The Siren’s Song of Competitive Balance
This off-season’s will be remembered for years as the winter in which analysts/writers/commentators discussed labor law and bargaining at least as much as we discussed players moving teams. To some, that’s a good sign that owners have colluded to depress the free agent market. To others, it’s a sign that the Moneyballization of the fanbase has reached its apogee, or at least has crossed some critical threshold: fans now care more about being “smart” than hoping their team signs a bunch of good players. To still others, it’s a sign of an end to the recent period of closely-bunched teams and the beginning of a new era of super-teams – teams who are so far ahead of their rivals that they have no use for a so-so free agent market at all. And, for a high percentage of remaining fans, there’s a growing frustration that economics has dominated the hot stove league. For such a dry topic or set of topics, it’s actually produced some fascinating baseball writing – so much so that I hesitate to post this, but here goes anyway.
To me, this offseason’s biggest story is not that Eric Hosmer has yet to sign a $100M+ contract. It’s not even that, following several years of what looked like labor peace, we’re now clearly looking at the possibility of a strike within the next five years. The MLBPA and MLB Owners have fought their carefully-limited battles over a variety of issues, but both have couched their position in terms of preserving or enhancing “competitive balance.” A league in which the team with the most money wins every year would bore fans, so the thinking goes, and it would prevent the kind of healthy competition among teams that would drive up salaries. The league’s framed its support for luxury taxes, revenue sharing, and the various mechanisms that make up what now looks more like a soft salary cap in the same terms: this preserves balance, and ensures that even small market teams can compete on an equal footing with the Yankees of the league. This framing allows both to the claim the mantle of representing the fans’ interests.
It’s also why they’ve been able to come to agreement so easily. In recent CBAs, players have noted that some teams were flouting the ostensible point of the June amateur draft, in which draft order is in reverse order of the previous year’s standings. The entire point of the draft is to boost competitive balance, and the whole “bad teams pick first” is just another thumb on that scale. But as many have pointed out, what it’s really done is to depress the amount of money that goes to young players. When the Detroit Tigers were able to sign a number of consensus “best player available” guys whose draft stock slid based solely on their bonus demands, the MLBPA and Owners instituted bonus pools to restrict a team’s ability to Dombrowski their way around the seeding. In the last CBA, the Players and owners tweaked the system for international bonus pools – opting not for an international draft, but instead for “hard” caps on international free agent bonuses, along with further restrictions on the posting process. The CBA also included more stringent penalties for exceeding the luxury tax threshold, right when league revenues were growing thanks to MLB Advanced Media’s breakaway success and subsequent sale as well as the market for live sports in general. So, to review, owners and the MLBPA have fundamentally agreed on the need for competitive balance, and thus the recent CBAs have sought to enhance that balance by ratcheting up the penalties for any behavior that runs afoul of it.
Why would the players care? The idea has been that if you restrict spending on amateurs, and also restrict the ability of one or two teams to corner the free agent market, teams would have no choice but to spend their MLBAM profits on free agents. The MLBPA has had an interest in preventing teams from signing a top collegiate player *as a replacement for* a mid-tier free agent, so you’ve seen major league deals to draft picks (which used to be routine for the top picks) abolished. Further restrictions on international spending was supposed to do the same thing. Now imagine that you’re an owner, and thanks to the brilliant framing of “competitive balance,” you’ve got the MLBPA coming to YOU and demanding that you spend *less* on certain classes of employees. I wonder if they made even an attempt at pretending that the agreement was a difficult one to accept, and gosh-could-we-get-some-more-movement-on-pace-of-play-in-exchange hemming and hawing, or if they signed it in a nanosecond, trying to stifle a chuckle.
This structure wasn’t just a boon to owners in the short term. By changing the relative value of a “prospect” and a free agent, it set the stage for the kind of impasse we’ve seen this winter. The problem with the balloon theory – the idea that squeezing the amateur side would produce a transfer of money to MLB players – is that it made pre-arb players even more attractive to teams. With the free agent value of a win rising rapidly, and with league minimums rising with inflation, mid-tier free agents became less and less attractive. If you arbitrarily lower the cost to acquire amateur talent, this discrepancy gets magnified. If this theory were true, you’d expect to see teams spend more on player development, as the benefit of having a player “make it” and contribute what a free agent would have is even more valuable than before. That’s hard to verify empirically, but the emphasis on mental skills, “high performance” specialists and the like suggests that teams are doing some of this. Maybe they would’ve anyway – they should – but I think at least some of the trend in PD spending is a result of the increasing awareness that the draft is now a screaming bargain, and you can hire a cadre of people to get more out of the pool of players you spent less on. The MLBPA fought for competitive balance, and now they’re watching it blow up in their faces.
