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Why are so many big-name free agents still unsigned?

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There’s big revenue in baseball. But players aren’t getting it. What’s wrong with this picture?

Photo by Joe Raedle/Getty Images

I’ve spent much of this offseason wondering where all the signings have gone. You have too, probably.

So has Yahoo’s Jeff Passan, and earlier this week he wrote this 3,500-word article, which goes into a detailed examination of what’s gone wrong with baseball’s economic system, which he calls “broken,” and I can’t say I disagree.

There is a tremendous amount of information to unpack in this article, but if you want a summation, it’s probably best said by Passan here:

What’s clear is the free-agent impasse represents a reckoning long in the making – one that marries shifting power in labor relations, the emergence of analytics and cookie-cutter front offices, and the willingness of teams to treat competitiveness as an option, not a priority. Combined, they pose the greatest threat to a quarter century of labor peace and have people at the highest level of the sport asking whether a game-changing overhaul in how baseball operates isn’t just necessary but inevitable.

“I’m just not sure that the structure that’s been in place for all of these years makes sense anymore,” one union official said. “Now, whether anybody is prepared to blow that up is a completely different question.”

“Of course it doesn’t make sense,” a league official concurred. “We pay you the minimum for three years and arbitration for three or four years, and then you get paid more in free agency for your decline?”

No doubt, what’s said in the first paragraph is true. The current system of arbitration and free agency, though it’s been tweaked and adjusted multiple times over the last 40 years, was created by team owners required to adopt this system because of arbitrator Peter Seitz’ 1975 decision regarding Andy Messersmith that overturned the owners’ reserve-clause system, which had been in place since nearly the beginnings of the game in the 19th Century. You can read more about how that decision came about and some of its ramifications here.

When the owners thus were forced to create some form of free agency, Oakland Athletics owner Charlie Finley proposed making all players free agents every year. Horrified, since they’d already lost most control, owners wouldn’t hear of it and instead made what has evolved into the current system, unrestricted free agency after six years’ service (for the most part, Kris Bryant a prime example of being a service-time victim of the present system. Bryant will have to play almost seven full seasons before free agency).

Finley was correct. If every player had to negotiate a contract from scratch every offseason, prices would quickly have been forced downward. You can see a variation of sorts of that theory in the current offseason impasse. While there’s no guarantee this will happen, with every day that ticks off the calendar closer to spring training, you’d think that players, most of whom really do enjoy playing the game and want to be on the field, will drop their asking price in order to get back on the field.

On the other hand, there’s this surprising passage from Passan’s article:

Recently, one of the best free agents available this offseason met with a friend, and he admitted something shocking: He was preparing to sit out until the middle of the season. The market for his services this winter was so thin, the offers so incompatible with his production, that he worried he was going to need an external force to compel teams to pay him what his numbers say he’s worth. Maybe it would take a playoff race.

Maybe, although again I’d think that itch to get back on the field might get that free agent, whoever he is, signed as spring training comes closer. If the market for this player’s services was really “so thin,” what makes him think teams would come rushing to him in June or July? The way teams operate these days, someone else would take his place and this free agent, in my view, would likely be largely forgotten.

Across the game, profits have soared. Baseball should cross the $10 billion mark in revenue this year. Each team soon will receive a $50 million payment from the sale of MLB Advanced Media’s streaming arm, BAM Tech, to Disney. And amid that opulence, one of the best free agents available is preparing to sit at home.

When an elite player would rather not play baseball than play baseball, that’s a problem. When teams are restricted on spending everywhere except with major league free agents and still don’t want to reward someone whose production more than sufficed for a bonanza contract in the past, that’s a conundrum: Is this the manifestation of an inefficient market turning efficient, or is it something dirtier?

Personally, I don’t think it’s something dirtier, although this graph might indicate otherwise:

That number is at 37 percent through the 2014 season, and it probably hasn’t gone up since. The biggest drop occurred right after there was nearly another work stoppage 15 years ago, one that was averted at the very last minute, just hours before the first game of the day was scheduled on August 30, 2002. What’s wrong with this picture?

