The Missing Free Agents
This year’s free agent class was supposed to be historic, but with Clayton Kershaw pitching only really well, Josh Donaldson and Andrew Miller hurt, David Price and Jason Heyward not performing well enough to opt out of their deals, and Matt Harvey taking a nosedive, this class only turned out to be pretty good. Manny Machado and Bryce Harper are two superstars hitting free agency in their mid-20s. Having one of the two would make for a great headliner; signing both would provide multiple teams with the opportunity to transform their franchise. After those two, we’ve seen starting pitchers do pretty well so far, and a bunch of relievers sign solid deals, but the talk of a slow offseason has returned.
Some of last winter’s slowness was mitigated by star players receiving contracts close to expectations. Yu Darvish, Eric Hosmer, J.D. Martinez, and Lorenzo Cain all signed deals that seemed fair as spring approached. Jake Arrieta didn’t come that far off when we consider his opt-out. Machado and Harper are still likely to sign very big contracts, while some in the middle might end up getting squeezed. But with this free agent class the supposed justification for teams saving their money on the heels of MLB payrolls going down despite soaring revenues, another slow winter is cause for concern for the players.
In examining the slow market, Ken Rosenthal recently called the system broken and floated some differing perspectives on the causes, effects, and solutions. One paragraph, in particular, caught my eye.
Some on the players’ side believe the market is better than last year’s, echoing club officials who say agents need to change their playbooks, stop holding out for unrealistic prices and secure long-term extensions for their clients — even at club-friendly rates — before free agency.
As to the first part, there is some reason to believe free agency is going a little better this year as compared to last year. Dollars and signings are way up over this point last season. Patrick Corbin, Andrew McCutchen, and Nathan Eovaldi have all done well. It’s hard to know which players, if any, have good offers on the table but are holding out for more, though the very last part of Rosenthal’s quote above was striking. It’s clear from the quote that teams are trying to convince agents and players to sign long-term extensions at team-friendly prices before free agency.
Teams like team-friendly things. It’s right there in the description. What’s less clear is why anyone on the players’ side should be advocating for more of these deals. I advocated for the opposite last spring and argued that if the players wanted to do something to combat the glacial market, they should stop signing team-friendly, long-term extensions. While likely impractical without additional financial assistance elsewhere — individual players will still be keen to receive life-changing money — the strategy would net players considerably more in free agency. A previous study I performed showed that teams saved half a billion dollars on the contract extensions signed in the four years from 2008 through 2011. We can look at this year’s missing free agent class and see similar savings.
Below are the players who would have been free agents this winter if they had not signed contract extensions early on in their careers.
| Player | 2019 Age | 2018 WAR | 2019 Projected WAR | FA Seasons Bought Out |
|---|---|---|---|---|
| Corey Kluber | 33 | 5.6 | 4.8 | 3 |
| Anthony Rizzo | 29 | 2.9 | 4.4 | 3 |
| Andrelton Simmons | 29 | 5.5 | 4.2 | 2 |
| Jose Quintana | 30 | 1.4 | 2.6 | 2 |
| Adam Eaton | 30 | 1.9 | 2.5 | 3 |
| Yan Gomes | 31 | 2.2 | 1.2 | 2 |
| Julio Teheran | 28 | 0.7 | 0.6 | 2 |
Hosmer got $144 million last winter coming off his best season; Anthony Rizzo had a similar 2018 season to Hosmer’s 2017 at the same age, though that was a down year for Rizzo. Corey Kluber is one of the very best pitchers in baseball coming off another great season. Andrelton Simmons learned how to hit a little bit and that, combined with his great defense, helped him transform into one of the league’s premier players. Those three players might add close to half a billion dollars in free agent spending this year without meaningfully changing the rest of the market. If the Cubs looked more like the third-best team in the NL Central without Rizzo, would they still have been this quiet? Would Cleveland still have shifted salaries around instead of trying to make themselves better? Might the Angels have been more even active in trying to build around Mike Trout if their second-best player was a free agent? The effect on the free agent market isn’t just that better players might be available; it’s that the teams losing those players have major holes that wouldn’t be filled by players on bargain contracts.