Who could’ve foreseen this, beyond owners? Agents, that’s who. They’re the only group who represent both MLB veterans as well as college draft picks, AAA veterans and 19 year old Dominicans in the Northwest League. Clearly, they’re self-interested, but there’s a reason that Scott Boras was sounding the alarm for years at the bonus pools, and he’s one of several agents that are taking the fight to MLB Owners, even as MLBPA head Tony Clark has sought to quash the idea of a spring training boycott. Boras correctly foresaw this problem developing, and I’d guess he’s told many of his players that their labor strategy may backfire. If more players agree with Brandon Moss that they negotiated their way into this mess, then you can see the agents’ calls for solidarity and action to be the first step in a return to a more active union leadership – one led by an agent, perhaps.
All the talk about the relative value of a draft pick versus a free agent versus an arb-eligible player would seem to make the case that fans have grown too fond of general managers, or rather, that fans now identify more with maximizing surplus value in a trade than they do the prospect of watching dingers soar through the summer evening air. I get that concern, but feel it’s a bit overblown. Fangraphs and BP are influential sites, and led many to internalize rubrics for evaluating contracts and trades that put a premium on avoiding an “overpay” or “paying for a decline.” But as big as they’ve become, they’re still niche sites, and I’ve NOT seen a groundswell of fans outright opposing their favorite teams from spending money. Maybe it’s just because I’m an M’s fan, but I’ve actually heard the opposite: that M’s ownership standing pat at a time when making modest upgrades could potentially do the most good looks foolish. Pace Rian Watt, I don’t think any fan actually wants to watch Brian Cashman on the phone more than watching an Aaron Judge moonshot. I think fans are perfectly fine with an “overpay” if it means they can beat their hated rivals, but I think fans want to see their teams build a championship-capable roster, and not just a pleasant 78-83 win quasi-contender. The problem right now is that the model for building that championship team is so limited – and it’s limited in part by the balance-obsessed CBA.
If fans aren’t opposed to spending, they ARE increasingly comfortable with a team losing for a while. The success of the Astros and Cubs in painful but ultimately successful rebuilds has taught many that a few seasons in which a team stops trying to win big league games can be a good thing. With the growing importance of TV (and MLBAM) revenue to teams, the year-to-year benefit of winning games has also diminished. Owners don’t need to win to make money, and fans are OK with some lost seasons if they build to contention. It’s all perfectly logical, especially given the focus on competitive balance. If you want to win these days, get yourself a Carlos Correa, a Kris Bryant, an Aaron Judge, and develop them along with a few complementary pieces. Then add in a trade or two or a free agent pitcher, and boom, you’re ready to go. The MLBPA hates tanking, but helped make it an attractive proposition.
All of this argues for a very, very different CBA next time (2021, I believe). The MLBPA should fight hard – as in, be willing to strike – to get a big increase in the minimum salary as well as higher arbitration awards. The bigger the discrepancy between free agent salaries and all other salaries, the fewer free agents will be seen as worth the risk. They should fight for fewer, not more, restrictions on draft or international spending. That’s a tough sell, I realize, as that means watching more money flow to non-members, but the alternative is watching owners opt for draft-and-develop over picking up MLB-ready skills in free agency. The next CBA needs to change the incentives that drive GMs and teams, and watch teams alter their strategies to react. I’m all for *multiple* paths to championship, beyond the Astros-style teardown. I’m even more in favor of the Mariners finding one and following it.*
In general, I’m sympathetic to the players. I watch the game to watch great baseball, not an efficient allocation of resources. I understand that this particular year is something of a black swan, especially given the Shohei Ohtani situation – one created almost entirely by the last CBA itself. The changes to the posting system seemed designed to keep Ohtani out of MLB for another few years, but when he decided to come anyone, he instantly became the biggest bargain in the game by an order of magnitude. Couple that with the looming FA class *next* year, and this year’s crop was probably going to struggle. Unlike Nellie Cruz, production from players over 30 has dropped in recent years as young players have been increasingly important to teams (a result of investment in PD?). But the players need to think about how to move forward, and part of that is going to mean changing the narrative around competitive balance. Make it about fighting to ensure all teams actually try: a salary floor might help, along with reduced penalties on “over” spending. Penalize teams that tank (reduced or no revenue sharing proceeds) and eliminate free agent compensation (no draft picks attached to FA signings). Push to expand rosters. As much as fans have traditionally sided with ownership in labor disputes, I’ve heard a lot more anger directed at Derek Jeter this offseason than at Hosmer or JD Martinez. Build on that.
