Let’s Fix MLB’s Salary Arbitration System: Introducing Restricted Free Agency
We’ve reached, at long last, the finale of our series on how to fix salary arbitration. The previous installments have all focused on how the arbitration process works, and how it might work better – from changing evidentiary rules, to granting greater independence to the arbitrators, to eliminating the either/or model. But today, we’re going to look at something different: who is eligible for arbitration, and how we might replace the current system with one designed to adapt to the realities of the current market for player labor. Doing so requires addressing service time manipulation, and ensuring that both sides can opt-in or out of a particular arbitration hearing and also that players are paid even in a slow free agent market. Can we do all of that without breaking teams’ payroll? I think the answer is yes.
A little over a year ago, Travis Sawchik floated the idea of adding restricted free agency to baseball, which would bring the sport more in line with the NFL and NBA. More recently, he revisited the topic.
Players with more than three years of service time but less than six are eligible for arbitration. The first year of arbitration eligibility is supposed to garner a player about 40 percent of their open-market value, the second year 60 percent, and the third year of arbitration approximately 80 percent, though that estimate does not always apply. While arbitration earnings are far greater than pre-arbitration salaries, which are typically near the minimum salary, they are still short of market value.
The type of restricted free-agency system that owners attempted to implement in 1994 seems increasingly beneficial to players today. That system could have made young star Francisco Lindor a 25-year-old free agent this winter and Mookie Betts a 25-year-old free agent last winter.
An approach similar to other sports leagues could address many of the problems inherent to baseball’s current system. So let’s examine how Travis’ system might work in practice. To start, let’s look at current rules for arbitration eligibility, courtesy of the fantastic FanGraphs Library (which, if you’ve never used, you should).
Players are eligible for arbitration hearings if they meet any of the following requirements:
- They have at least three full seasons of MLB service time, and less than six. Players with six or more years of service time become free agents after their contracts have expired, while players with less than six seasons are under team-control. Up until players have acquired three seasons of service time, their salary is determined solely by their team. For years three through six, players can take their salary demands to an arbitration panel if they can’t reach an agreement with their team.
- If they have less then three full seasons of MLB service time, but are within the top 22% of players with more than two years of service time. This is called the “Super Two” exception, and it often leads to top prospects being held down in the minor leagues until they have passed the Super Two threshold. For more on this, see our Super Two page.
The first part of this is fairly straightforward, at least in theory: if you have less than three years of service time, you aren’t eligible for arbitration; if you have more than three years of service time, you are. Of course, it’s more complicated than that. That service time definition – 172 days – is the pivot point around which many teams determine big league promotions, and it leads to all sorts of tomfoolery.
I’ve discussed service time manipulation at some length in these digital pages. Preventing players from accruing major league service time delays free agency, allowing teams to keep talented players cost-controlled for longer. And while service time manipulation isn’t barred by the letter of the Collective Bargaining Agreement, it likely does violate its spirit, as I noted last March. Players can file grievances, as Kris Bryant did, but those can languish for years without resolution. And it is difficult to prove that a team kept a player from the majors to stunt service time, rather than for valid developmental reasons; it’s why we hear about top prospects needing defensive reps in Triple-A every spring. It is unlikely that we can create a system fully immune from manipulation. But it is worthwhile to see if we might suggest a system that contains less easily exploitable loopholes.
The second part of the arbitration criteria is even more complex. Determining Super Two eligibility is so confusing that Major League Baseball has a separate glossary entry for “Super Two,” on its website, and the union and league have to sit down and prepare an agreed list of eligible players.
These eligibility requirements are fixed for players, but teams have the ability to effectively opt-out of the arbitration system by simply declining to tender the player a contract, making that player a free agent. There are reasons a team may non-tender a player that aren’t about the player’s potential arbitration award, like 40-man roster crunch, and very good players obviously aren’t released out of hand. But many non-tender decisions emanate from an assessment on the team’s part that the player’s value is misaligned with their current or likely salary, and the fact remains teams have the ability to eschew the whole process beforehand. The player, on the other hand, has no such recourse.
So how might restricted free agency work in baseball? To find out, let’s look at the National Hockey League, the only other major North American Sport to use an arbitration system.
A restricted free agent in the NHL is a player who has completed his entry-level contract, but does not have enough NHL service to become an unrestricted free agent. This player qualifies as a restricted free agent when his contract expires.
An offer sheet is a contract negotiated between an NHL team and a restricted free agent on another team. It includes all the terms of a standard player contract, including length, salary, bonuses, etc. When a player signs an offer sheet with a new team, his current team is notified. That team has the right to “match” the offer sheet with an identical contract and keep the player. Or it can decline and let the player join the new team under the terms of the offer sheet.
The original team has seven days to make its decision.
Taking those parameters as a guide, here is our thought experiment:
- The current service time rules are eliminated. A “major league season” is now any season in which a player spends more calendar days on a major league active roster than on a minor league active roster.
- All arbitration-eligible players now have the ability to opt out of arbitration once and become restricted free agents. They can do so in any year of their arbitration eligibility, but may do so only once.
- Deals would have minimum lengths tied to the number of years of the player’s original arbitration eligibility remaining. Thus, a player who opts out in his first year of eligibility would, upon completion of the process, sign at minimum a three year deal (players could opt to sign longer deals extending into their free agency); a player who opts out in his second year would sign at minimum a two-year deal, and so on. If a player doesn’t receive any multi-year deals in restricted free agency, his rights would revert to his original team.
To see how this might play out, let’s use Travis’ example of Mookie Betts. Each time Betts goes through the arbitration system, he and the Red Sox exchange figures. At that point, the Red Sox have the option of non-tendering Betts or proceeding to arbitration. Betts has the option of opting out of arbitration to become a restricted free agent, or proceeding to arbitration. If Betts opts for restricted free agency, the Red Sox would have the option of either matching whatever offer another team makes, or letting Betts walk at that higher price. Should Betts not find a restricted free agent contract to his liking, he and the Red Sox would then go through the standard arbitration process, though hopefully one that has integrated the improvements we have previously proposed. As with the current system, the parties involved could reach a settlement prior to arbitration.