If we were to look at the missing free agents and examine only the years bought out and the expected production during those years, here’s the surplus those teams are projected to receive over the course of the next few seasons, based on $9 million per win. The remaining surplus has not been discounted to present-day value.
| Player | FA Seasons Bought Out | 2019 Projected WAR | Estimated Remaining Value | Remaining Contract | Remaining Surplus |
|---|---|---|---|---|---|
| Corey Kluber | 3 | 4.8 | $122 M | $53 M | $69 M |
| Anthony Rizzo | 3 | 4.4 | $120 M | $40 M | $80 M |
| Andrelton Simmons | 2 | 4.2 | $78 M | $28 M | $50 M |
| Jose Quintana | 2 | 2.6 | $43 M | $21 M | $22 M |
| Adam Eaton | 3 | 2.5 | $56 M | $28 M | $28 M |
| Yan Gomes | 2 | 1.2 | $11 M | $8 M | $3 M |
| Julio Teheran | 2 | 0.6 | $5 M | $12 M | -$7 M |
| TOTAL | 17 | 20.3 | $435 M | $190 M | $245 M |
Yan Gomes basically breaks even and Julio Teheran is a slight negative, but every other player comes out way ahead. This doesn’t even capture any discounts teams may have received during the arbitration process. Teams save massive amounts of money on these contracts and prevent very large free agent deals. This doesn’t mean these deals are necessarily bad; some players may value the extra security that a long-term deal provides, even if it comes at a steep discount. What would constitute a faulty strategy by players and their agents would be signing these types of deals as a means of getting more money to players, as it often has the opposite effect. Teams have less need for free agents when they have cheap options in-house, and that’s what team-friendly extensions tend to provide. Players’ options are currently limited by to the poor CBA negotiated on their behalf, but signing more team-friendly contracts is not a solution to their troubles. If anything, doing so would actually make their position even worse.
Craig Edwards can be found on twitter @craigjedwards.
Should maybe be pointed out that Jose Fernandez was supposed to be part of this FA class as well
🙁
May he rest in peace
CBA has limited players. I don’t think individual players should be trying to max out what percent players get in free agency outside of CBA. Individual players should be looking out for themselves. If they want to try to earn the maximum they can make, they should head to free agency. If they want to know they and their families should be financially set for life before free agency, they should consider signing extensions. I have no problem with owners saving money on guys that will have long careers. I have no problem that Jon Singleton is making money despite being a bust.
Players need to do better in next CBA.
I’m not going to say that the MLBPA shoulders all of the blame for the current trajectory, but they certainly didn’t do that much to avert it. Years of selling out minor league and international players for a few extra dollars for their top end veterans has finally caught up with them. The middle-tier players have been squeezed for years, but Machado and Harper may test whether or not the top end players are about to see their markets dip.
The actual “current trajectory” is what I would like to know, but this article doesn’t shed any light on it.
The only article I’ve seen on the subject that wasn’t analysis-by-anecdote was written by Ben Lindbergh last year (“Baseball’s Economics Aren’t As Skewed As They Seem”), and showed that baseball players’ share of total revenues has hovered around 56% since 2010.
I haven’t seen any evidence that the true trajectory of players’ share of baseball revenues has changed in the last year.
MLB just announced 2018 revenue of $10.3bil.
The total paid to players was $4.548bil (https://www.forbes.com/sites/maurybrown/2018/12/17/final-mlb-payrolls-for-all-30-teams-show-second-largest-decline-since-2004/#15d9480be474).
That means salary in 2018 accounted for 44.16% of total revenue.
If it were 56%, players would have made $1.22bil more in 2018 alone. Or $40.66m more for each team.
Maybe there’s some factor I’m missing, but that seems like a big difference.
Based the Ben Lindbergh piece that Wonderful referenced, postseason shares and minor league salaries + signing bonuses are included in the 56% number. It looks like postseason shares were $88 million this year (https://www.forbes.com/sites/maurybrown/2018/11/26/mlb-sets-postseason-shares-record-of-over-88-million-for-2018/) . Couldn’t find a reference for 2018 minor league salaries, but it was about $560 million for the two previous years and I assume it would be close to that in 2018. That brings the total to $5.196 billion which is essentially 50% of total revenue IF $10.3 billion is the actual number. The values Ben references are substantially lower that what Forbes reports, so I’m somewhat skeptical that revenue for this year isn’t closer to $9.4 billion which would be in line with the increases from the past few years (again, according to Ben’s piece). This would result in Major league compensation at 49.3% and total player compensation at 55.3% of revenue which is a decline from the past few years though not a drastic one.
No idea which set of numbers are correct, but it is difficult to calculate accurately with the publicly available information. Overall it doesn’t look like the sky is falling for players but they still have some cause for concern.
