Just two weeks before spring training opens, baseball’s offseason has barely begun to rock its wheels out of the frozen mud of winter. Not only has the slow free-agency period disrupted the normal temporal rhythms of the offseason, it’s made it tough to even offer predictions about the coming season, because so many players who could influence a pennant race are still without a team: Bryce Harper, Manny Machado, Craig Kimbrel, Dallas Keuchel. Even less glamorous free agents like Marwin González and Gio González played key roles for some of baseball’s best teams last year, yet are available to any club with a phone and a checkbook.
Just because these players are unemployed doesn’t mean they wouldn’t be a big addition for any club. There are a handful of teams that are either so set on the left side of the infield that Machado isn’t a big upgrade, or so stacked at the corner outfield and DH spots that they might not have use for Harper, but no team is so good at both positions that it couldn’t use one of this offseason’s marquee free agents. Keuchel and Kimbrel would both improve any pitching staff in baseball—so would Gio González, for that matter, considering that MLB teams carry 12 or 13 pitchers at a time and go through more than five starting pitchers a season. Marwin González, meanwhile, is an archetypal superutility guy, a particularly useful player in the age of three- or four-man benches, as has been pointed out in the past week by sources as disparate as The Ringer’s Ben Lindbergh and Astros right-hander Collin McHugh.
Free agency allows clubs to buy up quality players without sacrificing anything in trade, and it’s a straightforward, if somewhat brute-force way, of improving a club. The Yankees rode free-agent signings to periods of dominance in the 1970s, 1990s, and 2000s. The Red Sox won the World Series last year not just because they’ve developed their own prospects, but because they shelled out for premier free agents like J.D. Martinez and David Price. Even the small-market Milwaukee Brewers splashed cash in the 2017-18 offseason on outfielder Lorenzo Cain and starting pitcher Jhoulys Chacín. Milwaukee finished with the National League’s best record and went to a seven-game NLCS; Cain was their second-best position player and Chacín was their best starting pitcher. Even the Brewers’ prime offseason acquisition, eventual NL MVP Christian Yelich, was only available because his previous team, the Marlins, put Yelich on the block to shed payroll.
But even with two of the best players in baseball on the market, clubs have been reluctant to take advantage. Far from eagerly gobbling up these free agents, all 30 teams are just standing around and waiting, if not taking themselves out of the running altogether, for economic reasons. Even so-called big-market teams are staying out of it. After two straight World Series losses, the Dodgers signed A.J. Pollock to a five-year, $55 million deal rather than chase Harper. And the Yankees, after almost 100 years of dominating the league through brute financial force, signed D.J. LeMahieu rather than offer Machado a $300 million contract. The putative reason MLB instituted the draft, luxury tax, and revenue sharing in the first place is because rich teams (usually, but not always, the Yankees and Dodgers) were buying up all the best players and dominating the league like big-stack bullies at the poker table. That’s not how the richest clubs have operated the past three offseasons, which is a shame, because what’s the point of being incomprehensibly rich if you’re not willing to throw that money around?
Under certain circumstances, a team can sell fans on prioritizing the club’s bottom line over its on-field competitiveness: When signing one free agent might tie up money better used on a different, better free agent down the line, for instance, or when a rebuilding club wants to give young players time to develop in the big leagues rather than signing veteran free agents who’d block them from playing.
In both cases, cutting payroll in the short term is supposed to be a temporary measure, with the implied promise that any savings now will be poured back into the roster later. In other sports, teams that cut payroll are said to be “freeing up cap space,” suggesting that cap space is desirable so it can be filled later. Baseball has no salary cap, so the euphemism is “payroll flexibility,” but the idea is similar: build flexibility now so the payroll can be stretched in the future.
Fans want their clubs to be in good enough economic health to field a competitive roster, and when one leads to the other, fans line up behind ownership. But over the past two offseasons, economic concerns have begun to overshadow on-field production throughout the team-building process—the promised reinvestment hasn’t come. It’s not just a free-agency slowdown. Stars-for-prospects trades involve one team not just getting younger but cheaper. A decade ago, a top-end starting pitcher would fetch a bushel of promising prospects in a trade: Baltimore got Adam Jones by trading Erik Bedard; Cleveland got Michael Brantley by trading CC Sabathia and Carlos Carrasco by trading Cliff Lee; the Mets got Noah Syndergaard by trading R.A. Dickey, and so on. But when the Pirates traded Gerrit Cole to the Astros in 2018, they received four young players, none of whom had All-Star potential. But three of them were already big league roster players who could fill a spot on the field for cheap.
