MLB needs to stop rewarding mediocrity

This is a long piece on a possible solution to the issue of tanking and leaving top prospects in the minor leagues long after they are ready. I think I outline my case very carefully, but if you don’t want to read it all, skip to the tl;dr, part at the end.

Besides the normal news of the pennant race, the biggest news story this September has been the failure of teams to promote top prospects, such as the Blue Jays’ Vladimir Guerrero Jr., the White Sox’ Eloy Jimenez and the Mets’ Peter Alonso. All three teams are firmly out of the pennant races and have no incentive to call up a prospect now and possibly lose a year of control six years down the line.

Earlier this season, the big story was about “tanking” teams who were intentionally not putting the best team they could on the field in hopes of gaining better draft picks and increased bonus pool money. The Mets and Blue Jays weren’t among those teams (they were just unintentionally bad), but the White Sox certainly were.

The thing that ties both of these stories together is money. In both situations, teams realized that by losing more games now, they could make a lot more money a few years down the road, both by saving money on arbitration-eligible players or potential free agents, as well as creating a wider “window of contention.”

(Just so I’m not accused of bias, the Cubs were guilty of this as well in 2015 when they left Kris Bryant in Iowa for two weeks before he made his major-league debut. This delayed Bryant’s free agency by a full season.)

No one seems to think this situation is good for the game. Even front offices themselves say they don’t like it, but that they have no choice but to exploit the rules to benefit their clubs.

Most of the solutions for service time manipulation seem to revolve around changing the service time necessary for reaching free agency or arbitration. To combat the problem of tanking, most people seem to just throw up their arms in frustration, although there have been proposals to institute a draft lottery or simply not allow teams to draft in the top ten in consecutive seasons.

Both situations reveal the fundamental problem of baseball today. If a team doesn’t make the playoffs or come close, there is absolutely no financial incentive to win. In fact, there is a massive incentive to lose, and that is striking at the integrity of the game.

When baseball’s labor wars moved into its second stage in the 1980s, the battle between labor and management was joined by a battle between “big” and “small” market teams. Teams like the Yankees and Dodgers welcomed the new labor rules, although they were outvoted by the “small” market teams like the Brewers, Twins and White Sox. (I include the White Sox because team owner Jerry Reinsdorf was and continues to be aligned with the small-market teams, even though his team plays in a big market.) In the end, the small markets won in 1992 when commissioner Fay Vincent was fired and Brewers owner Bud Selig took his place.

This isn’t the place to argue over Selig’s legacy. But his biggest concern as commissioner was to create “parity” or a level playing field where teams like the Brewers and Royals would have a reasonably equal chance to compete as the Yankees, Red Sox and Dodgers. In that light, Selig created more shared revenue through expanded licensing and eventually internet revenue. He also repeatedly tried to rein in the amount of money that the big clubs were allowed to spend, as well as force the redistribution of some money from the big clubs to the weaker ones. Selig also oversaw new rules that gave the worst clubs stronger access to amateur talent than the strong ones.

This had an unintended consequence. Teams who finished at the bottom of the standings always had the first picks in the draft, but now the bonuses those players can ask for are severely proscribed. The same now goes for the top international talent.

The increase in shared revenue has had another impact. In the past, a team that lost 100 games could expect to see a major drop in revenue from attendance. That’s still true, but the the increase in shared revenue from national sources as well as revenue-sharing payments to small market clubs means that attendance is a much lower percentage of a team’s overall revenue than it was in the eighties.

Teams that finish near .500 get the worst of both worlds. They don’t get the added revenue from a pennant chase and playoff runs and they don’t get first crack at the best amateur players. They also pay the same penalty for signing free agents that playoff teams get.

Unsurprisingly, teams have reacted to these financial incentives by running from the middle as fast as possible. The White Sox are perhaps the best example of this. In 2016, the South Siders finished a respectable 78-84. They could have added three or four expensive free agents and taken a shot at a playoff run, but there were no guarantees that they would have succeeded. Then they’d be stuck with a .500 ball club with the payroll of a pennant winner. They made the smart choice and dealt three of their best players: Chris Sale, Adam Eaton and Jose Quintana. They’ve got a chance to lose 100 games this year. But like the Cubs a few years earlier, the White Sox now have a terrific farm system and are hoping to compete for a title with a lean, low-payroll club in 2019 or, more likely, 2020.