Why might this system be superior? First, it would encourage compromise and the resolution of arbitration cases. If a team knows a lowball offer might result in the loss of a valuable player, it’s likely to increase its initial offer, bringing players and teams closer to resolutions. Second, it disincentives the “file-and-trial” approach by penalizing those teams with the very real possibility of losing players, further incentivizing pre-arbitration settlement resolutions. And third, it incentivizes players not to overreach, because a player who files for restricted free agency and receives no offers significantly better than that offered by their current team would have a difficult time arguing that they were worth their filed salary figure and would have just had burned their shot at restricted free agency.
But there’s another reason why this kind of system would work better than the current one. It incentivizes teams to offer big, long-term deals to players when they first hit their prime, so as not to lose them to competitors. Turning arbitration into a pseudo-competitive market would drive up player salaries earlier, making long-term deals for players in their thirties less necessary, as it will no longer be their one shot at a major payday. We’ve seen this kind of system work well in the NBA, and even in the NFL, allowing teams to uncover hidden gems while also driving players’ salaries up.
This system might, as Travis noted, therefore be a meaningful step towards addressing the dysfunction in the free agent market. By the time many players reach free agency, they’re often in their late 20s, solidly in their peak years, but also nearer to the beginnings of their declines. Restricted free agency would allow for players to shift their peak earning years from free agency toward their presumed prime. Whit Merrifield, for example, won’t hit free agency under the existing system until he’s 34; under this proposed system, he would be able to cash in earlier by opting out of arbitration, and potentially receive far more than the extension he just inked with Kansas City.
And while it won’t eliminate the ability of teams to manipulate service time, it might at least curb the practice: under this system, if the Red Sox had wanted to manipulate Betts’ service time in his first season in the big leagues, they would have had to leave him in the minors for at least half the year. For contenders who need their top prospects in the majors, that’s an unappealing proposition.
This kind of restricted free agency system recognizes that teams are increasingly hesitant to guarantee long deals to players reaching free agency as they approach or enter their 30s. But that newfound reticence shouldn’t preclude players from being paid what they are worth at some point in their careers. Paying a player what he’s worth during his prime seems like the optimal solution.
Sheryl Ring is a litigation attorney and General Counsel at Open Communities, a non-profit legal aid agency in the Chicago suburbs. You can reach her on twitter at @Ring_Sheryl. The opinions expressed here are solely the author's. This post is intended for informational purposes only and is not intended as legal advice.
I wish this existed a few years ago just to see what type of contract 23 year old Mike Trout would have gotten from the Yankees.
Trout shows the power of being a couple sigma better than the average player and one sigma better than the next tier. The problem is there are so few players in the Trout tier (Betts might be it) AND the second tier once you count all aspects (defense, injury risk/age) and HUNDREDS in the middle group.
Betts has been close to Trout for one season, Trout broke in at that level and hasnt slowed since!
One of the typical gotchas in a RFA scenario is when the outside club makes an offer to another team’s RFA that would cause the original team salary cap (luxury tax) problems. I would imagine that the owners would want some sort of provision to be made addressing this.
Why is there a need to address it? Teams already trade/release players in arbitration when they deem the price too high for their liking. RFA would change nothing in this regard.
If anything if there’s a loophole for retaining restricted FA to not count against the tax, teams like the Yankees would actually spend less in FA and just trade for young RFA from poor teams who don’t want to pay market value for their young stars.
So take the Mookie Betts example. BOS is already a luxury tax team and that’s with Mookie signed to a $20M arbitration avoidance deal. What’s to stop a team like PHI from making a 10/400 offer that BOS cannot hope to match without suffering either nightmare tax penalties or being forced to jettison some other part of their roster?
I happen to agree with the notion of “too bad”. But the reality of it is that ownership would be justifiably concerned with this scenario.
In an unregulated RFA market, a big money team coming out of a rebuild (like PHI now) would be a menace to every other team’s emerging young talent.
What’s currently preventing the Phillies from going 10/400 on Machado or Harper? The answer is they don’t think the player is worth the price.
If Mookie Betts is not worth 10/400, then Phillies would not offer him that, regardless of what it would do to the Red Sox which is not even in their conference. If Mookie Betts is worth 400mil, then the system works as intended
Don’t get hung up on the particulars. Let’s say in our scenario there just aren’t any stud FAs that particular year. And regardless of the details of the numbers, PHI wants to make an AAV offer to Betts that BOS’s budget is not equipped to handle.
To see a real life example, go read about how the Washington Wizards signed Gilbert Arenas away from the GS Warriors in 2003.
Also note that I an in favor of the notion of RFA, generally. I am merely pointing out a potential pitfall that needs to be handled in the codification of the same.
As baubo said, it’s the system working as intended. Ignore the “restricted” part of RFA, that just means the original team gets a chance to match the offer. The intended effect of RFA is that young players hit free agency and get paid market value after 3 years instead of 6. If the Phillies want to sign him that’s their choice. Betts isn’t Boston’s player anymore, except for their right to match Philly’s offer. Boston can either budget for that or let him walk.
Again, I agree. But ownership won’t, and they have to agree to it or it doesn’t go in the CBA.
Replace Boston with Kansas City. Or Pittsburgh. Or any other small or mid market team. That’s when you start to run into trouble.
Yes, this I agree with. Given that MLB doesn’t share revenue nearly the extent of the NBA (I don’t watch hockey so not sure about NHL), this really hampers small market teams as they begin to lose control over players after 3 years instead of 6. Because teams like the Yankees or the Red Sox would just severely outbid the Indians for Lindor for instance. I think that’s the biggest issue with RFA as it pertains to MLB. Not really any luxury tax concerns.
