The Other Big Change in MLB’s Post-PED Era

As we head towards the expiration of the CBA this winter, there seem to be three pretty common discussion points or narratives making the rounds in MLB right now.

1. The problems with the qualifying offer system, highlighted by Howie Kendrick’s contract with the Dodgers and the lingering free agency of Dexter Fowler, Ian Desmond, and Yovani Gallardo.

2. The unhappiness of some owners in regards to their view that some teams are “tanking” in an attempt to stockpile high draft choices and the bonus pool allotments that go along with those picks.

3. The continued silliness of the international signing rules, and the perverse incentives created by the system for signing players from other countries.

Yeah, there’s some talk about the DH and the luxury tax threshold, but those haven’t been as pervasive over the last month or so as the conversations about the qualifying offer, tanking, and the Dodgers decision to spend almost $100 million on international teenagers in the last six months. And, interestingly, those three things all have one thread in common: the draft.

The qualifying offer is contentious because teams are putting higher-than-ever values on draft picks, and teams that would have otherwise spent money on veteran free agents have decided to opt for alternative paths in order to retain their top selections. Kendrick settling for 2/$20M, after turning down 1/$16M, is another reminder of the impact that draft pick compensation can have on mid-level free agents.

On the so-called tanking issue, some executives (and Scott Boras, of course) are using the media to publicize their dissatisfaction with the draft, and what they’re claiming are incentives to lose on purpose. Of course, any league with a draft that assigns picks based on ascending record will provide a larger benefit to teams that lose than teams that win, and that’s by design. The questioning of whether or not there should be a reward for losing should call into question the value of the draft itself, which I’ve been calling to abolish for years, but for different reasons.

And finally, there’s the disaster of the international signing system, which is probably the most broken thing about MLB right now. The soft-cap system — originally intended to mimic an international draft without actually setting one up — setup a reward structure where teams are high-revenue teams are incentivized to keep on spending well beyond their bonus pool allotment, getting as much value in one spending period as they can before the signing restrictions kick in. This system has resulted in some teams spending up to 100 times what other teams spending during the international signing period, and has widened the gap in international talent acquisition rather than narrowing it as intended.

In each of these cases, the cause of the issue appears to be the draft, or in the international case, the lack of one. At least, that seems to be MLB’s position; Commissioner Manfred has repeatedly stated that he’s in favor of a “single method of entry” system that pushes all players coming into MLB through one portal. The logistics of a universal draft are problematic, so the single-method-of-entry comment allows the flexibility for the league to push for two drafts, retaining the one for domestic players and adding a second draft for international talents. This seems to be pretty likely to be a significant point of emphasis for the league in the upcoming CBA negotiations.

But while I’m no big fan of the draft — it is, really, just a way to reallocate money from young players to veterans — I think there may be an underlying issue that can’t be can’t be collectively bargained away. The driving force behind all three of these issues appears to be the changing relative values that teams are putting on young talent compared to older talent; teams are clinging to draft picks — and, according to some, attempting to set themselves up in better draft positions by losing on purpose — because of a huge demographic shift in MLB.

In 2015, players 30-and-older combined for just +266 WAR; in 1998, that number was +470. The primary effect of the PED-era can be seen rather easily in the huge mid-90s spike on that graph, and the recession of that spike since the league took action to curb chemically-aided longevity. While most of the talk about the change in the game has revolved around the decrease in run scoring, the bigger change has been in the demographic shift, with ineffective veterans being swapped out en masse in favor of better, younger talent.

The only year on the above chart with fewer WAR from 30+ players is 1994, when the season ended in mid-August. The game is now younger than ever, and teams are indeed responding to this reality. Without being able to count on veterans to age well, money is moving towards acquiring and retaining young players. The relative value of young talent — which draft picks represent — has as much to do with the decline of veteran performance as it does with the shift towards analytical decision-making. When teams look at charts like this, perhaps we shouldn’t be too surprised that the guys being hit hardest by the qualifying offer system are non-elite players in their 30s.

I wrote about this issue a couple of years ago, and the trend has only escalated since; in the post-PED era, the allocation of money has shifted dramatically towards players in their twenties. Here is the chart I included in that post two years ago.

You can see that, right around 2008, money that used to go to players in the 31-35 group started being given to players in the 26-30 group instead. Instead of betting on good players leaving their primes, teams started betting on lesser talents still in their peak years, believing that the effects of aging were going to be more dramatic in a time where PEDs were not as easily taken. And, probably not coincidentally, this is exactly what Jeff Zimmerman found when he updated his research on aging curves to focus on more recent seasons; age-related decline was beginning sooner than it used to.

MLB can — and should — work on rectifying the processes that are in place, especially ones that serve to produce unintended consequences. The qualifying offer system wasn’t designed with the intent of being disproportionately harmful to mid-tier veteran free agents, and the international slotting system wasn’t setup to allow the Dodgers to sign every interesting teenager with an accent. But making changes to those systems isn’t going to touch the fact that the game has shifted dramatically, and teams are going to continue to emphasize the acquisition and retention of young talent over the pursuit of aging veterans.

And this is something that the MLBPA might have to consider in their decision of which priorities to fight for. Historically, they’ve used the draft as a bargaining chip to strengthen their position on getting more money for union members, allowing the league to implement cost-savings techniques to hold down the pay of those not yet in the union. But the shift towards a younger game means that those are exactly the areas where teams find the best return on investment for their dollar, and so they’re going to attempt to spend as many of their dollars acquiring those kinds of players as possible. Fighting for more money for older players, at a time when teams are moving their money away from older players, seems like a losing proposition.

Likewise, the league will need to consider this shift before attempting to implement any of the “anti-tanking” proposals being bandied about at the moment. With the game skewing younger, and internal development being the primary way to acquire the kinds of players who are producing a vast majority of the value in the game at this point, it’s going to be difficult to create a system where bad teams with veteran players aren’t highly incentivized to trade them for young talent, rather than trying to build back up around those players. 10 years ago, maybe you could have argued for keeping your 30 year old franchise player and hoping he’d have retained enough productivity to still have value when the rebuild was complete, but in this day and age, players on the wrong side of 30 are being rightfully treated like an opened avocado; if you can’t use them now, you sell them to someone who can.

The shift towards young talent is changing the game, and changing how the market values draft picks, prospects, and veterans. Altering the systems that allocate draft picks or get prospects into minor league systems isn’t going to deter teams from putting an increasing value on young talent; they’ll simply find new ways to use their financial resources to buy up young talent, because that’s what the incentives of the game are pushing them to do.

It’s a young man’s game now, and this isn’t a trend that looks like it’s going to change any time soon. The league can tweak the draft rules and change the qualifying offer system, but money is going to keep following productivity, and in this day and age, productivity is coming from youth.