As far as having an idea of which set of numbers are correct, we have a pretty good idea that the numbers used in Lindbergh’s piece are correct, because both MLB and MLBPA agreed that they were.
Could you provide a source on MiLB costing $560m per year? I’m not sure which Lindbergh piece is being referenced, but I just read this one (https://www.theringer.com/mlb/2018/2/21/17035624/mlb-revenue-sharing-owners-players-free-agency-rob-manfred) which only makes a casual reference to MiLB costs and says nothing about $560m.
I’d be VERY surprised if MiLB salaries cost that much.
The 2017 MLB draft cost $287,575,870 in total. If the remainder ($272m) went to player salaries that would equate to $9.1m per team. There are approximately 200 players in each team’s farm system. $9.1m would equate to each player making $45,400 per year on average. Quite simply, this is false.
Even including their $25 daily per diems on the road, these numbers still don’t add up, unless someone is using some very creative accounting to come up with that number.
Rusney Castillo and Yasmany Tomas combined to make more than $25 million last season as minor leagers. Perhaps these salaries are reflected on the teams’ balance sheets as minor league salaries, rather than major league payroll? Combine these with the higher salaries for 1st round picks from prior drafts who haven’t yet made it to the majors, and you can see how the mean average might separate dramatically from the median.
On the players’ side, if you’re looking at the 56% number versus what’s in the Forbes article, you’re missing playoff-share payments to players, major league benefits, minor league salaries, minor league benefits, and minor league signing bonuses.
As far as the 2018 revenue number of $10.3B for MLB, without further context, I don’t know if that’s apples-to-apples to the total revenue number in Lindbergh’s piece.
Here is the $10.3bil source: https://www.forbes.com/sites/maurybrown/2019/01/07/mlb-sees-record-revenues-of-10-3-billion-for-2018/#6002175b5bea
It’s note worthy that this does NOT include the $2.6bil sale of BAMTech. However, it is still worth noting that a large chunk of $2.6bil was distributed to the 30 teams, which should give them more ability to spend on players.
I’ll pass on discussing BAMTech. It’s a red herring in these discussions.
I know that player salaries went down last year, but that was the first time in a while, and once Machado and Harper sign, they certainly will be going up.
While I find the topic of the evolving market very interesting, I’m growing tired of the constant rhetoric and (sometimes) veiled references to owner greediness and collusion. Players were undoubtedly getting overpaid in the post-strike era, and now the market is correcting, but you rarely see articles here or elsewhere bemoaning the awful contracts that were handed out. It would be refreshing to hear from a different perspective on this, if only to educate we the readers.
I agree that the system could (and should) be improved, but I also resent the line regarding the CBA being negotiated on the players behalf, as if they had no say.
The solution isn’t so simple as to pay younger players at market value or to restrict the number of years of team control. These mechanisms are not in place for owners to hoard money; they are meant to protect small market teams and allow them to remain competitive in a sport that does not have a salary cap.
One thought I’m having now – What if a portion of the revenue sharing money was allocated to the players union and dispersed among pre-FA players based on their performance?
No harm in brainstorming, but no one, neither the MLBPA nor the owners, would agree to that proposal. You can’t have a second, competing source of payment for players’ performance. Are the players also now employees of the union? What if there is a conflict in incentives between what the union pays for and what the teams pay for as far as performance? How does the union decide who benefits and who doesn’t, when it represents and has a fiduciary duty to all players? How does the decision on who to pay effect competitiveness between teams? And there would be many more questions than that.
And moreover, revenue sharing money received by teams is already earmarked for player costs. If the MLBPA and/or MLB is concerned that revenue sharing funds aren’t being used for that purpose, they can tighten up the rules on that front. The MLBPA has an interest in more money going to the players overall, it really doesn’t have an interest in benefitting one group of players over another.
Yep, fair questions, and it’s likely a wholly unrealistic proposal. I also did not intend to imply that teams receiving revenue sharing were not allocating that money properly.
I just wonder if there could be a way to compensate players (specifically pre-FA players, but you’re completely right regarding the union issues in doing so) based on unbiased performance metrics (which agreeing upon can be difficult enough in its own right, see: WAR on Fangraphs vs Baseball Reference) through what is already communal funding and not the employing team directly. I imagine such a system would be unprecedented.
It looks like luxury tax penalties go largely to player pensions and benefits per the CBA, for what that’s worth, so the Union didn’t mind allocating money to former members. Perhaps they could get a little creative and think more of their junior members (and non-members, in the case of those in the MiLB).
