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Analysis

Market correction, not collusion has slowed baseball free agency

The players’ union thinks owners are conspiring to suppress salary, but the collective agreement and revenue sharing give teams incentive not to spend.

It's been a long off-season for Yu Darvish and other free agents, with owners in no hurry to fill out their rosters.

The Associated Press / Matt Slocum

It's been a long off-season for Yu Darvish and other free agents, with owners in no hurry to fill out their rosters.

Yahoo Sports reported on Wednesday night that the Major League Baseball Players’ Association is planning its own pre-season camp for unsigned free agents, who are numerous this winter.

The association hasn’t organized a shadow spring training since 1995, when a lockout prompted big-league teams to open camp with non-union replacement players. Resurrecting the idea outside a formal work stoppage seems unusual, but the union maintains these are unusual times.

With spring training set to open next week, several high-profile players remain free agents, including pitchers Yu Darvish and Jake Arrieta, infielders Eric Hosmer and Mike Moustakas and outfielders Carlos Gonzalez and J.D. Martinez. The market for free agents has stayed so cold that the union threatened to boycott spring training altogether, hinting owners might be colluding to drive down the price of veteran talent.

But the lack of free-agent action this winter isn’t proof of collusion. It’s a correction.

Teams don’t need to co-operate to cool off the free-agent market. They’re simply working within the rules of a labour deal that imposes neither a floor nor a ceiling on player salaries. The same features of the collective bargaining agreement that enabled lavish deals like the one Albert Pujols signed in 2011 (10 years, $240 million) contributed to this winter’s stagnation.

Contrast MLB’s inaction with the flurry of signings each summer on the first day of free agency in the NBA, where the collective agreement mandates 49 to 51 per cent of league revenues fund player salaries.

The NBA signed a nine-year, $24-billion media rights deal with Turner and ESPN in 2016, nearly tripling the average annual value of the previous agreement. The rapid increase in revenue boosted franchise values — Forbes reported Wednesday that every NBA club was now worth at least $1 billion. It also lifted the salary cap, which rose from $70 million in 2015 to more than $99 million this season. Teams are obligated to use at least 90 per cent of their salary allotment.

With revenue rising, free-agent paydays went to stars like Steph Curry, who re-signed with Golden State for $201 million over five years. But money also flowed to marginal performers like Cristiano Felicio, who re-signed with the Bulls for four years and $32 million. Under the NBA’s collective agreement, the money has to go somewhere.

But in MLB, where overall revenue reportedly surpassed $10 billion in 2017, that cash doesn’t have to go anywhere. And this winter, without a CBA-mandated payroll range to influence team spending, it has gone nowhere.

A minimum payroll likely would have prompted teams to spend more this winter since salary floors, like salary caps, exist to limit extreme actions by team owners.

Nothing forced the Angels to offer Pujols $240 million just before his 32nd birthday. But without a salary cap, nothing stopped the club from signing an aging player to a contract whose annual salary will peak at $30 million when he reaches 41. Pujols hit .328 in 11 seasons with St. Louis, with six years of 40 or more homers. He has hit .262 in six seasons with the Angels, including a career-low .241 last season, and has hit 40 homers once.

Teams are finally listening to data and deciding against expensive deals that outlast a player’s productivity. This newfound fiscal discipline could unravel next winter, when Manny Machado and Bryce Harper are slated for free agency, but for now cautious spending is trendy.

For clubs focused on long-term success, the Houston Astros’ highlight the payoff available to teams willing to de-fund major-league rosters and invest in scouting, analytics and player development. The Astros had a major-league-low payroll in 2013 ($14.7 million according to Baseball Reference) and produced an MLB-worst 51 wins. Last season, the Astros won the World Series with a $158-million payroll that ranked 13th in the majors.

And small-market clubs fixated on short-term profit can theoretically dump salary while still receiving a cut of shared MLB revenue.

Either scenario squeezes recent-vintage stars like Darvish, Gonzalez and others who otherwise might still command elite salaries. The current setup also puts pressure on older players like Jose Bautista, who hope to extend their careers without enduring a steep pay cut. MLB’s frugality movement means teams have little incentive to meet non-superstar free agents on the players’ terms.

But owners didn’t collude to create this environment.

The collective agreement facilitated it.

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