Dunkirk NY – Spring training is exactly two weeks away, and as of right now neither Manny Machado nor Bryce Harper have signed a contract to play baseball. Neither have other key free agents like Mike Moustakas, Dallas Keuchel, Craig Kimbrel, and others. There’s a new game in town, and by “new game” I don’t mean the game on the field. It’s the off-season of signing free agents that has changed dramatically.
This is the second year in a row where the off-season hot stove has chilled significantly to the point where teams wait out all the big free agents in the hope that they can sign them for much less money and years than they are demanding. The benchmark signing rate for both Machado and Harper was supposed to be 10-years/$300MM, and so far there is no indication that these numbers are being offered by anybody. Even a team like the Philadelphia Phillies, who have money to burn, could sign both players, and actually need both players, have not gone out and offered “stupid money” to either player.
It’s the players that seem to be behind in this game. Owners have amassed massive analytical teams that tell them that signing a player – any player – to a long-term high-dollar contract is financially a losing proposition. Players and their agents have not yet caught up to this reality; they continue to hold out for more years. Perhaps the most telling sign for this new reality came with the signing of Patrick Corbin, who went for the extra year offered by the Nationals rather than take the 5-year contract offered by his hometown team the NY Yankees. It was a real eye-opener when the Yankees, who have a long history of signing expensive free agents, refused to add the extra year on to their offer. They had the money, they had the need, but Cashman would not move on the number of years. You would think that’s a trivial thing – what’s one more year on a contract to the Yankees? – but they did not go in that directions. They stuck with what their analytics team told them was the best value they could offer to a player.
We are now in a moment where the owners seem to hold all the cards. They have a contract arrangement which allows teams to control and repress salaries for seven years before a player hits free agency, because the players’ union tends to favor contracts for veterans more than for rookies. Owners have also figured out that they can make just as much money by putting players with league-average WAR values (about +2) on the field as they can with a Machado, who has something like a +6WAR over his 7-year career. Teams have also looked at other long-term contracts given out over the years and have the numbers to show that 10-year contracts generally do not end well for the team (Albert Pujols); there are few to no bargains out there for 10-year contracts, even when you’re talking about players like Harper and Machado, who are both only 26 and are hitting free agency at very young ages.
Contract negotiations will be coming up soon, and at this point it looks like owners really have no reason to bargain with players, because players have nothing really to offer owners in a deal. The current MLB contract gives owners a great deal of control, the ability to keep younger players’ salaries down, and the ability to use analytics to offer less money and years than in the past. About all the players have to offer to a cap on contract lengths, perhaps offering a 5-year cap on all free agent contracts in return for more money in the early years of their career. Or perhaps there is a way they can create a situation where contracts can easily be tied to clear benchmarks. Or perhaps contracts will become much more incentive-laden. At any rate, we are seeing a very seismic shift in how free agents are handled in this new market reality. It seems the burden is on the Players’ Union to get creative, or management’s analytical teams will continue to burn players during the hot stove season. -twl