Based on the economic market shift of the past few years, they should be more motivated to do so in the next CBA negotiations. If that should be a priority, here’s hoping that they communicate that to those who negotiate on their behalf so that they can negotiate on their behalf accordingly.
“These mechanisms are not in place for owners to hoard money; they are meant to protect small market teams and allow them to remain competitive in a sport that does not have a salary cap.”
This concept was soundly rebuked over 60 years ago in Simon Rottenberg’s 1956 article in the Journal of Political Economy. Players generally go to the teams that value them most. Obviously the system is vastly different than the one discussed by Rottenberg, but there are definitely mechanisms in place for big market teams to “buy” premier players from small market teams (via prospects, which big market teams can acquire more of via international markets) or by simply eating money. How many times do you have to see the Rays or Marlins trade away star players before you realize that big market teams are easily able to acquire the best players regardless of whether teams have more years of control or not. All it does is transfer surplus value from players to team owners.
That doesn’t mean teams are “greedy”. Rather those are the rules of the game that were negotiated in the CBA. One obvious solution is to eliminate “pre-arbitration” contracts entirely and submit immediately to salary arbitration after the player has accumulated one full year of service. That would reduce the surplus value absorbed by the teams and transfer it to the players while still allowing small market teams to maintain those years of control. If younger cost-controlled players are substitutes to free agents, making those younger players more costly would increase the demand for free agents and presumably spending on those guys would go up. Of course this idea would also require an overhaul to the arbitration system, but this would probably be the best step to address the issues of MLB’s stagnant labor market.
I believe a question was posed recently in Meg Rowley’s chat as to what she would make points of priority for the upcoming CBA. If the MLBPA wants to balance the revenue split, I would make the following priorities.
Significant increases to Minor League Salaries.
Significant increases to International Spending Pools.
Significant increases to the Luxury Tax threshold.
Overhaul qualifying offer rules so the team would have to offer a contract whose annual value is equal to the average of the top 5 salaries in the MLB to qualify for draft compensation.
From my understanding, the first two don’t benefit the PA directly, making them less of an issue.
I’m not saying it’s right/wrong, but the 1200+ members of the union have goals for THEM, not goals for the future players that will join them. It’s a unique arrangement because the short-term player pool is already established, but the current player pool has no obligation to assist them.
It is a broken system, on many levels! First, the economics of the games, the spread in payrolls is extreme… small market team can’t make 1 single mistake!
Also, the age of FA should be fix rather than years of service. While it will not eliminate ALL service manipulation, it will reduce a lot of it… lets say… players become FA’s when they hit the first of the following… 6 years of service or 28 years old. This would allow players to hit FA status in their prime and allow them to cash in.
That being all said, should the owners agree to this, players would have to give something substantial in return… would PA/players agree to salary cap (floor and cap), only partially guaranteed contracts??
As a fan, I think it would be unfair that players gets less than 50ish% of ML revenues… I think that is a fair piece of the pie… IMO!
My impression is that implementing a salary cap and not fully guaranteeing contracts would be a hard non-starter for the Players Union, as they should be, although I never read much about this, perhaps because it’s obvious. Many of those who lament the current system often overlook the massive benefits that the MLBPA has over other professional sports unions in this regard.
Besides, a strict salary cap and non-guaranteed contracts can be just as bad or even worse for both sides. Just look at the NFL where many quality and otherwise affordable players are released every offseason and have the salaries of their next contracts unnaturally depressed due to the combination of those two factors, while their former teams struggle to fill the resulting holes on their rosters. Plus, it’s a real pain to deal with the NFL preseason holdout that also occur due to their system.
FYI, major league players – in salaries, benefits, and postseason shares – already get ~50% of total baseball revenues. If you include minor league salaries/signing bonuses/benefits, players get ~56% of total baseball revenues.
This has been consistent (within a percentage point or two in both directions) for more than the last decade.
So, what you think is fair is what is and has been happening for awhile now.
How many of the teams with the “team friendly” contracts would have kept the players until free agency? How many would have moved into rebuild mode? Other than Rizzo most of the others played with “merely competitive” small and midmarket teams.
It’s not the Yankees, Dodgers, or Red Sox perennial-contender big market teams signing players to those deals.
Yes, the system is broken.
The entire CBA is focused on maximizing salaries of older top-tier players at the expense of MLB newcomers and mid-tier players.