* The pick-ups of Dee Gordon and Mike Leake may indicate a new way to navigate this. If mid-tier free agents have been the most impacted by the CBA, then you’ll see teams either not signing future contracts, or trying to get out of the ones they’d already signed. Leake came at a relatively low cost in talent AND he came with some money. Gordon cost more, but you can see why the M’s thought he might be a decent third way between handing the position to, say, Braden Bishop and pursuing Lorenzo Cain in free agency. If 10-12 teams really don’t care about winning, the M’s should be looking over their roster for just the kind of contracts that Fangraphs may dislike but that’d offer an upgrade on the M’s current rotation. To be clear, I don’t think this strategy is the only way forward, and I think it retains a bunch of the risks of regular free agent contracts and it also costs MiLB talent – something the M’s are in extremely short supply of. Longer term, the M’s absolutely need a restocked farm system to compete, and unless they want their contention window to slam shut, they’ll need a savvy FA pickup or two after this year.
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Great article. The owners may be miscalculating at this point because a year without baseball will hurt them more than the players. The players have leverage, if they’re willing to use it. A society without a middle class is inherently unstable—which is hopefully just about baseball.
If players are recognized as hitting their stride earlier (thanks to PD and such), then wouldn’t the MLBPA want to push for fewer arb years and a faster path to Free Agency? Seems like getting guys out on the market when they have more of their career left would encourage more FA contracts to be happening in aggregate. It does continue to put a premium on drafting and intl players but I don’t think anything will stop that from being the case… And a shorter path to FA certainly reduces the likelihood of a player sticking with 1 team for their entire career – but that feels like a quaint memory at this point; not something to plan the future of baseball around, nor a “tradition” to try to preserve in the game at the cost of other improvements.
If Seattle is out of contention by early July, though probably unlikely, wouldn’t it make sense to try to move Paxton (if he’s healthy) along with 2019 free agents, and try to reload/prepare for 2020?
They’ll need to restock the farm, but how do they do that without tanking or moving a player like Paxton?
I enjoyed reading this, but found myself talking back at it all the time. Not that I found anything to disagree with, but more like random sentences which left me mumbling. Such as: “Maybe it’s just because I’m an M’s fan, but I’ve actually heard the opposite: that M’s ownership standing pat at a time when making modest upgrades could potentially do the most good looks foolish.”
“Actually”? I’d actually be surprised to hear anything else. In fact, if I wanted to sit down and torture myself, like some Boston fan watching reruns of Bill Buckner, I could dredge back through the years and find all the times I had those sentiments.
The other: “Owners don’t need to win to make money, and fans are OK with some lost seasons if they build to contention.” The first part of that sentence could have been engraved on a gold plaque and hung above Howard Lincoln’s desk, and has applied to the Mariners, like, forever. But as for the second part, which is put forward as a new baseball ethos … I’m not sure where we draw the “lost season” line for the M’s. Unless we can come up with some new definitions for losing, including sort of losing, or really losing …
“So-so losing”
“Losing, but deep down not really”
“Mendoza losing”
“Nuclear meltdown losing”
“Existential losing”
“Minimalist losing”
“Glory losing”
I’ll have to work on this … But, hmmm… not really.
We need to win a few.
Great article.
It does seem like baseball may be primed for a strike, as you say… but I also wonder if we could see some maverick ownership group which decides it’s found a way to game the system and says “we’re going to flout the rules, pay the penalties, lose a few draft picks, and come out ahead anyway”.