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.

Team Opening Day Payrolls, Year-to-Year
Years Up 20% or more Down 20% or more Difference
2000 – 01 13 2 11
2001 – 02 7 3 4
2002 – 03 10 4 6
2003 – 04 6 7 -1
2004 – 05 6 2 4
2005 – 06 10 1 9
2006 – 07 7 2 5
2007 – 08 10 4 6
2008 – 09 4 2 2
2009 – 10 4 2 2
2010 – 11 6 5 1
2011 – 12 10 4 6
2012 – 13 9 2 7
2013 – 14 7 1 6
2014 – 15 9 1 8
2015 – 16 4 3 1
2016 – 17 4 1 3
2017 – 18 3 9 -6
SOURCE: Cot’s Contracts

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.

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Jeff made Lookout Landing a thing, but he does not still write there about the Mariners. He does write here, sometimes about the Mariners, but usually not.

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carter
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carter

I’m dying for there to be something else to write about.

I have some ideas.

Mike Trout

Adrian Beltre

Babe Ruth

Mlb translators

Ichiro

Some clips of Barry Bonds home runs

Statcast data based off of old video

soddingjunkmail
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soddingjunkmail

One thing I would find fascinating is if someone at Fangraphs did a series of articles where they played fantasy GM for each team out there, setting out an off season plan for the team. What is your direction for the team (rebuild, tank, add, hold, chips in, etc) and how would you get there? FA, trade, promotion, etc. Some teams will be more interesting than others of course, and maybe you only do contenders, but I’d love an article like this on Cleveland.

What do they do at 3B? Ramirez? Yandy and shift Ramirez to 2B? Then what to do with Kipnis?

Do they add and “go for it” because you feel like their window is closing because of the ascendancy of the Astros and Yankees? Or do you decide winning a weak division and rolling the dice in the post season is enough?

frangipard
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frangipard

Grass growing

Underwear-folding techniques

Lint collection

ThomServo
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ThomServo

Or if Nathaniel/Travis/Craig refuse to write about anything else, they can simply redo their poor work.

Nathaniel’s “38% player split’ figure (which this whole absurd series is based on) is dubious- his only source is a now defunct website BizofBaseball. So here’s an article idea- Tony Clark says the split is roughly 50-50%, let’s have a serious empiricist try to estimate whether that is correct- without using a defunct website or poor methodology.

Craig’s “payroll might dip” article should be sent back with a “try again” mark. Instead of making a comparison between 2017 opening day spend and February 2 2018 spend, assuming not another cent is spent, why not use serious empiricism to estimate the 2018 opening day spend- don’t forget, teams can spend in ways other than FA (i.e. contract extensions).

Travis can redo his unbelievably bad JD Martinez projection- if you are going to make a sample size of less than 30, don’t throw out catchers just so that the aging projection for Martinez is better. Better yet, don’t use over-fit comparison criteria to create a sample of 10 players, use a sample over 30.

These are all basics- it’s not that the topic is bad, misleading or boring, the writing and intellectual process is.

Mike NMN
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Mike NMN

If you don’t care for the content, don’t read it. I can understand being bored by the subject matter–we would all rather talk baseball, but what’s the point of the invective?

ThomServo
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ThomServo

Hoping to give constructive feedback to encourage better writing.

Tommy
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Tommy

Regardless of the validity of your feedback, coming off so unnecessarily aggressive makes it hard to take it as constructive.

WoundedSprinter
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WoundedSprinter

Hard to imagine that you don’t have an agenda of some sort.
One of these posts per OP is justifiable, if annoying. But you don’t seem to have another theme tune in your pocket, do you?

Brad Johnson
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Wasn’t BizofBaseball Maury Brown’s site? That’s a legit source.

Brad Johnson
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fwiw, I got a % of revenue split in the low 40s using some very rough back of the envelope math.

sadtrombone
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sadtrombone

Hear hear. There is nothing left to cover on this story. I mean, nothing. Let’s just wait until we have some more news that actually breaks before tackling it again.

Personally, I want to hear more about:

Steven Souza

Yolmer Sanchez

Michael Wacha

Alex Claudio

Clete Boyer (I will read anything about Clete Boyer)

Winter Leagues

Pitches with lots of movement (this could be a series…fastballs with most movement, changeups with most movement, etc)

Sharp
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Sharp

I feel like the loss of Eno means we won’t get the sweet sweet “check out this dude’s weird grip” pieces we all know and love so much.

Instead we need analysis of the best screwballs and eephus pitches of all times.

DBA455
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DBA455

Lots of disjointed pieces on the same topic lately.

It’s almost like the site needs a Managing Editor.

Handsome Wes
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Handsome Wes

I applied – I haven’t heard back. Can you put in a good word for me?

Aaron Judge's Gavel
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Aaron Judge's Gavel

Generating article ideas is fun. This is more of a bigger project: which current (and past) GMs have assembled the most WAR/year and WAR/$? Who are the best/worst traders, and who gets the best/worst FA deals? Who’s traded away the most home-grown talent? (Ok, we know the answer to that one already). Who inherited the best team? Who made the biggest turnaround in a 3 or 5 year period, and vice versa? Some way to quantify and visualize GM performance from multiple angles seems like it’d be fun to digest.

Regarding the current topic of spending, the one thing I would like to see once everyone is signed is how do these deals compare to the crowd and DC estimates? As Travis noted in his Jan 3rd piece: “Max Rieper of Royals Review found that, from 2013 to -17, free agents who signed before Jan. 1 received guaranteed dollars 4.0% above FanGraphs’ crowdsourced estimates. Free agents who signed after Jan. 1, meanwhile, received 25.3% less than FanGraphs’ estimates.”