It worked before teams got a good handle on aging curves and when PEDs helped older players recover from injuries and heavy workloads, extending their peak performance years. Absent PEDs, less teams are willing to throw big money at mid tier players.
The CBA is also a contributor to the “Team Friendly” contracts because, while the contracts are below FA market value, they dwarf the guaranteed money the player in question is looking at. Players offered those deals balance present value vs future security differently from the union and (some) media analysts.
Bear in mind that the “B” in the CBA acronym stands for Bargaining. The Union bargained with the teams, trading benefits in both directions to create the system as it stands. Likewise, the “team friendly” contracts are the result of bargaining between the player and the team.
Life-changing money is exactly that. Some players prefer to change their lives early. Their choice.
If the union wants less players to willingly sign those deals, they should work to change the conditions that cast them in a favorable light. Maybe by focusing on making more money flow to the players with limiting bargaining power and six-figure salaries instead of trying to maximize the number and size of nine figure deals.
Making teams cough up more money can be done both ways: benefiting the Bryce Harpers or the pre-arb players. Which way it goes is up to the Union because left to themselves the teams prefer the current setup.
I think this is pretty close to what’s actually going on. The whole system was predicated on teams not understanding aging curves (and to a much lesser extent, PEDs). Teams now understand that the ideal situation is getting guys for six years, signing them to an extension through their early 30s (depending on the player; some guys are better bets than others), and letting them walk if the price gets too high.
There’s just no good way to tell guys to pass up becoming a multi-millionaire now in order to maybe–if their health turns out well–become a multi-millionaire in three years. On the average, it may be better for players to wait, but players don’t get to be “on the average”; you only get one career.
The luxury tax is an issue, but it’s more of a diversion than anything. If there was any way to start arbitration earlier, or raise the minimum salary substantially, or both, these are the things that would get guys some more leverage (and money) early in their careers. And right now, it’s far too tempting to just ride guys’ pre-arb and arb years because they’re just so dang cheap unless they take a team-friendly deal. And that’s before we even get into the plight of minor leaguers.
Another side effect of the CBA is non-tenders.
It took a while but teams eventually figured out that there were enough average and replacement level players in the game that they didn’t have to submit to the hardwired salary escalation of arbitration. Better to cut loose a useful but non-essential player and replace them with a comparable player at a lower cost.
Both sides act in their own best interests as they see fit and use whatever leverage they have to get there or as close to it as possible.
Bargaining is about balancing each side’s leverage and interests.
Which is where the Rosenthal quote fits in: one of an agent’s duties is to understand a player’s actual leverage and market value so their client doesn’t overplay their hand.
It seems not all agents have quite internalized the idea that there are no more George Steinbrenners or Mike Ilitches left in the game.
The other issue with arbitration is that the way that teams value players doesn’t line up with arbitration at all anymore. Chris Carter got cut loose a few years back because he hit 41 home runs, but nobody wanted to pay arbitration rate for a guy who could only play first base and whose OBP fluctuated between .300 and .320.
The biggest problem–from this perspective–is that as it stands right now, guys who are most valuable when they’re young because of their excellent defense never get to cash in. The raises for defensive contributions are modest, and they tend to hit free agency right at the time their skills decline.
The whole thing with the plight of middle-tier free agents and guys signing below-market extensions comes back to guys getting screwed earlier in the process. You fix that, you’re going to see some better outcomes down the line as well.
Another way young players get…squeezed…is with the slotting system for the draft and the capped pools for international signings.
The union agreed to those things, presumably to free up money for Free Agents. But with the more efficient free agent spending regimes now in place, the savings aren’t going to the mid tier guys but are instead funding the nine figure contracts or staying in the team’s pockets.
And yet again, which class of player is most likely going to sign “Team Friendly” deals? International signees and lower round draft picks.
Kluber was a fourth rounder in 2007 and he was slow to master his craft, getting to the majors in 2011 and establishing himself in 2013. Rizzo was a sixth rounder.
Contrast Lindor’s $2.8M signing bonus to Jose Ramirez barely getting four figures to see why the latter signed an extension and the former rejected $100M.
Baseball teams are like any other business: they spend when they have to and only when they have to. And lately they’ve learned many reasons not to that still let them get the job done.
It’s remarkable how far down we can go down this line of reasoning. I doubt we’ve even hit the bottom of it yet. I think the bottom line is that the MLBPA is not going to get a quick fix, that they need to address some upstream economic issues, but that it is possible to pursue the interests for both younger and older players simultaneously (just not the specific ones that are old now).