There has to be a severe enough penalty for the team signing a RFA to balance things out IMO. Or have a cap on how much a player can be offered. Something like a max cap like the NBA.
You would need a salary cap and a floor for this to work. I actually think getting RFA and a salary floor in exchange for giving up a cap is worth it for the union and the owners.
The penalties for an NHL team that sign’s another team’s player to an offer sheet are steep enough (usually multiple first round picks depending on salary and term) that it almost never happens, and the very few that have been done are always matched by the player’s original team. But just the mere threat has been enough to drive salaries for top-end players coming off their entry-level deal. Auston Matthews just got a massive contract (in NHL terms at least), largely due to the threat Arizona would offer-sheet him (Matthews is from Arizona, and IIRC the only NHL player ever from the area, much less the only superstar).
Owners will fight to keep the binding arb system of MLB, because the NHL system is clearly better for the players. One could only imagine the offer sheet that, say, Philadelphia would have offered to Mike Trout.
Matthews got a huge contract but it’s actually still below market value. Offer sheet had little to nothing to do with it. Matthews has huge leverage just by the threat of sitting out. Look at the Nylander stiuation and how he didn’t get any offer sheets.
Pending contracts signed this offseason, Matthews will be making more in 2019-20 than any player in the league except McDavid (who also benefitted from the NHL RFA system and would barely be in arbitration if he was in MLB’s system). Matthews also won a major victory by getting that term over 5 years instead of 8+ years. I would say that he got market value in terms of the NHL and its salary cap system.
Nylander and other players who are good but not elite don’t get signed to them more frequently due to the large penalty and the “gentleman’s agreement” among NHL GMs not to do it, but the fact that it’s possible is why players can hold out at all. They have a right to negotiate for any contract they wish, even with another team, and refuse to sign if they don’t want to. MLB players are ultimately forced to sign whatever the arbitrator says and cannot hold out for a better contract. Sometimes the holdout ends with an offer sheet (think Ryan O’Reilly and the Avalanche), and usually a deal is ultimately worked out with the original team like with Nylander. It’s not a perfect system, but it’s much more fair for the players than MLB’s is.
Yah I’m just saying it’s the threat of sitting out that creates the leverage, not the offer sheets. Matthews would have made a 20% contract if he’d been on the open market and willing to go to the highest bidder.
Arizona never really was a legitimate threat to offer sheet him. I mean, they can offer him a contract, but he actually has to agree to it for it to be valid. And while playing in your hometown is fun, the Leafs offer him his best chance of winning over the next few years. There was no chance this was actually going to happen.
He’d be like McDavid in Edmonton if he actually agreed to a potential Arizona offer sheet, wasting away and never ending up in the playoffs, surrounded by a much weaker supporting cast.
The offer sheet is about leverage. I know Leafs fans can get a bit defensive about this, but Arizona, with their cap situation, could have offered Matthews like $15m/year. Would Toronto really be able to match that with all their other marquee players? If push came to shove and he was actually mid-holdout, would Matthews leave $4m/year on the table to play for a better team even if they’re actively playing hardball with him? It’s moot because he signed and they didn’t play hardball, but the fact that there’s a team out there that could have outbid the Leafs if they didn’t put up a true competitive offer absolutely factored in to negotiation.
Contrast that with Manny Machado, who got to go from league minimum salary to settling for $5m/year to avoid arbitration because he had literally one other choice, which was go to arbitration and get a similar salary. Imagine if the Orioles had to deal with the threat of a hold out and the looming specter or the Yankees and Red Sox?
I love this. The only argument against it could be “teams who have low payrolls won’t be able to match for their stars.”
To which I say too bad. Every team has the money to spend. Incentive TO spend is needed in baseball. Similarly, the team still gets a few years of cost-controlled play from the player – just fewer, under restricted free agency.
I like how people on here like to boldly state nonsense about “every team” having the money to compete with the big boys in free agency, when in fact that has never been the case, and never will be the case.
Some fans don’t understand economics of baseball. Every team, even the rays, could afford $30 million per year more on payroll. Nowhere did I say they could consistently compete with the big boys, not sure why you made up statements to make you sound smart.
Ironically, this would spell the end of the Rays in Tampa Bay.
Good. There shouldn’t be a team in Florida. It’s not economically feasible because of the nature of snowbirds.
Clarification on my comment:
Every team can spend more. But, given the harshness of the luxury tax, “big boys” won’t ever buy up all the good RFA. The “big boys” refuse to operate on unlimited payrolls, so money spent to steal Trout from the Angels prevents them from spending on, say, Harper. RFA would essentially create an unofficial payroll floor, forcing teams to pay their players closer to their worth or lose their players. RFA coupled with draft pick reform (first team to miss playoff gets #1 pick, rather than worst team) would make baseball better for players and fans – owners would still be fine, given revenues.
Big market teams would sign up in a second for this scenario.
Yeah, that was my first instinct, too. This is a way to get big market teams to open up their checkbooks, but it also means that small market teams would probably only ever feel confident about having 3 years of a good young player. Which, in turn, might lead to Oakland, Kansas City, etc. trading any good player after two years service time. You can say that every team can afford to spend, but I think that probably only goes so far- every team can probably afford to spend more, but not every team can afford to spend like the Yankees. This just seems likely to exacerbate that problem- it would be easier for the Yankees and similar to dominate, and harder for a team like the Royals to win once every 30 years.
Given the harshness of the luxury tax, though, “unlimited payrolls” don’t exist anymore. The Dodgers are staying under the tax line – if there were RFAs this offseason, they’d like not have pursued any. Money spent to steal an RFA prevents them from spending on a different RFA or FA. RFA would essentially create an unofficial payroll floor, forcing teams to pay their players closer to their worth or lose their players. RFA coupled with draft pick reform (first team to miss playoff gets #1 pick, rather than worst team) would make baseball better for players and fans – owners would still be fine, given revenues.
