps a touch healthier than it looks. A few free agents earning their money won’t be enough to offset the growing inequality between management and labor, but a winter in which good players get paid could perhaps go some way toward deescalating brinkmanship in advance of what will surely be tense collective bargaining negotiations after the 2021 season. We’re far from that point, but the early returns from the current free agent period seem encouraging.