However, keep in mind that the team-friendly extensions and service time based salary structure are necessary evils for competitive balance, as they’re the only consistent ways the small market teams can compete with the large markets. There could be some needed changes in the next CBA, but the basic structure needs to remain intact
This is no knock on the (high) quality of the work you put into this post, Craig, but I just don’t know why it’s become so popular to get worked up over this. The players have a union. Even though the last CBA was rough, that union has been, historically, extremely successful and strong. Their minimum wage is over a half a million dollars per year, and their median income is over four million dollars per year.
Why is it weird that the business owners are making more? That’s how it is everywhere. I get that there’s a lot of anti-capitalist sentiment floating around right now, and there are some really good reasons for that sentiment and a lot of really important discussions to be had, but isn’t this a bizarre choice for a focus? I mean, Do YOU have a union protecting YOUR interests? What about, I don’t know, farmers? That’s a really critical field of production for all of us, and their income is subject to constant, sweeping changes in global markets that are largely beyond their control. What about teachers? They have a union, but is it working well enough? Their median salary is like $38,000.
I’m not saying this concept isn’t important. But why spend time and energy lobbying for reform for a group of laborers (MLB players) that are already very wealthy AND have all the tools in place to preserve and improve their collective lot?
(Also, I know that MiLB players do not enjoy these benefits. But that’s a different story altogether and isn’t what this article is about)
I mean, it’s pretty clear why Craig is not writing about farmers and teachers on FanGraphs. This is a baseball website to write about baseball matters. An important feature of baseball is the economics of it, especially in the winter when there’s nothing else to do but speculate about where your favorite free agents will go. In addition, right now we’re in the midst of a pretty significant redistribution of spending. That’s something worth talking about!
Well, it’s an open question as to whether the sport is in “the midst of a pretty significant redistribution of spending,” but this article doesn’t help answer it.
Median salary of teachers in the US is close to $60,000. $38,000 is the average of the starting salary figures from the 50 states given by the NEA.
Collective bargaining is an essential part of the history (and present) of baseball. It shapes how teams approach roster construction, and, in case you’ve forgotten, this is a sport that had (checks internet) 4 strikes and 3 lockouts between 1973 and 1995.
While some of the readers of the site may be too young to remember them, the 1981 and 1994 strikes were massive (and for Expos fans) devastating events. Pretending that collective bargaining isn’t hugely important on a site devoted to baseball coverage because people in other professions make less money strikes me as a) whataboutery and b) sticking one’s head deep in the sand.
It’s entirely reasonable not to ‘worry’ over the well-being of players with a minimum salary of $500K, but if the players keep getting squeezed and the owners refuse to bend, then a little way down the road we won’t be getting any baseball for a while.
There’s tons of content on players, statistics, and fantasy on this site if this stuff isn’t of interest, but I’m glad that the interesting and intelligent writers on here continue to focus on this topic. Beyond that, I have no problem with a pro-player ‘bias’–apologizing for, or rooting for the owners is like, um, rooting for the Yankees.
A lot of people blame the CBA for the recent changes to the nature of free agency, but I think it’s less the construction of the CBA, and more the approach of the owners when it comes to the Competitive Balance Tax.
The tax was originally designed to slow the biggest spenders down some, but it’s had an additional, perhaps unintended effect, and that’s that every ownership group in baseball is treating it like an actual salary cap. Hank Steinbrenner (Yankees) has said that his goal is to contend while spending under the tax line, Guggenheim Baseball Management (Dodgers) have reassured investors that their long term plan does not involve going above the tax line, and even the Red Sox have tried to avoid paying the steepest penalties.
The old adage that it only takes two buyers to start a bidding war is still true, but the owners treating the CBT like a cap means that bids now have an artificial cap. The Red Sox could sign Bryce Harper and put him in their outfield – but they won’t. Because of the tax implications. The Yankees could sign Harper and Manny Machado – but they won’t. Because of the tax implications. So long as every ownership group treats the tax as a cap (and they have), free agents will be forced, essentially, to bid against each other for the handful of contracts that have become artificially scarce.
The reason the big bucks teams stay around the cap is they’ve learned how to run their businesses successfully by adopting the efficiency tactics of smaller market teams.
Yes, the Yankees can afford to pay Harper $40M a year to play CF but the incremental benefit of going from Aaron Hicks to Harper won’t move the competitive needle as much as giving $17M to Happ. The Dodgers seem to prefer Verdugo and Bellinger at minimum wage.
