Tuesday, February 19, 2019

baseball free agents: collusion or risk management?


Note: While I was writing this, Manny Machado signed with the Padres for $300 over 10 years.

When it comes to baseball owners vs. baseball players, I will side with the players almost every time.  Baseball owners did a despicable job of grossly underpaying a labor force that was close to illiterate (at least football and basketball players are forced to spend some time in college, where some book learning might rub off on them).  Thanks to Marvin Miller and the MLB Players’ Association, baseball players became the best paid athletes in the world with a powerful union that beat the owners so often the owners basically gave up and stopped fighting.  They did refuse to admit Miller to the Baseball Hall of Fame, an honor Miller has shown no interest in.

One of the stupidest things the owners did when they were fighting the union was their collusion in the early days of free agency, when Commissioner Peter Ueberroth suggested that just maybe the players could be put in their place if all the owners got together and agreed not to bid on any free agents.  This highlights one of the more amusing aspects of antitrust law; the fact that businessmen get together to fix prices thinking they are being clever when in fact they are breaking federal law.  The final tab for violating federal law (both antitrust law and labor law) was a $280 million settlement with the MLBPA.  Obviously after a lesson like that, baseball owners would never, ever collude to restrict the signing of free agents.

If you believed that last sentence, you obviously don’t know much about baseball owners (might I suggest a book called Lords of the Realm for a history lesson on owner arrogance and stupidity).   Here we are in 2019, days away from the start of spring training, and several free agents have not been signed to new deals, including superstars Bryce Harper and Manny Machado.  Once again, the players are starting to utter the C-word.  Rob Neyer, in his Big Book of Baseball Blunders, called collusion the single biggest blunder in the history of baseball.

As I said, I tend to take the players’ side in labor issues, but I’ll defer judgment here.  Why has there been an impasse; are teams reluctant to pay player salary demands, or are they reluctant to take the risk of signing a long-term deal?  Are teams not offering Harper $30 million a year, or are they not offering $300 over ten years?  If the risk is the issue, I can see the owners’ side.

Some people will use the Hall of Fame’s biggest mistakes to justify more mistakes; if Jesse Hines got into the Hall of Fame, then Joe Schmo should get in; as applied to contracts, players like Harper are saying if Albert Pujols got a ten-year deal worth $254 million, then Harper should get a ten-year deal too.  But the Angels are now seeing the result of offering a long-term guaranteed contract to a player whose age is at a point of diminishing returns, with his injuries becoming more frequent and his stats becoming more mundane.

One player with an unhelpful suggestion opined that maybe every player should play with a one-year contract.  No doubt many owners started salivating at the proposal, but they should re-think that attitude.  If long-term contracts are a bad deal for owners, short-term deals are not any better.  Imagine you are an owner of a team that does everything right, drafts well, develops players, and makes astute trades.  Your team improves dramatically and looks ready to vie for a pennant and then—you’d have to negotiate with every team member who had a good season, meeting all of their salary demands.  The key to the success of the Cubs and the Astros was locking in young players to extended contracts while they were still arbitration-eligible, establishing a low payroll that you can use to try and spend to eliminate your weak spots.  Having to negotiate with all 40 players on your roster would also over-tax your manpower by having to evaluate every player and negotiate with all of their agents.  It is hard enough under the current system to know how much to pay and when to let a player go; the odds of making a miscalculation would go up dramatically if you negotiated with 40 free agents instead of four or five.

Frankly, if I were a baseball owner, I’d be leery of offering Bryce Harper a long-term deal.  He’s had some great years, but he’s also been inconsistent and streaky.  He only hit .249 in 2018; okay batting average is one of those old-timey stats, so let’s say his WAR was 1.3.  That’s not worth $30 or $40 million a year for ten years.  Sign a five-year deal and if you have five great years, we’ll talk about an extension.  Or, sign a ten-year deal but with the salary in the out years tied to production.  It’s called betting on yourself.

I think collusion is a likely explanation of the failure of recent free agents to find gainful employment, but if the problem is players expecting guaranteed contracts of ten years with increasing salaries throughout, then I’ll reluctantly agree that the owners have a point. 

I suspect what is happening also is that owners are taking the wrong lesson from the success of the Cubs and the Astros.  I can just imagine owners thinking, “So that’s it!  All we have to do is suck for two or three years, then we’ll be great.  Let the sucking commence!”  It’s like the underwear gnomes from South Park: Step one is suck for several years, step three is win World Series. To these owners, step two is a little vague; the idea that you need to draft intelligently and evaluate talent accurately to be successful is lost on them.


No comments:

Post a Comment