The MLB Collusion Conundrum

A Blog by Andrew Brown

Over my lifetime as a baseball fan, I’ve heard many words and phrases involved with baseball conversations such as Hall of Fame voting, sabermetrics, and of course steroid use. But due to the slow nature of the 2018 MLB offseason, there has been another word added to the mix, one which I thought I would never hear: collusion. Within the many things I have read and heard have included stories about how owners have banded together to squeeze players out of big contracts, thereby practically forcing high talent free agents to take deals worth a fraction of what they originally wanted. Now, I do believe that if a few more big money deals had taken place, this conversation would not be talked about, if at all.  Let me first state that I truly believe no collusion is taking place what-so-ever. However, I find it slightly disturbing some of the solid points that are used to try and strengthen the whole collusion theory. I hear the arguments about the luxury tax and that the MLBPA has lost some power, but I feel those points have less connection with collusion and more to do with a combination of an outdated and flawed free agent system, fear of the big deal, all to go along with a combination of next year’s free agent class and the luxury tax, causing a slow offseason.

The outdated and flawed free agent system has caused the average age of players entering the league over the past decade to be around 24 years old, it’s easy to agree that the six year service hard cap generally puts free agents past their prime. With age 27 generally being the most prime year for a player, the power to shop their talents at that prime age is indeed hampered. It’s not like teams these days can simply expect a Dwight Evans type player to show up and perform better in their latter years than their earlier years. That type of a player is a rarity and players want to have their prime years rewarded (respectively of course) with a proper contract to fit. Again, I agree for the most part that the initial six year service but in playing the devil’s advocate, there is one big setback to the whole argument and that would be arbitration. Since the advent of arbitration in 1974, the process has mitigated the negative effects of the six year service cap of free agency. Although arbitration effects different players in different ways with the top performers reaping the biggest rewards, the process itself is not biased and each individual player has a fair shot at a fairly large deal per their individual situation, performances, and so forth. In other words, to some degree arbitration has the power to reap a big reward financially just without the number of contract years that comes with true free agency. Now with that said, I’m not saying that arbitration completely wipes out the flawed system nor does it always prove to be the best for the player but as of recently, especially in 2018, the arbitration process has highly benefited the players. Whether from winning an arbitration case or by team’s fear of an even bigger payout, players have sure reaped the rewards to the tune of arbitration eligible players averaging a 96% pay increase from 2015-2016. That 96% increase equated to an average increase from $1.79MM to $3.82MM among arbitration eligible player salaries. Even though the six year deal has cast a negative cloud over players, the players themselves have not been without their gains ranging from various amenities to the fore mentioned benefits of arbitration.  All together though, even with arbitration added in, the case that the free agent system yields significant blame for the dead 2018 offseason holds more than just a nugget of truth. It is my firm belief that if positive change is to be acquired, it starts with addressing the system and not the notion of conspiracy.

Speaking of things that will fall into place, one aspect that the free agent system has effected another component that I believe is at fault for the slow offseason, and that would be fear of the mega deal. For the time being it seems that the days of the 5-10 year, $100+M monster contracts have come to a close and it’s a combination of the system and the results of the past decade to blame. Over the course of history, Major League Baseball has seen its share of big money deals from Carlos Lee to Barry Zito and Alex Rodriguez to Albert Pujols. They’ve ranged anywhere from 5-10 years and $100M to over $250M and while some of those big time contracts have been warranted, the aspect that has had a lethargically negative effect on this offseason has to do with all the contracts that went bust. There was a time not too long ago where teams wouldn’t think twice about dishing out a kings ransom for a player but what has transpired over the past few seasons has scared teams from making future big deals. Take for example Mike Hampton who’s 22-4 1999 campaign helped sparked an eight year, $121M deal that will go down as one of the worst contracts in history. Hampton churned out a strikeout rate of just 6.5K/9 innings at best during his peak years while posting an above average walk rate of 3.5BB/9 innings, and that was before putting up a 5.75 ERA over just two years with the Rockies. By the way, Hampton produced a Wins Above Replacement mark of just 2.9 throughout the 8 year deal. That deal showcased the dangers of a big deal as it came during his age 28 season but for a contract that really provided bad timing involved Albert Pujols. Now the story of Mr. Pujols involves a contract that in my estimation is the worst contract that is, ever was, and forever will be. It all started after Pujols decided to head out of St. Louis in 2012 despite a more than successful 9 time All-Star, 3 time MVP, 11 year career. Pujols was a juggernaut of player who played like a God among men starting in 2009 where his MVP season consisted of leading the league in On Base Percentage and Slugging. The 2011 postseason casted Albert as a franchise changing player after touching up a .353 average, a scorching .463 OBP, and an astronomical postseason slugging mark of .691. From all of that sparked a 10 year $254M deal for the Angles that is still ongoing to this day. Now on the surface I don’t blame the Angles for making the deal but if they’d look just a little bit closer they’d noticed a rapid decline in the works that stemmed after Pujols’ brilliant 2009 campaign. By the numbers Alberts on base percentage dropped from .443 in ’09 to .366 in 2011 while his slugging percentage dropped from a ’09 mark of .658 to a 2011 mark of .541. The declining numbers dipped largely in part to a lack of plate discipline where Pujols went from chasing just 22.9% of pitches outside the zone to near 32% chase rate all while decreasing his walk rate from 16% to 9% during that same time frame. Oh and by the way, that was all before Pujols became a member of the Angles giving LA a player who fell of the face of the earth defensively and who’s only claim to fame is steadily becoming less potent…all that for roughly $25M a year until his age 41 season. Good in theory but for the price paid, a nightmare that will only get worse.