Harper will get his money but it will more likely be from the White Sox or Phillies, who actually need his skills rather than teams where he’d be more of a PR coup than a necessity.
And other teams are following the same approach, which is how last year’s glut of 3B and this year’s glut of 2B came to be.
With enough teams focusing on financial efficiency over PR value, a lot of players are learning that a synonym for “Free Agent” is “unemployed”.
Wouldn’t be surprised to see a few more “missing free agents” in years to come as contract extensions start to look more attractive to players short of the very top.
But I view this as good though, dont you?
I want the Phillies and CWS to have a shot in the end. What if baseball became basketball-esque with stacking teams and NO cap to prevent anything? At least in basketball there is a cap to somewhat curtail the practice a bit, in baseball it could get super ugly-
Personally id be more alarmed if said teams were blowing by it with a smile
Just my thought Ive often pondered is I bet Friedman and Cashman would just enjoy a championship a lot more with a 180 mill payroll than a 250 – Front offices are getting more and more face time these days, we cant take ego out the equation here
I agree that we don’t want to live in a world where the big-market teams can just blow away others by out-spending them. I think that’s a good thing, too. But the Phillies and White Sox are odd teams to use to make that case when the Twins, Padres, Reds, and Brewers are a thing.
Well, there’s the narrative that marginal teams prefer to tank and boost profits rather than spend on Free Agents to be more competitive. The Chisox and Phillies are rebuilding teams looking to be more competitive by careful spending on *some* free agents.
Brewers did the same thing last year and it worked.
Twins tried but were rejected.
Padres succeeded but really shouldn’t have tried.
It’s not the spending per se but spending effectively on players you need and can afford.
I picked those four teams because all four of those franchises have a habit of spending money relative to their market size, in comparison somewhat more miserly franchises in small markets.
Definitely good to see marginal contenders use their resources effectively. It makes for more parity. Phillies and the ChiSox are both teams with large revenue potential so the sooner they get back to contention the better it is for the team and the league in general.
What isn’t good in the long haul is when non-contenders mortgage their future competitiveness for a bit of positive offseason PR. As in the Phillies’ Howard extension, the Tigers’ Cabrera extension, the Padres’ Hosmer deal.
Teams face a balancing act weighing present needs versus long term competitiveness. All the recent talk of “superteams” has obscured the fact that it is healthier to have a 90 win team for 5 to 7 years in a row than to put together a one year 110 game winner that disbands after the season. Banners fly forever but once a decade competition doesn’t make for happy fans or owners.
These past few years we’ve seen some interesting moves by the mid-market teams looking to be as competitive as possible as often as possible instead of following the Cubs/Astros total teardown approach. It’s not just the big boys looking to be more efficient and it’s given us the current Brewers and 2018’s A’s.
Unconventional but welcome.
More parity is always good.
“where players get less and teams keep making more”
There is the problem. I’d be fine with millionaires making less, but the savings are not being passed onto me. Ticket prices aren’t going down, while regional sports networks are causing my cable bill to increase. The result is more of my entertainment dollars are diverted to owners, instead of the people that entertain me.
Raise the floor for the lower-paid (pre-FA and esp. pre-arb.) players, and the disincentive to pay free agents is reduced. The union has gotten the endpoints so far apart that it may have reached a point where it doesn’t really benefit anybody much. Of course you still have to get the Monty Burns owners to share some of their growing piles of revenue and rising franchise values instead of releasing the hounds…
Although the average salary has gone down, there are a lot more player options being given out now than there used to be. 2018 contracts may still, on average, have higher value than 2017 contracts when you factor in the value of the player options.
I’m curious – does that table include all guys that would have been a FA this year? Meaning, are there any guys that had one or more FA years bought out through an early extension, but busted out of baseball (and became dead money)?
Is the success rate really that high for guys that sign pre-FA extensions? That’s a pretty good list of players. I’d be curious if this is typical, or if this year’s class is an outlier. If that’s typical, then the front offices are doing a really good job of locking guys up and getting surplus value.
I was wondering this too. Could certainly change things if so!
I didn’t include guys like blackmon and Segura who signed close enough to get basically free agent prices. It’s also possible I would have missed someone who was sent to the minors a bunch as my search was for players with six years of service time. None of those players come to mind, but I have no problem being corrected.
4 years service time before FA. 1 year of minimum wage. 3 years of arbitration.
