June 20, 2018

Corrections That Are Moving Towards a Rational Marketplace

February 5, 2018 by · 4 Comments 

You can almost hear the unsigned players grinding their collective teeth. After years of escalating salaries, there may be a principle at work that confounds the dumb-struck baseball player, namely a rational economy. When the average American was getting their economic bell rung in 2008-2010, losing their homes, their jobs and their emotional well-being, baseball players saw their salaries continue to rise, immune from the forces killing the rest of us. If you did not see the MLBPA donating to support the unemployed, walking the picket lines of the disenfranchised in solidarity with their union brothers, it’s because it did not happen.

Now that the shoe is on the other foot it will be interesting to see how many fans will support players like J.D. Martinez when they pull a Curt Flood and sit out the season in protest.  Well paid slaves indeed. Martinez can only get a five-year deal worth somewhere in the neighborhood of $125 million,  Then there is Jake Arrieta who is crying over the Cubs refusal to pay his asking price of six years at more than $25 million. The days when George Steinbrenner and other owners would throw outrageous money at players just to show the hometown flag seem to have vanished as luxury cap spending has finally chastened the country club set and forced them to act less like children than the players.

Looking at the players who have signed for 2018, the parameters of a rational market seem to be forming. Lorenzo Cain signed a 5-year deal for $80 million. Cain had a WAR rating of 4.1 according to FanGraphs. Martinez was a few ticks below Cain because his defensive numbers are atrocious and likely to get worse. Cain is an all-around player who can contribute with the glove as well as the bat–hopefully for a few more years say the Brewers. So, while players may want to elevate their swing in hopes of cashing in on the home run craze, that trend is not leveraging a sky-high salary market. A rational market dictates that as home runs become plentiful, they become a cheaper commodity and players like Martinez are being valued accordingly.

Yonder Alonso had his best year in the majors, slashing .266/.365/501 with 28 long balls. But the lack of a track record and a slugging profile that was almost commonplace, made him affordable. Cleveland nabbed him for $16 million with a two-year deal. Alonso garnered only 2.4 WAR despite his breakout season. Looking at several of the signed players, a trend can be seen.

Take Cain, Jay Bruce, and Alonso all of whom have signed. Their WAR ratings for 2017 were as follows: 4.1, 2.7 and 2.4.  Their annual salary going forward is $16, $13, and $8 million accordingly.  Yes it is a small sample, but the market has so far reacted within reasonable parameters. The players are being valued roughly according to their likely overall performance. Smaller market teams like Cleveland and Milwaukee have taken advantage of the market to nab players that will help them in 2018.

There are outliers like Carlos Santana, whose $20 million, three-year deal falls far outside the norms established. The Philadelphia Phillies have seen attendance plummet in the past few rebuilding years. In 2017 they were in the bottom of the pack, 24th overall with less than 2 million fans overall, as compared to 3.6 million in 2010. Their signing of Santana shortly after the Winter Meetings looks more like the kind of contract that bottom tier teams have done in the past when trying to signal to fans that they are ready to compete seriously.

At first glance Zack Cosart, who signed a three-year deal for $38 million, might be incongruous. His 5.0 WAR last season and a slash line of .297/.385/.548 suggest a better payday than he got, but the chances he will repeat those numbers age 32 are unrealistic. His 2.5 WAR in 2016 and almost $13 million annually fits well within the contracts of Cain, Bruce and Alonso that seem more appropriate to the 2018 marketplace. Cosart seemed to believe the offer was about what he wanted and signed relatively early.

The market on the pitching side is almost a mirror image of that for position players, and maybe that is part of the answer. Wade Davis got more than $17 million annually on a three-year deal. His WAR numbers crumbled from 3.1 in 2016 to 1.1 in 2017 according to FanGraphs, but he is still one of the best available closers and that commodity, unlike home run hitters, is seeing its numbers on the rise. Jake McGee is going to get $9 million annually to set up Davis.

Several other relievers generated WAR ratings in the 2.0-2.5 range without compiling appreciable saves, formerly the measure of a reliever’s worth.  Pat Neshek had a 2.5 WAR, Anthony Swarzak 2.2, and Mike Minor 2.1. What is remarkable is that they are being paid like Yonder Alonso–$8 million annually–for a WAR that is almost identical. Those relievers join a list that also includes Juan Nicasio, Addison Reed, Joe Smith and Bryan Shaw who saw their salaries soar as the game begins not only to value their contributions more highly, but is willing to pay the freight.

Some may dig the long ball, but the larger pool of players may be digging analytics more and more as their salaries become more commensurate with actual performance measures.

The unsigned players have reportedly begun exploring other options. Can they sue? Can they strike? The failure of owners to meet their demands is so outrageous there must be justice somewhere, somehow? Yet the response has been: no, you cannot sue; no you cannot strike. The owners are within their rights under the CBA to use the luxury tax as a mild salary inhibitor. Call it an “ace-inhibitor” for Jake Arrieta.

Everyone was happy with the luxury tax until it actually had its first downward affect on salaries. Who is going to be the first to break? My bet is that the guys handing out the money will win this one. Players like Alex Cobb and J.D. Martinez who are seeking contracts that outstrip their value are going to be forced to accept something less than what they think they are worth if they want to play. The likely option is a plethora of one-year deals. Even the slowest agent knows that seven percent of nothing is still nothing, so there will be no Curt Floods in 2018.

The longer term question is whether or not the MLBPA will be forced into some unwise action during negotiations over a new CBA in 2021. There will be even less sympathy for players than in 1994 when they had more room to operate. It is doubtful that a Judge Sotamayor who step forward to bail out the players once they look at salaries and the mechanisms in place to govern the market. Both the marketplace and the rules that govern are totally reasonable. It is the players that have lost sight of reality and hopefully that will change in the near future.

Comments

4 Responses to “Corrections That Are Moving Towards a Rational Marketplace”
  1. Joseph T. Bonanno says:

    Well written article and on point!

  2. Marc Hall says:

    With many front offices using advanced stats to determine value there will be more off years like this. It isn’t the owners that are the players enemy, its math.

  3. Helienio says:

    In addition to access to the IMG Academy, the MLBPA will continue to identify ways to generally support, provide ongoing information and increase the visibility of unsigned players in advance of the upcoming season.

  4. As I indicated in an off-the-cuff remark on FanGraphs, it would be fine with me if the MLBPA ran major league baseball in much the way the PGA runs golf. But greed is a universal and while the owners long history of bleeding the game discredits them, the players show few signs of being vastly different.

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