Collusion or Caution: What is Really Behind MLB’s Slow Free Agent Market?

By: John Zubek

While Spring Training is beginning in Arizona and Florida, many talented MLB players are still without contracts. Free agent signings have been few and far between in 2018 — leading to what some are calling the slowest offseason of all time.[1] Top MLB agent Scott Boras recently said he has “never seen anything like it” when asked about the lack of movement.[2] There are several theories for the cause of this phenomenon. Some argue that MLB teams are colluding to drive the free agent market down, allowing teams to sign players for a fraction of the money they would normally get.[3] The reality, however, is that a mix of circumstances—driven mainly by smarter front offices and new team creation strategies—are to blame for the stagnant 2018 offseason.

Collusion?

Players and agents are hinting that they believe there is a coordinated effort by teams to drive down player salaries in the free agent market.[4] Players are reportedly “outraged.”[5] The MLB Players Association (MLBPA) released a statement lamenting that “a record number of talented free agents remain unemployed in an industry where revenues and franchise values are at record highs.”[6]

Collusion by MLB teams would not be unprecedented. In 1990, three arbitration rulings concluded that MLB teams were colluding against the players for years, leading owners to settle the players’ claims for $434 million (equivalent to about $800 million today).[7]

Could the same thing be happening this offseason? It is unlikely. No hard evidence of collusion has been presented.[8] Instead, the slow 2018 offseason is a result of a combination of circumstances discussed below.

The Reality

Several factors have combined to create a perfect storm, causing the slow market we are seeing today. While some tactics teams are using now may be questionable and may highlight the need for reforming MLB’s arbitration system, owners are not doing anything illegal.

MLB front offices are getting smarter. Teams have embraced advanced statistics and analytics.[9] As a result, teams are more aware of the effects of aging on player productivity, and teams are using advanced data to improve player development.[10] This is allowing teams to replace older, more expensive players with younger, cheaper ones.[11] Perhaps the biggest factor is the increasingly popular strategy of full rebuilds — that is, teams trading their star players for prospects, losing as many games as possible for a few years to get higher draft picks, and using the money they save over the years to supplement their young talent by signing superstars.[12] This strategy — which MLBPA president Tony Clark contemptuously calls the “race to the bottom,”[13] and Boras calls a “non-competitive cancer”[14] — has had a significant chilling effect on the free agent market, since it limits the amount of competitive teams — thus limiting potential destinations for older, more expensive stars.

Other factors include teams’ desires to stay under the luxury tax threshold, and the superstar-level players of next year’s free agent class — both of which are incentives to spend less on free agents this offseason.

Together, these factors explain why teams are reluctant to pay top dollar for aging players this offseason. While the players are understandably frustrated, nothing can be done unless some hard evidence of collusion is uncovered. Until then, some of the most talented baseball players in the world will be stuck watching Spring Training from their couches.

[1] Travis Sawchik, This Is the Slowest Offseason Ever, FanGraphs (Feb. 6, 2018), https://www.fangraphs.com/blogs/this-is-the-slowest-offseason-ever/.

[2] Bob Nightengale, Agent Scott Boras: ‘Non-Competitive Cancer’ Ruining Baseball, USA Today (Jan. 29, 2018), https://www.usatoday.com/story/sports/mlb/columnist/bob-nightengale/2018/01/29/scott-boras-non-competitive-cancer-ruining-baseball/1074755001/.

[3] See Michael Hiltzik, Are Major League Baseball’s Owners Engaging in Collusion Again?, Los Angeles Times (Feb. 7, 2018), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-mlb-collusion-20180207-story.html.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Steve Adams & Jeff Todd, The 2017-18 Offseason: Trend or Anomaly?, MLB Trade Rumors (Jan. 27, 2018), https://www.mlbtraderumors.com/2018/01/slow-mlb-offseason-trend-anomaly.html.

[9] See generally Neil Greenberg, MLB’s Free Agent Snoozefest: Don’t Call It Collusion; Call It Smart Business, The Washington Post (Feb. 7, 2018), https://www.washingtonpost.com/news/fancy-stats/wp/2018/02/07/mlbs-free-agent-snoozefest-dont-call-it-collusion-call-it-smart-business/?utm_term=.a1c32a0f2d37.

[10] Id.

[11] Id.

[12] Nightengale, supra note 2.

[13]Jeff Todd, Tony Clark Accuses MLB Teams Of “Race To The Bottom” MLB Trade Rumors (Feb. 6, 2018), https://www.mlbtraderumors.com/2018/02/tony-clark-accuses-mlb-teams-of-race-to-the-bottom.html.

[14] Nightengale, supra note 2.