I think you’re exaggerating the impact of the luxury tax threshold. Yes, many teams are working to get underneath the line, but that is only to reset. I don’t see teams treating this as a hard cap when they are in an optimal point on the win curve. I expect now that the Yankees have gotten below the threshold, they’re planning to be over for the foreseeable future as they need to pay Judge, Didi, Severino, etc.
Implementing an RFA system as outlined above would key more player movement and lucrative, shorter-term deals, both of which definitely benefit large market teams.
Yankees are already over and might go even higher. They’re just giving different kinds of contracts: mostly short ones instead of long ones. Today they’re at $220M. They could easily go higher by season’s end but they’ll likely be back under the limit after the WS.
It’s not that they’re unwilling to spend: they just don’t want to end with more Elsbury and post- opt out ARod deals.
Cot’s claims they’re at $199 million, Spotrac claims $191 million. The 2019 luxury tax threshold is $201 million.
Of every team in baseball, the Yankees would be the best prepared to “buy up every good player” as most fans think they would… Yet they don’t. RFA wouldn’t enhance that, because they aren’t willing to spend over the luxury tax frequently.
Cot’s has the Yankees over the tax line in 2019. The cited payroll of $199 million isn’t the luxury tax payroll number. See the right side of the Cot’s spreadsheet here – https://docs.google.com/spreadsheets/d/1ai3Wo4UVZbUFtEEOnVEUwBgh2H45wwNe4nd6bXPAvRQ/pubhtml . The current 2019 CBT payroll estimate for the Yankees is ~$213 million versus the luxury tax line for 2019 of $206 million.
Per Cot’s estimates for 2019, the Red Sox (~$31 million over) and Cubs (~$20 million over) are also currently well over the luxury tax line for 2019.
Steinbrenner said they were at $220M and wasn’t contradicted.
Teams are treating the luxury tax as a salary cap, that’s been discussed ad nauseam since the end of 2016. The luxury tax as defined in the latest CBA is an effective salary cap – many articles have been written about that (most in 2016/early 2017 when the CBA was defined).
Why would more player movement benefit large payroll teams? Similarly, why would lucrative short-term deals benefit them more? If anything, both would benefit small payroll teams: increased player movement would lead to an increase in available players, driving down prices. And, as it has also been written about often, it’s easier for a small payroll team to stomach a lucrative, short-term deal than a large long-term deal (Harper at 3 year $110 mill versus 10 years at $300 mill is much more manageable for the Rays).
“Teams are treating the luxury tax as a salary cap, that’s been discussed ad nauseam since the end of 2016.”
No, they really aren’t. While it is having some impact on team decisions – which is the point of it, after all – the idea of it as a “salary cap” is dramatically overstated.
Two teams went over the luxury tax line in 2018: the Red Sox and the Nationals. That is admittedly fewer than in the prior few seasons, but it is still two teams over the luxury tax line. And one of those teams – the Red Sox – went well over (~$42 million) to the point where they crossed the $40 million threshold that means that their highest draft pick will drop by 10 spots this year.
There are also three teams that are set to be over the luxury tax line in 2019, as I note in a comment above.
“increased player movement would lead to an increase in available players, driving down prices”
I agree that would tend to happen, and I think it is something that some writers forget when talking about free agency. It is far and away the highest $/WAR means to acquire players today – due to limited supply – so even changes that lead to higher overall payroll dollars to players (i.e., higher average $/WAR across all players) might still lower salaries in free agency.
That said, I don’t think that the higher supply from an idea such as Sheryl’s would have *that* much impact of lowering free agent contract dollars at least at the top end of the market. The truly top, 4+ WAR level players would almost certainly still command 5+ year, high AAV contracts if they hit the lightly restricted free agency proposed by Sheryl after 3 years of MLB experience. I suspect that the impact from more supply of young players would be most felt among players who are at the level of league average starting players (~2 WAR) and somewhat below.
How about this proposal + increased revenue sharing? It’s not like big market teams haven’t been dominating recently anyways.
And what does the union offer the big money teams in return?
They won’t roll over and play dead on command. They can block any deal that takes money out of their pockets in return for… nothing?
Offer sheets are a huge failure in the NHL. Mostly because of collusion but also because of the overly steep penalties.
To expand on this a bit; Draft picks are much more valuable in the NHL than in MLB. Guys make the NHL much much younger so generally you know what you are getting when you pick, especially in the 1st round.
This is true, and it’s why a proposal that seeks to mimic hockey or football is doomed to fail for baseball. This proposal to “fix” the system would turn the small market teams into AAAA farm teams for the large market teams. What a great idea, if your objective is to kill interest in the sport in a ton of markets.
Yes, I don’t even know what the MLB “equivalent” to 4 first round picks would be for the max hockey compensation. A first in hockey is probably the equivalent of an entire draft class in MLB. So would an MLB team give up their next 4 draft classes to sign Mookie to that deal?
I like restricted free agency a lot in terms of fixing the arbitration process and getting more money in the hands of the players sooner. But the thing I can’t get past is that this would put the have’s of the league way out ahead of the have-not’s.
You could easily see a scenario where a big spender would throw an outrageous AAV contract at a player – even if it’s just for one year – that their home-team couldn’t (wouldn’t?) match. The Yankees wouldn’t have had to trade anything for Paxton – they could have just offered him a contract the M’s couldn’t match. Anyone could have Zach Wheeler on a one-year contract. Would the Twins be able to keep Eddie Rosario?
Again, in terms of getting money to the players, I like the idea of restricted free agency. In terms of competitive balance, it might be something that would have to sort itself out somehow. But then again, with so many teams not acting like they’re interested in improving, maybe I’m just overthinking the latter part.
In order for RFA to work there would have to be a hard salary cap. Else a big spender could just eat the tax penalties for a year or two and sign all of the RFAs.