Earlier this century, you’d find one or two odd teams at a time sitting out free agency, undertaking extended tanking projects, or manipulating prospects’ service time to delay arbitration or free agency. Usually, those teams were operating under some financial or talent disadvantage and looking for a way to cobble together a contender on the cheap. These behaviors were unusual enough that when the A’s or Rays or Astros figured out a way to compete with the Yankees and Dodgers on a shoestring budget, insofar as such a thing exists in professional sports, someone wrote a book about it.
Now, the innovative cost-saving measures of the 2000s have been adopted leaguewide. Tactics that were once used by a few teams to compete on the cheap are now used by all 30 teams just to keep costs down. “If we try to play like the Yankees in here, we will lose to the Yankees out there,” said Brad Pitt as Billy Beane in the movie adaptation of Moneyball. Seventeen years after that movie was set, it’s the Yankees who are trying to play like Beane’s Athletics.
That isn’t sitting well with some fans at the moment. At PiratesFest on January 26, fans pressed Pirates GM Neal Huntington and team president Frank Coonelly over the team’s unwillingness to spend.
“When you sign a free agent, you have automatically outbid everybody else to get him 95, 99 percent of the time,” Huntington said during the Q-and-A session. “You have theoretically overpaid to get that free agent.” This is a restatement of a well-known business concept, the winner’s curse, but probably not that comforting to Pirates fans who care more about the team’s record than its strict economic efficiency.
That same day, at the Dodgers’ FanFest, fans asked president of baseball operations Andrew Friedman and team president Stan Kasten about the club’s refusal to sign Harper, or to spend above the league’s competitive balance tax (CBT), which has come to function as a de facto salary cap. Friedman brushed off the question with a joke, while Kasten first said concerns about the Dodgers’ payroll weren’t based in fact, then pivoted to hint at—but not explain—unspecified benefits to the team being under the CBT.
Said Kasten: “I’m not going to go into that because that’s real inside baseball economic stuff.”
Within days, you could buy a “Real inside baseball economic stuff” T-shirt.
We’re not at a point when fans are storming the barricades and throwing their weight behind a potential MLBPA strike en masse. But these fan-fest incidents show that while fans supported clubs’ cost-cutting measures when they thought it would lead to on-field prosperity, the same is not true when payrolls are being slashed and Harper and Machado are still out there. Ownership has gone back to the well of blaming inaction on economic considerations so frequently that fans and media are starting to find holes in the logic. To use another aphorism from the world of business: Pigs get fat, hogs get slaughtered.
The more you look at the numbers, the clearer it becomes that even the most generous projected salaries for the current crop of remaining free agents wouldn’t threaten teams’ ability to contend. In 2018, MLB made $10.3 billion leaguewide, raking in record revenues for the 16th consecutive season. Between massive TV contracts, public stadium financing, and an antitrust exemption that protects the league’s status as a legal cartel, MLB and its constituent teams are for all intents and purposes financially bulletproof.
Last year, the Yankees spent about $193 million on player salaries, their lowest total since 2004, when they spent about $188 million on player salaries, but leaguewide revenue was only about 41 percent what it was in 2018. And rather than spending their financial windfall on one or both of Harper and Machado, the Yankees are being linked with a swap of Jacoby Ellsbury for Johnny Cueto, which would allow them to cash insurance payments as Cueto recovers from Tommy John surgery.
It’s unclear what on-field purpose those savings would serve. There are few better uses for “payroll flexibility” than signing a superstar like Harper or Machado, and the Yankees seem to be uninterested in doing so.
One reason teams don’t tend to make big commitments to free agents wantonly is the risk that the player will decline before the contract is over, leaving the club to pay superstar wages for an unproductive player, which would leave them unable to afford the next superstar. Last year’s slow free-agency period was explained away over and over as the result of teams saving to spend big on Harper or Machado this offseason, rather than on, say, Eric Hosmer last offseason.
But the risk of tying up too much money in one free agent is overstated, particularly in this class. First of all, because MLB has no salary cap, a team that ends up with, say, the back end of the Albert Pujols contract or the Ryan Howard contract on its books could still spend as much money as it wanted in order to find a replacement.
