One More Look at Baseball’s Spending Landscape

Here’s the thing: You might well be sick of this. Actually, no, here’s the thing: Even if you are sick of this, which you might be, baseball writers are in the writing business, and when baseball things happen, baseball writers write about them. When baseball things *don’t* happen, baseball writers still need to write, because that’s the job. So you’ve been seeing a lot about the slow pace of free agency, and you’ve been thinking more than you’d like to about trends in team payrolls. Throw this onto the pile. I’ve got even more analysis.

As Craig Edwards wrote a few days ago, league-wide spending could go down in 2018, compared to 2017. That’s not something that frequently happens. Within that post, Craig inserted a plot, showing how all 30 teams have moved. Here, I’d like to add some further context, courtesy of Cot’s Contracts. I’m going to look at every team, going back to the year 2000.

There was a Jerry Dipoto quote recently that generated a lot of attention. Dipoto said to gathered media that there might be more competition for the No. 1 pick than there will be for the World Series. I’m not familiar with Dipoto’s thinking on the subject, so I don’t know how much analysis actually went into that statement, but it hit on what’s been a recurring theme. In the words of players and player representatives, there aren’t enough teams right now trying to be good. There might, in fact, be too many teams trying to be bad.

The way I see it, very few teams are trying to be bad. The Marlins are obviously tanking. Beyond them — well, there are teams that have recently started to tank or rebuild, but there’s not much else that’s new. I guess the Tigers are either tanking or rebuilding, depending on your definitions. The White Sox started rebuilding some time ago. So did the Phillies, and the Braves, and the Padres, and so on. This is information you probably know.

Back to the matter of spending. I decided to set an arbitrary cutoff. I’ve got opening-day payroll information for every team going back to 2000. My cutoffs: 20%. In this plot, the number of teams, each year, that increased payroll by at least 20%.

These are substantial boosts. There’s no real difference between a 19% boost and a 20% boost, but I had to draw the line somewhere. The peak: Between 2000 and 2001, 13 teams increased opening-day spending by at least 20%. Through last offseason, the average was about seven teams. At present, we’re looking at three teams that meet the criteria. Those teams are the Brewers, Diamondbacks, and Astros.

Now for the opposite. In this plot, the number of teams, each year, that decreased payroll by at least 20%.

Right. So, before, the peak was seven teams, between 2003 and 2004. Through last offseason, the average was about three teams. Right now, we’ve got nine teams that fit. Those teams: the Rangers, Royals, Dodgers, Marlins, Orioles, A’s, White Sox, Phillies, and Tigers.

It probably seems even more meaningful in combined table form. So, here that is.

We’re looking at six more big drops than big hikes. Only once before in the window were there more big decreases than increases, and that was by a total of one team. Now, granted, you probably could’ve predicted this, just from knowing that league-wide spending is currently down — that drop has to show up somewhere. But this is precisely what’s been making so many people so upset. League revenues are at an all-time high. Why should so many more teams be cutting costs? Where’s the sense in paring down, when not enough teams are trying to improve right away?

And yet. And yet, the obvious follow-up is: These numbers don’t matter yet. They don’t matter yet, because those projected 2018 opening-day payrolls aren’t set in stone. Dozens upon dozens of big-league players are still free agents, available on the market, and many of them are going to sign contracts. Many of those are going to be lucrative. There’s been something of a crucial misunderstanding. Not that everyone’s fallen victim, but anyway — the market isn’t slow because of a lack of offers. Not in many cases. It’s slow because offers haven’t been agreed to. It’s not like teams have just been sitting the whole market out.

Yu Darvish has at least one huge offer on the table. He might just be holding out to re-sign with the Dodgers. The Dodgers, in turn, have been trying to shed money to stay under the competitive-balance tax, which is a legitimate factor here, but the stumbling block there would be organizational resistance to packaging a quality prospect with whatever money is going off the books. Anyway, if Darvish is holding out, that affects Jake Arrieta. It also especially affects guys like Alex Cobb and Lance Lynn. Elsewhere, it’s been widely reported that Eric Hosmer has two huge offers on the table, from his two serious suitors. Scott Boras reportedly wants an eighth year. I’m not going to re-litigate the case of Eric Hosmer, but then he’s holding up Logan Morrison, and potentially Mike Moustakas, among others. And there’s the staring contest between the Red Sox and J.D. Martinez. Martinez has a huge offer on the table. Boras is holding out for more. Outside of Boston, the market at such a price doesn’t seem to exist. Boras hasn’t been able to drum up his usual intrigue.

Every case is complicated, and every case involves more details than are publicly known. It’s undeniable that the Yankees and Dodgers have both had some kind of effect on the market in particular, because of their desire to stay under $197 million. It would be fair to argue whether staying under the tax is actually as important to them as they’ve let on. But this isn’t just about the Yankees and the Dodgers, and this isn’t just about teams in the process of rebuilding. Teams have always tried to rebuild from time to time, and rebuilding teams don’t set the free-agent market. Contending teams set the free-agent market, and there are contending teams trying to sign free agents. There are even non-competitive teams in the mix, like the Padres and the Royals! But my sense is that teams definitely evaluate players more similarly than they ever have, and as a consequence of that, they’re less willing to budge — more willing to set red lines, walk-away points. They’d be less susceptible to player-agent persuasion. Agents have jobs to do, but a part of the job is keeping clients realistically informed about the state of the market. Teams are just ahead of where agents are right now, which is part of the reason behind this waiting game. Rob Manfred issued a statement today, and of course Manfred is a biased source, but he’s correct in noting that agents haven’t necessarily kept up with the market. They can’t force money to materialize, if teams are unwilling to exceed certain price points.

The situation is about to change. With spring training around the corner, remaining free agents might feel an urgency to find a new home. But injuries would also open new opportunities, and some teams might just get sick of leaving so many wins out there for the taking. There’s going to be leverage on both sides, and quality players will come to agreements. This just isn’t a story about teams not spending. It’s a story about teams trying to spend responsibly, and it’s a story about unemployed players on baseball’s least efficient market. Once just a handful of dominoes fall, then we should be able to better evaluate where the league has gotten to. For now, stubbornness is king.