MLB’s Middle Class Has a Free-Agency Problem

The middle class is embattled in America. Wages have stagnated. As a result, the percentage of people residing in the middle tier of income has declined over the past 40 years.

Baseball isn’t exempt from this problem. While even those players receiving just the minimum salary wouldn’t be classified as “middle earners,” context matters in this case. And in the context of baseball’s wages, the middle class is shrinking, too.

There are common obstacles facing baseball’s player pool and workers at large: a willingness among owners to pay a premium for top talent but an effort to replace other areas of the labor force with cheaper alternatives. Efficiency is king.

The ice-cold stove at the beginning of the present offseason, this period of little activity, is perhaps related and of interest.

Perhaps it’s possible that the market is sluggish simply because teams are waiting on the outcome of a potential Giancarlo Stanton trade and also the Shohei Ohtani sweepstakes. But neither matter seems as though it could fully explain the slow start to the winter. Ohtani will be relatively cheap. As for Stanton, most teams are unlikely to be serious bidders for his services.

Yahoo’s Jeff Passan spoke with several MLB executives regarding the lukewarm stove. There are two points from that story relevant to this post.

Point No. 1: More teams believe they benefit from being patient.

From Passan’s piece:

“The clubs each believe, and maybe correctly, that the longer they wait, the prices will come down,” one longtime official said. “That usually has not been the case as it relates to the premier free agents, so either there’s nobody in this marketplace that teams wouldn’t live without or it’s just the latest turn that even for premier free agents we’re going to delay, delay, delay.”

I was covering the Pirates two years ago when a former World Series MVP and solid regular David Freese was still looking for work in March, coming off back-to-back two-win seasons. Freese settled for a one-year, $3 million contract. It’s possible teams have placed too much weight on pre-arbitration talent and are costing themselves modestly priced via veteran players. In the following season, Freese signed a two-year extension with the club, perhaps wanting to avoid the waiting game again that offseason.

Did Freese consider testing the open market for a more lucrative deal?

“Potentially. I also could be sitting at home until the middle of March next year,” Freese said. “You look at both markets from this winter and next winter [2016-17], they don’t seem too different.

Regarding patience and free agency, agent Scott Boras has had some success in waiting out the market and eventually getting a lucrative offer for his clients. Said Boras way back in January of 2013 when a number of his big-name clients at the time — including Michael Bourn, Kyle Lohse, and Rafael Soriano — were still unsigned:

“People call me all the time and say, ‘Man, your players aren’t signed yet,'” Boras said. “Well, it doesn’t really matter what time dinner is when you’re the steak.”

On the one hand, Boras might be correct. All three players eventually signed multi-year deals at $10-plus million plus in average annual value. On the other hand, what if you’re not the steak? What if you’re a just a decently tasty hamburger?

In an ESPN Insider post, Dan Szymborski hypothesized that a certain sect of the free-agent population would be smart not to wait for a club to meet their demands because they could end up waiting a long time to receive an offer. Once they received the offer, it could be well below the years and dollars they had initially sought. Freese is such a case. Freese had been in talks with the Angels earlier in the 2015-16 offseason.

Wrote Dan:

“Free agency is a game of musical chairs, albeit one that tends to be a bit more lucrative than the version you played in kindergarten.”

The problem for the middle tier of free agent is that this game of musical chairs is more often being filled with young talent. That brings us to the second point from Passan’s piece on the ice-cold stove…

Point No. 2: More and more teams are leery of free agency.

From Passan, again:

Added a GM: “Teams are smarter. They know how terrible free agency is.”

As a front-office official told me recently, “It’s not whether you will lose on a free-agent deal, it’s ‘how much’ a club will lose on a free-agent deal.”

More than ever before, teams understand the downside risk of free agency. Perhaps teams have become too risk averse in free agency. More teams are operating in a similar way. Many teams might prefer internal replacement options at pre-arbitration wages compared to more expensive, modest upgrades on the open market. Moreover, many teams are clearly in rebuilding mode and the Cubs’ and Astros’ success will only further incentivize dramatic teardowns.

The average MLB position player age was 28.3 years old last year, 28.4 in 2015, 28.5 in 2014, 28.9 in 2010, and 29.1 in the first year of PED testing in 2004. Notice a trend? More and more, age-30 seasons have been replaced by those from 20-somethings. Hundreds of free-agency salaries have been replaced by minimum-wage earners over the last decade.

Baseball is a young man’s game again.

When you’re not the steak, when teams are prizing young, cheap talent more than ever before, when you play in a sport with a soft salary cap (luxury cap) but no salary floor, forcing owners to spend in a $10 billion industry… you have a problem. Free agency has a problem. Baseball’s veteran middle class has a problem.

There are 150 some free agents this winter. Most of them are not elite players, so this lukewarm stove should perhaps be a concern to a players’ union that has seen its average player salary rise to record levels but has also watched owners’ share of revenue increase year after a year. It can be argued the union is too concerned with protecting its top 1% and maximum earning potential, and not concerned enough with jobs and salary levels for a broader portion of its constituency.

More free agents will be waiting until March and some will wait longer.