What both the Hampton and Pujols contracts showcased were two teams too quick on the trigger to acquire premier talent. I agree both were respective powerhouses during their prime years but regardless of the system, what the Rockies and the Angles ended up paying for was the past performances and not continued production for future seasons to come. That I believe is a huge reason why this 2018 offseason has come to a screeching halt. Those among others have become a glaring ominous light casting said light over an era that now sees the luxury tax as more of a salary cap. Teams have extreme incentive to make every dollar as productive as possible as fear of the luxury tax penalties have forced teams to be more careful with their money, making absolutely sure each dollar ends up productive. More often than not, the big money deals of the past have brought nothing put a money dump with some of those deals ending with a player departure before his tenure was up. In the end I don’t blame teams for not jumping out at the big numbers of J.D Martinez and others, history has proven caution is a virtue.

Finally, I round out the topic by pointing out another aspect that deters the whole collusion talk and sets a more reasonable reason for the glacial offseason pace which would include the luxury tax and the upcoming free agent class. After the luxury tax came back with a vengeance in 2003, the soft threshold was erased and harder limits and even penalties arose to where it currently rests. I for one am a fan of the luxury tax as it sits today because I believe it forces a system of checks and balances. For years upon years big money teams like the New York Yankees would buy their talent regardless of the tax limit which left a competitive gap between the richest of teams and the poorest of teams without a single ancillary benefit for the small market teams. To whatever degree, I believe the current luxury tax has forced big money teams to actually utilize their farm system and therefore bring growth to the game. The Yankees reign of over spending the luxury tax has finally come to an end after 15 straight years. Now before you go yelling at me on this one may I remind you of a few current young superstars who came up through New York’s farm system…a one Aaron Judge and Gary Sanchez. If I recall right I believe that the farm system came through pretty well there. My point can be proven by looking at other home grown talent like Joc Peterson of the L.A Dodgers, Kris Bryant of the Cubs, and even the delightful tandem of Springer and Correa of the Houston Astros. In my estimation, home grown stars are better for the game than bought and paid for stars but none the less I digress. While teams like the Yankees and the Dodgers bring in quite a lot of revenue every season, the penalties for over spending the tax line now brought about an effective halt of free spending. After all, teams could pay up to 50% of each dollar they go over the luxury tax, and that’s just the baseline. There’s now an additional 12 percent tax on teams that go over the threshold by more than $20 million, and an additional 45 percent tax on teams that go over by more than $40 million. This is in addition to the existing tax they’re already paying, which, again, can be as much as 50 percent depending on how long their payroll has been over the limit. As we’ve seen, even for big market teams the potential total is plenty of incentive to spend a little less. But don’t worry, teams will still go over and as a result $13M will still benefit player benefit plans along with the remaining 50% of the overage money going towards player retirement accounts and teams who didn’t exceed the luxury tax limit. The luxury tax may not deter over spending every time but it has sure halted it as of now and that is another big reason as to the slow offseason. Why pay extra when you can underspend and still reap the rewards of a successful season?

So in conclusion, there is no collusion going on. I do agree that the players union has dropped the ball in terms of protecting the players but collusion in the MLB is certainly not afoot. So we’ve seen a slow offseason, it happens. This off-season’s glacial pace in my eyes boils down to a flawed free agent system, well warranted fear of the mega deal, a tough nosed luxury tax system, and I’ll even throw in next year’s mega free agent class. 

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