Passan’s article notes that players have almost abdicated going for what the MLBPA fought so hard to get them in earlier years — more money. The average salary, though, has increased so much — it was about $4 million in 2017 — that perhaps players feel they have enough money. Passan notes that might be true:

During the negotiations leading to the 2016 basic agreement that governs baseball, officials at MLB left bargaining stupefied almost on a daily basis. Something had changed at the MLBPA, and the league couldn’t help but beam at its good fortune: The core principle that for decades guided the union no longer seemed a priority.

“It was like they didn’t care about money anymore,” one league official said.

Though something of an oversimplification, there was more than a kernel of truth to it. Meaningful negotiating time was spent on issues the league happily accepted in exchange for stronger financial positions. The players wanted a chef in the clubhouse. The players wanted two seats apiece on spring training buses. The players wanted more off-days. Lifestyle and amenities took precedent more than ever.

And this is all fine. You can see this, for example, in the signing of Brian Duensing by the Cubs to a two-year, $7 million contract:

In the end, more players might sign contracts like this. When you are talking about generational money, sums that can set up players and their children and grandchildren and even great-grandchildren, another handful of millions (and how odd that phrase sounds!) might take second place to lifestyle considerations.

There’s another thing at work here, though:

Whether on account of a rebuild or the desire to profit, at least eight teams have no intention of being serious players in the current free-agent market: the Atlanta Braves, Chicago White Sox, Cincinnati Reds, Detroit Tigers, Miami Marlins, Oakland A’s, Pittsburgh Pirates and Tampa Bay Rays. The Kansas City Royals and San Diego Padres could join them.

That’s 10 teams, a full third of MLB. The Marlins, Braves and Pirates haven’t spent a penny on a major league free agent this winter. Neither have the Rays nor the Baltimore Orioles. Both harbor playoff aspirations; each is waiting for the market to cave deeper. Players are panicking. Some are threatening to fire their agents if they don’t have jobs by the end of this week. It’s fertilizer for bargains.

Either there’s going to be a flurry of signings over the next four weeks, or a lot of players who played fairly significant roles on their clubs in 2017 are going to be out of work. Is that collusion, or is that just smart positioning by front offices?

This is where we collide with the salary cap.

“But baseball doesn’t have a salary cap!”, you exclaim.

Ah, but it does, even though it’s not called by that name. The penalties for spending over the luxury tax (contractually called the “competitive balance tax”) threshold, which this year is $197 million, can be onerous, especially if a team does so for two or more consecutive years. This is the putative reason the Cubs are holding the line on salaries this winter, theoretically in order to be able to spend more when the threshold increases to $206 million in 2019. There’s no question the Cubs have the money. So do most teams. Even the Cardinals got $1 billion on their new TV deal; the Dodgers, as you know, got eight times that amount and the Cubs hope to pocket at least somewhere in between those figures when they have their TV network up and running in 2020, perhaps somewhere on the order of $150 million a season (compared to the $65 million in local TV rights money they receive now).

The penalties for going over the threshold are pretty onerous. For being a ‘big market’ team, it’s the loss of your second round draft pick plus a $500,000 deduction to your international free agent money pool. For having paid any luxury tax in the previous season -- add to the previous a loss of your fifth round pick and an additional $500,000 IFA pool reduction. This is why the Cubs have wanted to avoid the tax, so as to not have that “second season” penalty.

It’s when a team spends $40 million or more over the tax threshold that your first draft pick is moved back 10 spots. It might be that no team, not even the Dodgers or Yankees, will spend over that amount, making it a de facto hard cap.

Could the Cubs afford Bryce Harper in such a scenario? Could any team? That’s where we might be headed, and this is where, I think, the players association suffers by having Tony Clark, a former player, as its chief. Passan notes, and I concur, that Clark seems to be a good guy, a hard worker, and has the players’ best interest at heart, given that he played 15 years in the big leagues.