The same goes for calling up Eloy Jimenez. Despite their protests to the contrary, the White Sox have no baseball reason to keep Jimenez in the minor leagues. But calling up Jimenez might mean they’d win a couple more games this September than they otherwise would have. As noted earlier, winning more games is a bad thing for the White Sox at the moment.

None of this will chance until the economic incentives change. Some people have proposed changing the way service time works, but any sort of system that allows the teams to control when they promote players is going to be manipulated.

Jonah Keri, writing about the Blue Jays and Vladimir Guerrero Jr., proposed a solution that would give teams a financial incentive to call up their prospects. Basically, Keri suggests giving the first team to call up a top prospect a $10 million bonus.

Keri’s idea may or may not be a good idea (I think it would be arbitrary and subject to the same manipulation tricks), but he’s on the right track. The only way that teams will change their behavior is if there is a financial incentive to do so. Luckily, there’s a much simpler way.

As far as I can tell, each MLB team gets a $50 million (or so) check each year for national TV rights. There are additional monies from MLB Advanced Media and MLB’s marketing arm. This money is shared equally between the 30 teams. (I don’t know the exact figures because no team will open their books to the public. But for the sake of argument, let’s call it $50 million. It’s probably slightly more than that.)

But what if the money wasn’t equally distributed? What if teams were rewarded financially for winning more games? What if teams were only guaranteed $35 million but could earn more based on how many wins they had? Let’s say that every win between 65 and 85 earned teams an extra million dollars. Below 65 wins, teams are so hopeless that we don’t want to kneecap them further. Above 85 wins, teams have a good chance to earn added revenue through playoff games, so we don’t need to incentivize them further.

If calling up Jimenez or Guerrero could earn MLB teams an extra $2 or $3 million in added wins, then maybe that would make it worth a team’s while to call them up now. They money they’d lose in an earlier arbitration hearing three years down the line would be compensated for by the millions the teams would earn in extra wins. On top of that, there would be value in being a .500 team in that they’d have an extra $15 million in income every season. Instead of poor teams abandoning the free agent market altogether, a team probably would sign a veteran to a short-term deal that would keep them from losing 95 games in a season.

I know the immediate objection. Aren’t you making it harder for bad teams to compete? Teams like the Royals or Reds wouldn’t have the money to pay their bills after a poor season. Small-market teams would have trouble staying solvent.

Puh-leeze. The Royals are owned by David Glass, who is the former CEO of Wal-Mart. The Twins are owned by Jim Pohlad, who is worth a reported $3.6 billion. They wouldn’t miss the money. What this might mean is that owners couldn’t put out the cheapest possible team and be guaranteed to make a profit through revenue sharing. I see this as a plus, not a minus.

Also, don’t forget that two of the teams that would most benefit from this system this season would be the “small-market” Athletics and Rays.

The numbers aren’t set in stone. You’d need a team of economists to determine what’s the best amount for rewarding teams for winning and punishing teams for losing without crippling them. But the principle is what’s important here. Teams should be financially rewarded for every game they win and should not be guaranteed to make money no matter how bad their team is.

This system would be a boon for fans. The best minor leaguers would see the majors when as soon as they’re ready to help the team win more games. Fans would know at the start of the season that every team was trying to win as many games as possible. The biggest scandal in the history of the sport was when the Chicago White Sox intentionally lost the World Series in 1919. The 2018 White Sox are intentionally trying to lose 100 games and no one seems to care. (And to be fair, again, the Cubs did this in 2012 and 2013.)

Too long, didn’t read: The money teams receive from MLB for national TV and marketing rights should be on a sliding scale where teams receive a bigger share for every win they have between 65 and 85. This will insure that teams are trying to win every game.