That’s actually not an awful win-win. Players get RFA and a shot at more money for high-skill younger players, Owners get a hard cap to protect them from their own worst impulses.
Agreed that it could favor big spenders. The one-year deal scenario was addressed in the article though by having RFA deals last at least the remaining arb years.
There would need to be significant compensation awarded to teams losing RFAs to help with competitive balance. Likely multiple 1st round picks if signing someone over a certain AAV, similar to what the NHL does.
This has become appointment reading with every installment.
Any idea how this would effect the market for players after their restricted bumper contracts? Would this change coincide with a larger salary cap tax threshold changes that make it too difficult to speculate on?
What would the Union be offering the owners in exchange for RFA? Not striking?
As described, RFA has no downside for the player invoking it: at worst they get the same mandatory arbitration they have today, which essentially guarantees all players a raise even if they “lose”. (That is why non-tenders exist.) Some form of restricted free agency is a good idea but a proposal that is all player upside with no downside isn’t going to sit well with the owners.
Given that the soft cap is doing a number on free agency, I expect that the MLBPA could offer up a hard cap without too much additional pain.
Sounds like a good idea, except the cap would have to be a fair amount lower than the “soft” cap we have today, or otherwise there would need to be a lot more revenue sharing, before the small and even mid-market teams would agree to a system like this that allows the big market teams to raid their rosters even sooner than they can now.
If you dont make it higher you actually hurt the players, since they already arnt making a 50/50 split. The NBA has the caps but it is also mandated that they players get a split of league revenue so the players are locked into a fair share.
I think that restricted free agency of some sort is a logical way to try to get more money to players (as a group) earlier in their careers. It’s admittedly complicated to design a system of restricted free agency starting from baseball’s current system, but I agree with fjroterres that Ring’s proposal is such a player-friendly shift from the current system that it would be DOA with the owners.
Ring’s proposal here makes any pretty good player – someone who would get a contract of at least 3 years – a restricted free agent after 3 years of service with minimal rights for the current team (ability to match a new offer). It goes to the heart of one of the biggest concerns for lower revenue teams: having higher revenue teams sign away top players. It would also dramatically change the willingness of any early career player to sign an early career, potentially team-friendly extension.
I think that a realistic plan for restricted free agency in MLB would, in broad strokes:
– Have draft pick and/or IFA bonus pool compensation from the signing team to the player’s previous team. Presumably that would be tied to the size of the contract or the original tender from the current team, much like NFL and NHL restricted free agency.
– Probably have some sort of sliding scale of years of service and age that most benefits late bloomers. A core idea could something like “every player 28 or older with at least 3 years of service time is a restricted free agent”.
I like the second one but the first doesn’t offer much to the small market teams.
Any owner-acceptable proposal has to come with some kind of risk to the player himself like full free agency does. Maybe make the make the matching contract non-guaranteed like in football or make the player give up a year or two of full free agency, like the so-called “team friendly” extensions.
I’ve no idea where a balance might exist but I do know there must be both give and take in the negotiations to get anywhere without a strike or lockout.
Maybe the most important point that comes out of this is “But that newfound reticence shouldn’t preclude players from being paid what they are worth at some point in their careers.” This is really the nut of it…lifetime earnings that reasonably compensates the player for what he can produce on the field. The artificiality of a system that binds a player to a team during his likely peak productivity is ripe for abuse. But there is a supply and demand factor to this type of change–by increasing supply, this might drive down the price of many free agents, restricted or not.
While I agree that players need to be paid when they are young and over-performing their contracts, and I would love to see an end of the manipulation of service time, I don’t think this proposal would work at all in major league baseball. In the other major sports you have salary caps and/or max contracts which simplifies the free agent process. Baseball contracts are extraordinarily complex compared to the other sports, with options, opt-outs, incentives, etc. This leads to dramatically different payrolls between big and small market teams. Again, the other 3 sports don’t have 140-160 million dollar discrepancies between the highest and lowest payrolls. This change would murder small market teams. Imagine the Rays drafting a developing a young superstar, only to get 2 years of team control on them instead of 5. This would also greatly diminish the potential return of prospects said teams could get, because the big spenders could just offer something that the smaller teams couldn’t match, instead of giving up prospects in return. I like the change of service time going to half a season, however. I think that the best way to go about getting the players paid would be to simply up the dollars they are given in arbitration, along with the service time changes. Get them paid closer to their value than the 40-60% they are getting at arb now.
RFA would definitely be a step towards fairness for the players, but it would have a pretty dramatic impact on competitive balance. It works really well in the NBA, NFL, and NHL, but those sports are salary capped, which creates an artificial limit on the RFA offers. With no salary cap in baseball, big market teams could benefit from RFA much more than their counterparts in other sports.
Also, I’m not sure I agree 100% with this quote: “It incentivizes teams to offer big, long-term deals to players when they first hit their prime…” It’s true that small-mid market teams would try to lock in contracts to not lose their players with star upside, but it might actually create a disincentive for teams like the Yankees or Dodgers to sign long contracts. Right now they have to take on long term contracts, because that’s the only way to get top level talent without giving up prospects in a trade. Adding a new avenue in which they could use their financial advantages without longterm commitments would be much less risky, even if it would mean offering much higher AAVs than we see in free agency.
The Yankees, for example, took on Stanton’s huge commitment because he is still a very good player, and players of his quality and age are only very rarely available in free agency. In a world with RFA, I don’t think the Yankees would ever lock themselves in to something that risky long term ever again. Instead they could just go get Matt Chapman or Francisco Lindor, because neither Cleveland nor Oakland can outmatch them.
With RFA and no salary cap (which I don’t think we’ll ever see in baseball), small market teams will never really have a shot at keeping a superstar past their rookie time. Ramirez is a bit of an odd case, since he was a relatively late bloomer, but someone like Lindor would never sign a contract with Cleveland when he could go to Boston, New York, Chicago, or LA.
