Restricted Free Agency Could Benefit Players

Instead of covering free-agent signings like usual, members of baseball’s media have been forced to address the conspicuous lack of them this offseason. Dave outlined another possible explanation for the dearth of activity, noting that neither the Haves nor Have Nots are incentivized to spend money on a marginal win or two. There simply aren’t enough teams in the middle ground for whom a move might change their fortunes. There’s increasing speculation on and discussion about whether clubs might be colluding, as Zack Moser argues at BP Wrigleyville.

Wrote Moser:

“Free agency is the most important mechanism by which players can actually earn what they are due—after years of minor league, pre-arbitration, and arbitration salary suppression—and to argue for its obsolescence is to argue against the rights of labor in general.”

More than anything, I suspect the quiet offseason is a product of more clubs thinking alike and increasingly acting rationally. Emotion has largely been stripped out of the market (unless you can negotiate directly with an owner).

The other issue is the more potent luxury tax in the new CBA, which has essentially created a more rigid soft cap. There is an argument to be made that the players did this to themselves by focusing on issues like the qualifying offer instead of selecting bigger fights in the most recent round of bargaining.

While next year’s free-agent class — which features a rare wealth of young and talented players likely to be compensated handsomely — might give the impression that the system is operating in the players’ interest, it might just represent a temporary reprieve from the larger downward trajectory of the value of free agency. This is arguably the most important issue facing the MLBPA.

The MLBPA has fought for free agency — first to institute it and then to protect it — for decades. Now it might very well need to fix free agency. I’ve argued previously that the players should focus on a salary floor to promote more spending by owners, but there is also a free-market solution: restricted free agency.

Restricted free agency was actually proposed by the owners in November of 1994, a subject I visited nearly a year ago.

In the midst of the players’ 1994-95 strike, the owners not only briefly created a salary cap but abolished arbitration, replacing it with restricted free agency. Murray Chass reported on that series of events on Nov. 27, 1994 for the New York Times.

If major league clubs don’t like the selection of pitchers currently available as free agents, they need only be patient. More are on the way. When the owners, as expected, declare an impasse and implement their salary cap proposal, they will also eliminate salary arbitration, establish a salary scale for players in their first four years in the major leagues and create a new class of free agents — players who have been in the majors at least four years but fewer than six… Clubs will have the right of first refusal, meaning a club can retain a player by matching an offer from another club. With most of the best new free agents, offers from other clubs most likely only will drive up the price for their own clubs because their clubs will do what’s necessary to keep them.

It’s a fascinating development but one that was never implemented.

Free agency’s most significant problem is that the players available by means of it are generally over 30 and have either entered the decline phase of their career or are on the brink of experiencing it. Clubs know this better than ever thanks to data and aging curves. Free agency is often a losing bet for clubs because it represents an investment in a player on the decline.

What restricted free agency could do is bring in more under-30 talent, a lot more, into free agency and allow the market to value players rather than an arbitrator. This should direct more dollars to players, more dollars to younger players, and more dollars to the most valuable players in the game. This would make free agency a more relevant tool for talent acquisition.

Of course, there would have to be trade-offs.

Owners, today, would probably not be in favor of a cap-and-floor system or restricted free-agent model replacing arbitration. Owners today are no longer complaining about an imbalance in the share of revenue. And teams do spend significant dollars on drafting, signing, and developing amateur talent and would fight to protect their below-market control over players who reach the major leagues.

The implementation of restricted free agency, as in other major North American sports, would likely have to be complemented by stronger draft-pick compensation for teams losing significant under-30 talent. Restricted free agency could be a tough sell for small-market teams to accept, as it would reduce the incentives for young players to sign long-term contract extensions.

Restricted free agency could help fix free agency. It could direct more money into free agency and more dollars toward younger players who are largely underpaid for their on-field performance. Gerrit Cole and Jacob deGrom have expressed their disappointment with the pre-arbitration system in recent springs. Perhaps such voices will grow in number. If not something like restricted free agency, maybe players should focus on raising the minimum wage.

Free agency appears to be facing its greatest challenge as an institution for players, and in the next collective bargaining agreement talks, the MLBPA ought to have bigger goals and aspirations.

A Cleveland native, FanGraphs writer Travis Sawchik is the author of the New York Times bestselling book, Big Data Baseball. He also contributes to The Athletic Cleveland, and has written for the Pittsburgh Tribune-Review, among other outlets. Follow him on Twitter @Travis_Sawchik.

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6 years ago

I like the idea of changing the arbitration rules. However, I think unrestricted free agents will put the small market teams at an extreme disadvantage.

Hank G.member
6 years ago
Reply to  mprice11390

“However, I think unrestricted free agents will put the small market teams at an extreme disadvantage.”

MLB is awash in money, and there are multiple ways that the major league clubs could address this. More revenue sharing, or perhaps pay visiting clubs a pro-rated share of the home team’s television money, in the same proportions that they do with ticket sales.

Why should the players have to be the one to subsidize smaller market teams? This is a problem for all of baseball, but the players should not be the ones that pay the price to keep smaller revenue teams competitive (or at least solvent).