Harper and Machado are so good and so young, the usual dangers of a 10-year, $200 million-plus deal are reduced substantially. Contracts like that are structured so teams can spread out a superstar’s salary over multiple years—when the Angels signed Pujols and the Tigers signed Prince Fielder in the 2011-12 offseason, it was with full knowledge of the risk that those contracts would look bad in their later years. So consider that even in this offseason, in which teams have been operating like a government under austerity measures, the Phillies gave Andrew McCutchen a $50 million contract for his age-32 through age-34 seasons. Harper, who like McCutchen is a former MVP, would be in years 7, 8, and 9 of his next deal by the time he got into his age-32 through age-34 seasons.
And the argument that one bad deal would hinder a team’s ability to compete is also specious. In 2010, the Nationals gave Jayson Werth a seven-year, $126 million deal that was ridiculed as an overpay from the moment it was signed, and despite that Washington made the playoffs four times in the last six years of Werth’s contract, and finished in second place with a winning record the other two years. Last year’s Brewers accomplished what they did despite paying Ryan Braun $20 million to be a below-average left fielder, and they did it while running a below-average team payroll.
Even the worst-case scenario for big free-agent contracts turns out not to be that bad. The Tigers made the playoffs the first two years of Fielder’s contract, and were able to get out of the contract by trading Fielder to Texas, where the Rangers made the playoffs twice in three seasons with Fielder on the team. Injuries forced Fielder to retire in 2016, and because of that the Rangers receive an annual $9 million insurance payout to offset part of the cost of his contract.
Besides, the rest of baseball’s economic structure is set up to allow clubs to take big risks on free agents. The putative reason teams invest in cheap young players, or sign their homegrown stars to extensions before free agency, is so they can fill in the gaps with free agents, using the money they’ve saved by going young. That’s what the Red Sox have done, and what the Astros were doing until they let Keuchel and Charlie Morton walk, didn’t replace them, and positioned themselves to head into 2019 with a payroll about $10 million less than what they spent in 2018.
And it’s what the Pirates—who have Starling Marté, Chris Archer, Gregory Polanco, and Felipe Vázquez signed to under-market extensions—ought to be doing. Instead, they’re projected by Cot’s Contracts to run out a 25-man Opening Day roster that costs $68.475 million in total, about a third of the CBT threshold. This is not only annoying to the fans, but to Pittsburgh’s best starting pitcher, Jameson Taillon, who says the Pirates haven’t even offered him an extension. Taillon plans to go year-to-year in arbitration, as Cole did before he was traded. The Pirates have made more than a few savvy roster moves, but if they’re not using the savings to turn their 82-win team into a 95-win team, why should fans care that they’re spending less money than other 82-win teams?
The same goes for the Dodgers and Yankees trying to get below the CBT threshold. It’d be one thing if they’d reset the repeater penalty in 2018, and gone back to running $220 million-a-year payrolls in 2019, but so far ownership has just pocketed the difference.
And yet Harper and Machado remain unsigned. The deferred promises haven’t come. So what are the Dodgers using their payroll and CBT savings on? It’s not to cut ticket prices, or to save the finances of a team that makes a third of a billion dollars a year from a local TV deal that left a huge chunk of the fan base blacked out of local TV broadcasts. The Dodgers set a single-season record in 2015 by spending $291 million on payroll. They could cover that, plus Harper’s likely 2019 salary, without selling a single ticket, bobblehead, or Dodger Dog. And the Dodgers’ payroll in 2018 was $96 million less than it was at its peak.
Fans, by and large, want to watch entertaining, winning baseball, and are less eager to consider how much their club spends on debt service or writes off to amortization, and whether that’s enough to justify passing on a free-agent third baseman. The same is largely true of the analysts who cover the sport. And it’s mind-bogglingly easy to turn a handsome profit in a publicly subsidized cartel while still at least giving off the appearance that winning is relatively high up on ownership’s list of priorities.
But MLB owners have gotten just a little too overeager. They’ve foregrounded economic concerns too much, or said one thing and done another, or passed when presented with the two most anticipated free agents in years. Now fans and media alike, with no other story to tell, are starting to look for holes in ownership’s logic, and finding them. It’s possible that MLB has concentrated so much money and power in so few hands that teams are impervious to public outrage or journalistic scrutiny forever. But it’s not a certainty, and these two slow offseasons, these few terse fan-fest Q-and-A sessions, could be the first cracks in the levee. We’re told that it’s a big risk to give out nine-figure free-agent deals; ownership could look back in a few years and realize how much they risked by failing to do so.
