If you think this winter has been a cold one, it’s been even colder for a majority of MLB free agents. When the first training camps opened on February 13, more than 80 players, including five of the consensus top 10 free agents, remained unsigned, many of them wondering if they’ll have a job this season.
Whether owners have shied away from the free agent market or players have priced themselves out of work depends on whom you ask. A number of unscientific theories have been advanced to explain the stalemate, including: a less talented group of free agents this year; the loss of draft-picks as compensation for signing players who were offered one-year contracts by their prior teams; formerly free-spending clubs — the Dodgers and Yankees among them — sitting on the sidelines, hoarding their resources for the star-studded group of free agents anticipated next year; the financial benefits of staying under the competitive balance tax — also known as the luxury tax – this year; and the dreaded “C” word: collusion.
There were exceptions to the inactive market, most notably the six-year, $126 million contract given to Yu Darvish by the Cubs just days before camps opened. Because he was traded during the 2017 season, Darvish wasn’t subject to the compensation rules. Darvish’s contract fell short of the 7-year, $217 million deal the Red Sox bestowed on lefthander David Price two years earlier. The signing added fuel to the argument advanced by players and their agents that teams were intentionally depressing the free agent market.
The players’ position is best illustrated by the comments of Dodgers’ pitcher Rich Hill, who signed a three-year, $48 million contract after the 2016 season and watched this year’s free agent market from the sidelines. “Something that doesn’t seem very fair (is) going on,” said Hill. “Players just want what’s fair.” Objective observers of this winter’s slowly developing free agent market might counter that what players see as fair apparently differs from what the owners view as fair.
One prominent agent went so far as to recommend a boycott of spring training, which never materialized. Adding fuel to the fire, closer Kenley Jansen, a 2016 free agent who signed a five-year $80 million contract with the Dodgers, suggested the players should consider a strike.
Similar to inexperienced investors who were under the impression stock prices only went up and were blindsided by the market correction in early February, the players and their agents are expressing shock and disappointment that teams were neither acquiescing to their demands nor bidding against themselves. Just because baseball as an industry is awash in cash, clubs have decided, at least for one off-season, there is no need to throw exorbitant amounts of money at the players, especially given the mountain of evidence that suggests players over 30 are on the downhill side of their careers. While teams are willing to pay for quality, analytics show that in many cases younger players can provide as much, if not more, production as free agents at a much lower cost.
Not surprisingly, MLB Commissioner Rob Manfred favored the “free market” view. “Drawing lines in the sand based on a perception that your market value is something different than what the market is telling you your value is, that doesn’t make a lot of sense,” Manfred said. “It is a fact that markets dictate value. Values are not dictated by big, thick, three-ring binders and rhetoric about who’s better than whom. They’re dictated by markets. That’s the system we negotiated.” Manfred’s reference to “big, thick, three-ring binders and rhetoric” was a not-so-subtle jab at uber-agent Scott Boras who, as usual, represents a majority of the big names in this year’s free agent market.
The unrealistic nature of Hill’s comments are in sharp contrast to the realism exhibited by the Oakland Athletics’ Brandon Moss. In an interview with the MLB Network, Moss said the players’ union has to take responsibility for the balance of power that has obviously tilted greatly towards ownership. “It’s our own doing,” said Moss. “These past two collective bargaining agreements…I think that we have given the owners…who are very, very business savvy, a very good opportunity to take advantage of a system that we have created for ourselves…We have the right to bargain and set our price just like the owners have the right to meet that price.”
After Moss made his comments, and before spring training games got under way on February 23, there was a flurry of free agent signings, including two monster deals. The San Diego Padres signed first baseman Eric Hosmer to an eight-year, $144 million contract. That was followed by a five-year, $110 million contract agreed to between the Red Sox and J.D. Martinez, a deal that had been speculated to happen since free agency began in October. Despite those late moves, Moss couldn’t have said it better. The players have ceded the higher ground to the owners by allowing the balance of power to shift from the union to management.
Marvin Miller, the first executive director of the MLBPA, would be aghast at the direction the union has taken in recent times. Under Miller, the union was primarily focused on economic issues — salaries, pensions, arbitration and free agency. When Miller came on board in 1967, the average player salary was $19,000. Today, it exceeds $4 million.
Don Fehr succeeded Miller and Michael Weiner assumed the reins of the union after Fehr retired in 2009. Tony Clark took over as executive director in 2013 after Weiner’s tragic death from brain cancer. Miller was an economist, Fehr and Weiner lawyers. Clark is a former player who enjoyed a 15-year career playing for six different teams. His economic, financial and legal background is limited to participating in union activities during his playing days. Clark vowed to represent the players’ wants and needs and today’s players value “personal comforts,” like off-days during the season, above economic issues. Or at least they did, until this off season.
In fairness to Clark, the players’ percentage of league revenue began shrinking before he negotiated his first CBA in 2016. Despite an increase in average player salary, their overall cut of MLB revenues shrunk significantly between 2002 and 2014, from a high of 56 percent in 2002 to 38 percent in 2014. Baseball players now receive the lowest percentage of industry revenues in the four major league team sports.
Where do the parties go from here? The current CBA doesn’t expire until after the 2021 season. While prior CBA’s have been renegotiated on a number of occasions, most notably to address areas related to drug testing and rule changes, it’s doubtful the owners, after years of watching the union outmaneuver them at the negotiating table, will be willing to reopen an agreement that currently gives them the upper hand in financial matters. Unless the rhetoric on both sides subsides, we could have a prickly relationship between the parties for the next four years followed by the possibility of a work stoppage for first time since the 1994 strike.
The author is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in and Chair of the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com. The opinions contained in this column are the author’s. Jordan can be reached at jordan.kobritz@cortland.edu.