Personally I could live with 0 years before FA but this is a start.
Charlie Finley argued for cutting all players free every year.
He wasn’t doing it to help players.
They can still sign contracts, just not 6 years of underpriced labor.
The current service time based system is necessary for competitive balance. The small market teams need those 6 years of under-priced labor in order to build through the draft and other minor league prospects to have occasional competitive windows against the large market teams.
You could also argue the other side of the equation. How much more money would Matt Harvey have made if he signed a “team friendly” extension? Im sure there are countless others that missed out on a huge payday by being as greedy as possible as well.
Including 2019, Harvey will have made $26 M over the last four years so it’s hard to see him coming out too far ahead on a team-friendly extension. He will make more than Jose Quintana this year.
You wonder if there was ever a world where both sides would just wake up and do whats right because its still mutually beneficial in the end-
Stop letting teams delay service time, have set start points to start the clock , lessen arbitration years, have a set CAP AND FLOOR
Then its a yes, don’t overpay the vet free agents, because frankly they DON’T deserve the money – If we can sift threw the financials and all agree on a % split among milb- mlb -owners then we might have one of the best free enterprises on Earth at work- Lot hinges on that last part though, I really think the Floor part is far more important than the Cap for getting implemented- (110-220) makes sense next CBA – And yes more money would also have to be collectively “shared” as a % in my scenario along with probably 2-3 re-locations which Id be fine with in the end if it helped spawn this Utopian market
There is significant value to some players, especially pitchers, in locking in a large (but not “max”) contract in exchange for immediate security and insurance for the risk of injury prior to free agency. Every above average MLB player has a choice, as they should.
“Team-friendly” early contracts are often also player-friendly, because baseball players and multi-billion dollar corporations have differing utility functions.
So, Edwards proves that a hypothetical strawman strategy by agents (which he does not and cannot prove exists) is wrong, then mildly admonishes players signing extensions for depriving other players of money somehow. Good job, great article.
My two cents for the next CBA:
1. Increase the major league minimum salary significantly:
1st year: $1 million
2nd year: $2 million
3rd year: $3 million
And build in automatic annual increases in these values based on some sort of inflation factor.
2. If the Competitive Balance Tax must continue, have the yearly “cap” increase at a much higher rate.
The current increases are well below the typical salary increase rates of the last 20 years, which is one factor limiting team payrolls.
If you did this, you’d have to have some sort of exceptions for fairly fungible bullpen guys, or third year players will frequently be getting the boot in favor of another arm that is basically the same and $2 million cheaper.
That is correct.
Of course, from a pure economic welfare point of view, what you say would be good/beneficial for players overall. If teams cycled through fungible relievers and utility players to always pay $1M or $2M for them (but would never pay $3M for a player that was substitutable for a $1M or $2M player) then commensurately more fungible relievers and utility players would get paid, and there is far more utility to players receiving the first $1MM (or the first $3M, after being employed for two years) than in getting an additional $3M salary in the third year, after having already made $3M.
But in any event, I would agree with the OP’s point that one of the most obvious things to do in the next CBA (and maybe the only thing that needs to be done) is to substantially increase the minimum salary. That step alone would mitigate many issues for the players (real and imagined), from total comp to service time and roster manipulation issues.
why not cut ticket prices so for me to take my family of 6 to the park it is not $400+ for tickets, meal and parking. That does not include merchandising etc.
Or use that money to pay for team owners ballparks.
I know not the point of the article but do we have to keep escalating salaries.
Ticket prices and salaries have nothing to do with each other. Nothing.
Nationalise it. (but by city instead of country I guess)
Why not just allow all ballparks to do what many already do: allow fans to bring in their own food (with some necessary exceptions)? I could do that and invite 5 other people with me to a cheap game with nosebleed seats for a total of about $90.
Miguel Cabrera.
Troy Tulowitzki.
Matt Kemp.
Saying ‘team-friendly’ extensions are bad for players is a vacuous statement.
No player signs a deal thinking it is ‘team-friendly’.
How much money did Ian Desmond and Neil Walker lose out by not signing team-friendly extensions?
Allen Craig
The reason the free agent market is slow is simple:
Jake Arieta: 4.26 FIP, and the team lost more games than they won with him pitching
Eric Hosmer: 1.5 WAR
Yu Darvish: -0.2 WAR.
You can’t really blame the teams for not paying top dollar for below average performance. That isn’t the club’s fault. It’s whoever keeps negotiating the players end of the CBA.