Ramirez isn’t a late bloomer.
He’s barely 26. He made it to the majors at 20 although he didn’t establish himself as a regular until he was 22 and broke out at 23. Then he took it to a higher level for 17 and 18.)
He is, however, a rarity: a superstar talent nobody saw coming. The scout that got Cleveland to sign him thought he was worth a 4-figure bonus and nobody else bothered to go to even $10,000.
Probably the last case like his would be Mike Piazza.
Your point stands, though: Cleveland found him and developed and because nobody else believed in him they get to keep him for his first eight years. With the proposed RFA terms he could’ve been a FA at 23 and easily gotten a $150M/10 deal as a 4WAR ss/2b. Great for him. Great for the Yankees/Cubs/Sox/Dodgers, especially after he doubled his HRs the next year.)
Not so great for Cleveland or its fans.
The outcome would actually be worse than the pre-draft days when the small market teams were effectively farm teams for the Yankees and Dodgers. At least in those days the smaller teams got money and players back.
“The outcome would actually be worse than the pre-draft days when the small market teams were effectively farm teams for the Yankees and Dodgers. At least in those days the smaller teams got money and players back.”
+1
Also, we see articles all the time about how baseball is losing its audience, as other major league sports take away entertainment dollars. If baseball institutes something like this, which just creates greater competitive imbalance, then it loses fan interest in maybe half of its markets.
A commenter further down this page questioned how increased imbalance could decrease the size of the pie for everyone. This is how. Do revenues keep increasing if more than half the country is tuned out? Ratings for the 2018 World Series were down 27% year-over-year as we saw two coastal big-market teams with $200+ mllion payrolls duke it out to try to buy a championship. With proposals like this, welcome to more of the same.
You have a dozen teams slashing payroll and not trying to win, you have small market teams living off transfer payments and not trying to win, rich teams are crippled by insane free agent contracts, and yet all over the internet talented writers think that one of the biggest problems in baseball is that fans get to watch their favorite homegrown players for too many years.
Let me ask you a serious question. How would you apply that theory to any other business? How do you get the seller of a product (and that’s what baseball skills are) to agree to accept a hometown discount regardless of the actual value of their services? I’m not trying to diminish the sentiment in what you wrote, but why is it incumbent only on the player to accept less? Maybe there are other creative ways to try to retain hometown talent–changes in revenue sharing, a pool of retained transfer payments that can only be used to re-sign player, etc.
Underpaid arbitration victim Mookie Betts will be the third-highest paid right fielder in baseball in 2019, trailing only two horrendously overpaid older free agents. The highest paid third basemen last season and (without Machado) this season were in arbitration. Underpaid arbitration victim Xander Bogarts is the 6th-highest paid shortstop in all of baseball (without Machado), with the leader less than 30% above him. So I reject the notion that the arbitration system is ‘broken’ and therefore I don’t feel the need to try and find creative ways to fix it.
RFA is an interesting concept but it’s not really a solution as much as it is just pushing piles of money in a different direction. So if your end goal is getting young players more money, then yes RFA is a solution to that. But that money isn’t appearing out of thin air, it is going to come out of the pockets of other segments of players while also harming league parity. The owners are only going to be willing to share so much of the pie. RFA as a standalone concept doesn’t change that equation.
I think I’d prefer just a gradual (and significant) ramp up of league minimums. Like, minimum increases by 10% (or whatever, something greater than the YoY MLB revenue growth to get caught up) every year for x years (when it reverts to something that is merely tied to YoY MLB revenue growth).
In year 2, I’d say also add an extra 10% (again, or whatever) to the league minimum for all players with at least one full year of service time, but less than two. The purpose would be to force a difference between first and second year salaries. In year three, do it again for two years of service time up through the super-two line.
While we’re at it, I’d probably up minor league minimums so that there isn’t quite the huge jump from what you make in AAA to what you make as a MLB rookie.
IMO, the more gradual you can make the changes the better as we don’t just jump straight to vets getting shafted (some of the younger player money *is* coming out of their pockets as well as it not being a huge jump for the owners as it might be an easier pill to swallow for them with it somewhat gradual.
Right.
If one really wanted to “fix” all of these issues from an economic and social welfare perspective (i.e., ensure players get a “fair” % of baseball revenues) while maintaining competitive balance, and one would raise the minimums for MLB minimum-salaried players and have the minimum “float” so that total player costs meet whatever the % is that MLB and the MLBPA agree that the players get from total baseball revenues. If the players don’t reach the agreed % in any year through the “normal” competitive process (FA, arb, etc), there would be a true-up payment to all 1st-3rd year players and/or 40-man rostered players (you could do this different ways – but you’d probably want a different float % for 1-3 year players and account for days on a ML roster or playing time), to meet the agreed %.
No. A thousand times no.
Supply of league average baseball players has never been higher. Number of teams has held constant. This is part of problem.
This system would mess with competitive balance a ton since it would allow top dollar teams to steal young talent sooner it might work if you reinstitute the old style FA compensation where a team that signs away a player loses a 1st rnd pick for a 3+ 2nd rnd for a 4+ and 3rd rnd for a 5+ to the old team. This would allow players to be more fairly compensated while penalizing teams own minor leagues if they choose to poach a ton of players with big time deals that small market clubs just cant match. Or in this case you could also institute restricted FA and then ramp up revenue sharing so that teams are on a fairer playing field. Doesnt the NFL do a combined TV deal for the whole league where each team gets an equal share?
Yes, the NFL pools all TV money since it’s all negotiated at the NFL level but baseball TV money is both local and National. The National deals are pools and the local money is shared but only to an extent.
People keep forgetting that there are actually three parties to the CBA negotiations: the union is one but MLB is two factions. Smaller markets can only squeeze the big clubs so much before they veto a proposal and vice-versa.
