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Around the Horn

No collusion!(?)

The lack of activity around baseball this offseason has generated a lot of fretting and anxiety with the Major League Baseball Players' Association, with some voices alleging collusion among clubs not to offer high-priced free-agent contracts. Though the current collective bargaining agreement between the MLBPA and ownership, represented by commissioner Rob Manfred, is in place through 2021, some in the players' union are already talking about a strike if negotiations on the next CBA don't go their way.

There has been labor peace, relatively speaking, in baseball since the resolution of the disastrous 1994-'95 players' strike, which was the eighth work stoppage in the game. At one level or another, all eight were about how much players get paid, and in all eight instances the union defeated the intentions of ownership, making the MLBPA one of the greatest organized labor forces in history.

In 1972, players succeeded in getting a better pension fund and in '73 the screwy system of MLB salary arbitration was created. In '76, after a Federal judge declared free agency into existence, ownership pouted about it by locking players out of camp but were ordered by Commissioner Bowie Kuhn to negotiate a new system of free agency in accordance with the judge's ruling. 1980's free-agency dispute was kicked to 1981 and created the midseason strike that canceled a total of 712 games; the result of that fiasco was a denial of ownership's imposition of a rule requiring teams to surrender an existing player from their Major League roster for each free agent signed, though they would get a supplemental draft selection. The brief strike of '85 sunk ownership's plans for a cap on arbitration figures and a form of general salary cap, prompting owners to violate the CBA by colluding to depress free agent contracts over the next several years, a petty response that they ended up paying the union $280 million in damages for. 1990’s lockout was another failed attempt at imposing a salary cap and revamping the arbitration process in their favor. When ownership tried once again to unilaterally impose a salary cap in 1994, the result was the strike that canceled a World Series and cemented a general hatred for then-acting-commissioner Bud Selig (who as owner of the Milwaukee Brewers had also spearheaded the 1990 lockout), all for the grand result of status quo when then-U.S. District Court Judge (and current Supreme Court Justice) Sonia Sotomayor ordered the terms of the previous CBA reimposed; a new CBA did not take over until 1997.

Despite having been for nothing, the ’94-’95 strike has had lasting fallout; the PR nightmare was extreme, it ended the careers of several big-name players, it cost Tony Gwynn a legit shot at a .400 season, and it arguably murdered the Montreal Expos as an entity. And it scared the owners and the commissioner's office—revealed to be nothing more than a tool of ownership in the hands of Selig, who rose to power via coup in 1992—as well as the union into lasting labor peace. However, it also prompted ownership to be smarter negotiators—in the collective bargaining agreements negotiated since 2002, management has successfully changed the trend from players making all the gains to an incremental shift the other way that now sees players getting just 40% or so of MLB revenue in 2017. Studies put the players' share at 58% before the '94 strike, and between 60 and 63% in 2003. (Factoring in non-monetary Major League benefits and minor league pay—literally criminally low—the league's accounting has a 2017 figure of 56.3% going to players; numbers were not available for incorporating those factors to the figures cited for 2003 and 1994.) By playing a long game and negotiating a compromise position of a luxury tax and competitive balance tax on high-payroll teams, ownership has gotten much of what they wanted all those times they tried to impose a salary cap.

Free-agent contracts of at least 7 years (since 2006)

Signed Player Team Yrs AAV
2006 Barry Zito SF 7 $18M
2006 Alfonso Soriano CHC 8 $17M
2007 Alex Rodríguez NYY 10 $27.5M
2008 CC Sabathia NYY 7 $23M
2008 Mark Teixeira NYY 8 $22.5M
2009 Matt Holliday STL 7 $17.1M
2010 Carl Crawford BOS 7 $20.3M
2010 Jason Werth WAS 7 $18M
2011 Prince Fielder DET 9 $23.8M
2011 Albert Pujols LAA 10 $25M
2013 Robinson Canó SEA 10 $24M
2013 Shin-soo Choo TEX 7 $18.6M
2013 Jacoby Ellsbury NYY 7 $21.9M
2013 Masahiro Tanaka NYY 7 $22.1M
2014 Max Scherzer WAS 7 $30M
2015 Chris Davis BAL 7 $23M
2015 Jason Heyward CHC 8 $23M
2015 David Price BOS 7 $31M
2017 Eric Hosmer SD 8 $18M

Which brings us to the 2018-2019 offseason. As spring training gets underway, around 20-50 Major League-caliber (depending on how generous your definition of Major-League caliber is) free agents remain unsigned, with most eyes on the two biggest names, Manny Machado and Bryce Harper; the sense is that once those guys sign (or even one of them), the dominoes will start to fall, but it's not like there are any almost-as-good-as-Machado/Harper guys available next. I mean, does anyone think there are GMs waiting to pull the trigger on signing Denard Span until they see how many years and millions Bryce Harper gets? No, I think there are two separate-but-related issues happening around free agency:

