Teams Locking In Talent – What Is The Impact? (Daryll)

Baseball fans had been waiting for this winter of free agent talent for a few years now already. Manny Machado! Bryce Harper! Maybe Clayton Kershaw! In the end it came down to Machado and Harper, which became a long drawn out process that when the dust settled saw Machado and Harper sign record deals with new teams. Machado of course had already been traded from the Orioles, who in the end by not trading him the previous winter likely missed out on what could’ve been a much larger haul.

So what does this all mean? Is it good for the players involved? Or better for the owners?

One aspect I found interesting is thinking about how players are looking at free agency overall. For one minute Manny Machado found himself on top of it all with his 10 year, $300M contract. Then Bryce Harper upped the ante with a 13 year, $330M deal.

That is when things got a little interesting. Nolan Arenado who was on track to hit free agency after 2019 signed an 8 year extension to stay with the Rockies through 2026. Mike Trout next signed a 12 year deal worth over $426M that will pay him nearly $36M a season.

Phew. Yet baseball didn’t stop there. Alex Bregman, Chris Sale, Paul Goldschmidt, Eloy Jimenez(in AAA!), Brandon Love and many more got in the game. What does it mean?

First of all – these kind of extensions are not exactly new. As a great article in The Ringer shows, the biggest difference is the dollar amounts that we are seen given out to younger players and buying out more even pre-arbitration years. I believe this is partly because greater value is being given to young, impact players. They know that the window not only to see players at their best but also to actually win a World Series can be quick. I keep pointing out that the Royals WON THE WORLD SERIES just 4 seasons ago after building up their system for about 10 years to get there. Once it is gone, it is gone.

The tricky part is when teams swing and miss, pun completely intended. Last year the Phillies signed Scott Kingery before he had even played in the Major Leagues to a 6 years $24M contract. I don’t think his .605 OPS and 6 HR were what they made in mind by signing him that early. A Fangraphs article goes through some of the numbers on Sale’s and Goldschmidts extensions that shows the Red Sox might actually be getting a bargain on the extension contract of 5 years and $145M. So you could project that he is leaving money on the table – or that with some regression he gets more now than he could when he would have hit the free agency market. Based on the injury issues he had late last season and his performance on Opening Day, that’s looking like a better bet for Chris Sale so far.

To get negative for a second – the current baseball CBA expires December of 2021 – and many players are worried about how that impact the games finances moving forward. Could we see some sort of salary cap system implemented in baseball? Teams limited to how many years they can sign players too? More free agency restriction or linkage to draft pick compensation? Either way – players like the security they can get by signing contracts now. We have long known about the endowment affect that says we feel losses heavier than we do celebrate gains. So if free agency were to change – players would hate that more than just locking in money now that can’t be taken away. Do players know something about what is coming that we don’t?

Another angle to look at is all of the players that aren’t marquee franchise players like Mike Trout. If the Angels are paying Mike Trout $42M a year – they have less money to sign for that 4th starting pitcher. According to Average Salary documents published by the MLBPA, the average salary of players went down slightly last season to $4.095M from $4.097M in 2017. The best paid players last year had between 13 and 14 years of service time and average about $15M a season. This number looks to go down in 2019 with extensions and larger contracts being handed out sooner, though how far the trend goes remains to be seen.

Some outliers in all this? What about the average 32 year old 4th outfielder or aforementioned 4th starter? Adam Jones just signed a late 1 year deal with the Diamondbacks for $3M. Former Cy Young Award winner Dallas Keuchel and Rookie of the Year Craig Kimbrel are still free agents. So is Logan Morrison at 31, Evan Gattis at 32, Chris Carter who just hit 41 home runs in 2016, and even the erstwhile and resilient starters Edwin Jackson and Bartolo Colon!

What happens to baseball’s middle class as teams focus on youth, team control, and reliable contracts? How many more contracts will we see like the Matt Kemp and B.J./Melvin Upton contracts that just keep getting passed around the second half of their life because NO ONE WANTS THEM. The Blue Jays would rather release Troy Tulowitzski to sign with the Yankees than pay him his last two years and $38M.

These are all questions that can’t be answered today – but must be answered between now and the end of 2021. These deals are great for many of the players signing them, but every dollar spent on Mike Trout just might be a dollar that can’t be spent on Dallas Keuchel, or the journeyman reliever who is looking for Mark Melancon reliever money but isn’t seeing it. Where do those players go?

Often the difference between the rookie reliever and the 29 year old veteran is small in terms of baseball value – but a couple million dollars a year in what they are paid. As teams get more analytical and less emotional in how they allocate their money – they might deem any multi-year, multi-million dollar for many of the in between players just aren’t worth it.

That doesn’t make anyone happy. It will be a big problem baseball needs to figure out before another big labor situation erupts.

In closing, as some teams DO sign big stars, it can put pressure on teams like the Indians to sign their young stars like Francisco Lindor. Indians owner Paul Dolan was asked what fans should do worrying about the future of Lindor and possibly gave the best answer of all. The answer that all baseball fans can do now that the season has started and all the talk about contracts, CBA’s, rule changes, and the rest of the off-season distractions: “Enjoy him. We control him for three more years. Enjoy him and see what happens.”

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