The proposed RFA terms would likely pass muster with the top six/eight teams but even middle market teams like St Louis and the Texas teams are going to squeal at losing their young stars after three years.
Conversely, a deal with bigger revenue sharing would mean the big boys would face the prospect of paying for another team’s payroll they themselves bidded up. So why would they bid for RFAs then? Why agree to any change at all?
If the only compromises come from the two MLB camps and the union doesn’t cough up anything all they’ll get is a lockout.
I dont watch any football are all NFL games on national since they play so many less per week?
All NFL games are carried on the national stations (CBS/Fox for most games), but those stations don’t air every game to every part of the country. Instead, when multiple games are assigned to the same network at the same time, they have to divvy out which parts of the country get which games, so-called “regional action”.
If you’re in the home market to a team that’s in one of the games, the local CBS or Fox station is obligated to show that game, otherwise they might pick a game featuring a team that’s popular in that area, or at least a big game involving the main rival to that local/popular team.
just 14 total games a week and they still have crossover lols.
Exactly.
Assuming I’m understanding correctly, I present the 2018 Houston Astros:
Bregman, Correa, Cole, Keuchel, McCullers, Springer, Gonzalez, Giles, and Devenski all become restricted free agents.
Either the Astros lose some subset of these players, or the total they’re paying them goes from (completely guessing at the numbers, but the point is the same) from ~$40M to ~$140M.
Is this a good thing or a bad thing? It seems to me that it will make it nearly impossible for a team to amass a nucleus of good, young, cheap players that in many cases is necessary for them to be competitive.
“The current service time rules are eliminated. A “major league season” is now any season in which a player spends more calendar days on a major league active roster than on a minor league active roster.”
What’s the point of this? Does this mean that teams could choose to keep any player in the minors for 51% of the season every year and keep him for his entire career at the (pro-rated) minimum?
No all service time is tabulated in a running total so a player playing 49% of the season every season would still rack up the 3 years of time after the 7th season and would then be a rfa if they so choose.
I dont see how this could ever be advantage since the added service time is worth far less then losing a starting quality player for 51% of every season. On top of this you would be fairly limited in what you could do based on options and filling out your roster within the constraints of the 40 man where you would be losing players to waivers if you were trying to have 2 full starting rosters to manipulate.
This would just mean at the start of the season the bullet you have to bite to add a year would be a much greater competitive disadvantage so players that should be on the MLB roster would be to start the year since it wouldnt be practical to wait till July to add a player you need in April.
“Reticence” specifically refers to reluctance in areas of expression like speech, not general action. I realize it’s a silly pet peeve for me to have, but it drives me crazy when writers use it as a general synonym for reluctance in areas that are not related to expression because that is an incorrect usage.
Regarding the actual content of the piece, as other commenters have already noted, restricted free agency would be a massive blow for small market teams like the Rays. For that reason, it’s a pretty terrible idea compared to other options like earlier arbitration.
If you sign a RFA you lose your 1st round pick (which goes to the team that loses him) for as many years as the player is signed for. That team can not make an offer sheet until the next year they have a 1st round pick. Draft slot money accompanies the picks, I think that would definitely keep “the big boys” honest.
I see all the commenters are worried about parity, how about the simple solution, increase revenue sharing! The more money teams have to spend (league-wide), the more competitive the bidding for players.
Fact of the matter is you have to turn the economics of baseball from prospects being such good value and the way you do that is by making the average player cost more money earlier in their career. If you drive down the surplus value you get from prospects, the less likely teams are to tank like we’ve seen recently.
The NFL has it right in realizing that a rising tide lifts all boats. Even though teams like the Cowboys draw in a tremendous amount of revenue compared to teams like the Jaguars and Buccaneers, they give everyone equal footing on which to compete financially. The only reason this doesn’t work in the NBA is that one player can have such a dramatic effect on team performance that you have to have a top 5-10 player (or multiple top 20-30 guys) to have a chance at competing.
What if the cash donors object to higher taxes?
It’s their money.
(Look at how their cutting off Oakland. Tampa could be next.)
Or, since they don’t get to keep the money they make they find ways to make it non-taxable? The easiest way is shifting TV money to an RSN they own wholly or in part. Or start a local-only streaming service or a low-power broadcast station. The big market teams have the money to do pretty much anything.
The big market teams don’t have to agree to share anything just because the union says so. The CBA is negotiated, not mandated.
The union can strike but the owners can lock the players out to see who c
blinks first.
Mutually Assured Destruction serves neither side.
I like the idea (that I read in a comment on this site somewhere that I can’t find right now) of capping the dollar value of these RFA offers, kind of like the max contracts in the NBA. Mike Trout got 6 years, $144M — of course, he was pre-arb, but he’s also Mike Trout. 6/$150 seems to me like a reasonable amount that would give the small-market teams a chance to retain their young players.
How about restricted free agency, but the team controlling the player get to match with a discount – and if the player chooses to leave, they get financial compensation.
Sticking with the current 6 years model:
After 3 years, the player can seek an alternative 3 year contract (offer sheet model). Original team can match this for 60% of the salary. If the player chooses to leave, the original team receive 40% of the salary as relief.
After 4 years, as above, but alternative 2 year contract, with a 70% match option or 30% relief.
After 5 years, as above, but one year contract with 80% match / 20% relief.
Maybe I’m weird, but I care more about the players getting paid than about a level field among teams. So, I would approve of this, even if it meant an even more uneven field.
I am increasing coming around to this line of thinking. Its odd, but given my changing perspective on the economics of baseball, it has caused the film Moneyball to age curiously for me. For example in the opening scene where the A’s are playing the Yankees, and the screen flashes the teams payrolls I know it is supposed to establishing the A’s as underdogs in an unfair system. But, more and more I see it as one billionaire owner who wants to underpay his labor as much as possible, vs another billionaire owner who appears more willing to pay his labor market value. So, who is suppose to be the bad guy here?