  • The luxury tax system has become punitive enough to effectively be a salary cap, and those middle-value free agents are paying for it. The Red Sox aren't bringing Craig Kimbrel back in part because, even though his contract wouldn't break the bank by itself, it would push them into tax territory that isn't worth the tradeoff. Marwin González, same deal—a guy like that is valuable, but not so much that you wouldn't think two or three times about jumping tax brackets for him.
  • Teams have finally learned that long-term high-dollar contracts bite them in the ass and they don't want to be saddled with them. Both Machado and Harper are reportedly insisting on 10-year contracts, which is probably more of a problem for potential employers than the record-breaking annual salaries they want. Long term deals like that always turn into albatross-like burdens for teams after the first couple of years. Long-term extensions to popular players that not only produce but are heavily team-identified sometimes pay off—e.g. Todd Helton, Miguel Cabrera, Derek Jeter, Justin Verlander—but free-agent deals that exceed six years, seven at most, are, I think, widely thought of as foolhardy these days. Each of the more-than-seven-year free-agent deals from years past turned into a problem for the signing club, not one exception. The best of them might have been the Mariners' own humongous signing of Robinson Canó, and offloading him to the Mets this offseason was a relief. A couple of seven-year pacts worked out (or have yet not to), notably Max Scherzer, but nothing over seven.

Reports are that Harper and Machado each have offers of seven and eight years at $25-$35 million per from a couple of teams, but they're both still holding out for ten years. So I don't buy the collusion theory. Far easier to accept the afraid-of-owing-$60+-million-down-the-road-to-a-guy-that-can't-hit-anymore theory.

But even without collusion, there are problems to resolve. Yeah, it's tough to be sympathetic to Major League ballplayers who at minimum make more money in a year than most of the rest of us will see in ten and at the other end make so much that they buy gold cars and don't notice the expense. But they are the moneymakers for a $10 billion industry, and thus you have to look at the money in context, and it isn't like the collective billionaire corporate ownership in baseball deserves sympathy.

Ironically, one of the proposals the owners wanted to slip in in '94 was a good one and should be revisited, this time without attaching it to the poison pill of a salary cap: doing away with salary arbitration in favor of advancing eligibility for free agency from six years to four. Arbitration as used in MLB is a bad system that imposes budgetary uncertainty upon clubs from year to year and skews the salary structure unfairly. But since its purpose is to give some equity to younger players not yet able to test the free market, just make them able to. I think this is a reasonable tradeoff: the union loses one year of arbitration-aided higher pay (year four in the bigs) but gains more immediate free agency and control over their destiny and earning power; the teams lose two years of guaranteed club control of a homegrown player and gain more control over their budgets. This also disincentivizes long rebuilding periods—if young prospects are only controllable for four years before hitting the market, rebuild windows shrink and more teams should be open to free agents more often, even offers for more than seven years to younger ones. Both sides get rid of the contentious arbitration system that by its very nature causes animosity and forces free agent markets into places that end up hurting rank and file veteran Major Leaguers.

To accomplish that you probably would have to have more robust revenue sharing, but not in the current broken form of luxury taxes; something more general, like X% of each club's revenue goes into the community pot to be distributed equally among the 30 teams the next year. You'd also need a safeguard to keep the Marlins or someone from just deciding to be the cheap loser team and taking their 1/30th anyway, maybe reduced payments from the pot to clubs with three consecutive sub-.500 seasons, further reduced for four, something like that. (It needs work, but you get the drift.)

So, we may well be in for another bout of labor unrest as 2021 approaches. With the MLBPA losing ground in terms of their share of the overall pie, there will be continued efforts to blame something for the change, be it the unwarranted assignment of fault for not giving Bryce Harper an absurdly long contract or more reasonable complaints that mirror those about wealth inequities in greater society. All the while Commissioner Manfred conducts his quest to screw with the game at the margins and further cause unnecessary strife. Should be interesting.

Comments

  • Posted by Mack McCoy on February 18, 2019 (8 months ago)

    The system sucks.

    “Home grown” talent doesn’t really make any financial sense; the investment in top picks is so great that there’s little benefit in having them at the minimum before they’re arbitration eligible.

    Revenue-sharing is a must, but the recipients also must invest that money in talent, not sock it away while their rosters are made up of AAAA players.

    And, you’re right, of course - it’s not exactly “collusion” when teams are offering seven years at $25M-$30M.

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