But as a player, he might be focusing on issues like those lifestyle things important to players, rather than the financial and movement issues that previous MLBPA heads gained for players. That was particularly true for Michael Weiner, the former MLBPA executive director who died, far too young, of a brain tumor at age 51 in 2013.

I’m going to swing back to a quote from Passan’s article to wrap this one, because it speaks both to the present situation and to the future:

“Of course it doesn’t make sense,” a league official concurred. “We pay you the minimum for three years and arbitration for three or four years, and then you get paid more in free agency for your decline?”

That’s the system we’ve had basically since the late 1970s. It’s one of the reasons, most likely, that Jake Arrieta and J.D. Martinez and Eric Hosmer and Mike Moustakas are still sitting at home: right or wrong in their viewpoint, the perception among owners and GMs is that those players’ best years might be behind them, and yet they want the biggest rewards of their careers at the point at which they are likely to begin to get worse on the field?

Contracts such as the one given to Albert Pujols are an example of this. Pujols has four years left on his contract, $112 million worth, an AAV of $28 million, and they were backloaded, the four most expensive years of the 10-year contract he signed after 2011. And what do the Angels have? Pujols, despite hitting 23 home runs and driving in 101 runs, was probably the worst everyday player in the American League in 2017, posting -1.8 bWAR.

Teams don’t want to pay for that anymore, and you can hardly blame them.

So what happens next? Is this offseason an aberration because most of the big-name players left unsigned are Scott Boras clients, and Boras has a reputation of trying to hold out for every dollar he can get no matter how long it takes? Or is this the beginning of a trend, and if so, how could it be fixed?

The sport probably can’t go back and revisit Charlie Finley’s idea of free agency every year. But what if MLB allowed — NBA-style — restricted free agency after three years, where a player’s old team could match a contract, then unrestricted free agency after six years? What if the qualifying offers, instead of being one figure throughout baseball, were done by position? Would more players accept them in that case? Would it be helpful to force every team to have a salary floor? Or:

Baseball could, for example, offer free agency after three or four years, hoping to tilt its salaries toward younger players. Doing so, officials from both sides said, also could cause an NBA-type system in which superteams stack themselves with $40 million- and $50 million-a-year players while the low-revenue teams lose their stars early and are left with the dregs.

I don’t think that type of system would be good for the sport; look at the large number of NBA teams that have horrid records, never make the playoffs and have a hard time getting out of that “dreg” status. The Phoenix Suns haven’t made the playoffs for seven seasons and will make it eight this year and aren’t likely to return anytime soon. Can any MLB team afford to go that long without even a prayer of contending?

Players are receiving the smallest percentage of the sport’s revenue in the timeframe of that chart above. No doubt, there could be more money made available to them, but owners have consistently tried to walk back the dollars they pay to players — and this isn’t just a hallmark of the free-agent era, it’s something that’s been going on since the game began. And yet, over the last few collective-bargaining agreement negotiations, players have given back so that salary increases have been constrained and we have dozens of good players still sitting at home in mid-January without a contract.

No doubt, players will try to get back some of these giveaways after the 2021 season. You can rest assured owners aren’t going to give back the ground they’ve gained here. On the other hand:

“The desire to push back is easy,” one union official said. “In the past, it was almost a foregone conclusion for a work stoppage. In this climate, at this time, the other side knows that if tensions are left to rise to that magnitude, the entire industry is going to suffer no matter where we land. That has to be something they take into account when this push comes.”

Whatever happens for the rest of this winter, I have been concerned about a labor stoppage post-2021 because of the inequities in the labor agreement. That quote above seems to state that players don’t really have the stomach for it at this point, perhaps because most players are making pretty good money, even if the really big dollars never come their way.

If you haven’t read the Passan article, I commend it to you. It’s important reading for understanding the current economic climate in baseball.