It’s not weird. But it is the type of short-term thinking that will result in players getting paid less over time, because the pie grows slower or gets smaller.
Why is the pie smaller? All revenue does is go up. As said above, the pie is plenty big, it’s just that some billionaires don’t want to share it with labor at all. That’s probably not exactly the way that should be said, but there are plenty of teams that could pay more, they choose not to. Since the teams have a government approved monopoly, there isn’t much the players can do.
Look at the relentless douchbags that own most baseball teams. Of course the players should make more then the tool owners, but it doesnt change the fact that compared to normal people MLB players are wildly over compensated. Teams and players should make less and games should be more accessible to non-wealthy fans. Everyone involved other then never MLB minor leaguers and all non top exec/mlb coach/player is underpaid by the teams.
Fuckers get a giant pass on conforming to normal laws by congress and then use americas past time to gouge as much as they can from the public. Which stadiums have 20+$ beers now? These fucking crooks!
The only way you are every going to significantly reduce service time manipulation is to penalize it. You would have to set up a separate independent arbitration panel that would hear all grievances from players at the end of each season. If the panel determines that the team held the player down to manipulate service time, they are allowed to award the player one, two, or three years of service time depending on the blatant transparency of the manipulation. (For example, when the Blue Jays send Vlad Jr to their AAA affiliate for 3 weeks to start the 2019 season, this would be a 3 year offense, where as a super 2 deadline manipulation would likely only garner a single year) This is likely the only system that would sufficiently disincentive service time manipulation enough to eliminate it.
Even though offer sheets are allowed in the NHL, they are seldom used. They are seen as “bad sport”, earning bad reputations to GMs that offer them. Furthermore, when they happen they are usually matched. It’s now a guessing game as to who will break the taboo now.
Teams have tried to offer contracts to RFAs in the past, taking advantage of the current team’s vulnerabilities. The NY Rangers offered Joe Sakic a 21$/3 year contract with a 15M$ signing bonus, because his team was low on liquidities with a new arena (they matched anyway). Shea Weber signed an offer sheet for a 14-year contract with Philly: Nashville (small market) matched it anyway.
So, players tend to stay with their own team. They can refuse to sign, however. P.K. Subban held out before signing for 72M$/8 years (that’s roughly 23M$ AAV in today’s MLB when he signed it). William Nylander recently sat out months of the current season before signing a huge contract (for NHL standards). So, even if players don’t really change teams, RFA does increase their remuneration by a lot.
RFA has been around for a long time in the NHL, but a new wrinkle to it was the salary cap. It put a premium on entry-level deals, and RFA don’t only cost money, but also draft picks depending on contract size, which are way more important in hockey (they can also be traded).
The prevailing opinion seems to be that baseball is losing, or at least not attracting, young fans – the inevitable result of which (supposedly) will be the death of the sport. There have been a multitude of reasons given, most prominent being the gradual lengthening of average game times and the lack of “relate-ability” or “market-ability” of the modern player to younger fans. I get it… the NBA is hot right now. In the 70s and 80s, the NFL was the hot sport. Whatever. What comes around goes around.
But what if the reason kids aren’t attracted to the game is more simple? What if it’s just too damn expensive for the average family and kids to attend? I kind of liked baseball as a kid, but fell in love with it at 8 years old when I saw my first game live at Fenway Park. As a young man, I attended about 20 games a year, each involving a 200 mile drive round trip. Why? Because I could afford to. Bleacher seats in CF went for $2, were some of the best seats in the house, were available as walk-up on game day, AND we could chat with the players during BP. THAT was getting my money’s worth!
Fast forward 20 years. I had three kids myself, one of whom inherited my love for the game. But I only took them to one MLB game live. Why? Too expensive. By the time I paid for tickets and parking and everyone got one of everything, I’d be out $500. Maybe not much to you, but a lot to a blue collar working man trying to raise a family in the 90s and 00s. In contrast? We went to an A- minor league game on helmet day, the kids got one of everything, ate one of everything, we were right behind the first base dugout, and I was out a manageable $40. AND the mascot show between innings was all they (and I) could talk about afterwards.
So what’s my point? My point is baseball is now risking going the way of NASCAR and the NFL, pricing themselves out of range of all but the wealthy populace, who just happen to care the least about the team/game and are quick to jump on the bandwagon of a winning team, but the first to jump off in hard times.
And I know, the players deserve the money they get. I don’t disagree with that, at least in theory. They got screwed for so, so many years. But my point is, are we reaching (have we reached) the point where baseball as an industry has kicked 75% of their future to the curb? Players have to get paid somehow, and eventually, this comes out of the patrons’ pockets in the form of higher ticket, concession, and parking prices, to name just a few. I’m not naïve enough to believe it comes out of the owners’ cut – it never has and never will.
But… when is too much, TOO MUCH?
The difference with this argument that other leagues do it is they have a salary cap. Any system change that gives freedom to younger players would make the competitive imbalance larger.
Late to this discussion. Really enjoyed the series Sheryl. That said I still stubbornly think that the actual ‘win’ on the matter of underpaying arb-eligible players are policies that shift more money to players earlier in their careers without necessitating (or at least incentivizing or threatening) players leaving their team.
The messed up part of this is that the fans are not at the bargaining table. As an Orioles fan, I absolutely would have argued for the team to lock Manny long term up 3-4 years ago; that they didn’t reflects poorly on the organization. But under RFA, for a genuine home-grown superstar like him, we likely would have been looking at one of two options: the Orioles trade him after his 2nd year or he’s gone after his 3rd year. Which, good for him for getting paid, but fans are just left in the lurch. We should be celebrating long-term, homegrown stars and trying to encourage that longevity, not contributing to roster churn that distances fans from teams and players. Not saying players should be held hostage (Free Agency is important); just positing that an even better solution than RFA would be something that doesn’t screw the fans out of the enjoyment of supporting their favorite players.