Baseballs New Contract Era

[Platoon]

A somewhat lengthly piece by Thomas Boswell regarding the Nationals contract issues, and in essence all of baseballs. He admits that whether this winter was a permanent change in contract negotiations and amounts is sort of a wait and see, I would bet that it is forever changed. Hopefully a new labor agreement would address some of these issues. But that negotiation could get ugly. It seems the owners currently hold most of the cards.

 

What I don't think that will change for the time being will be the "pecking order" of the teams in terms of shelling out contract money. This is all relative. A low ball team will not compete with the Yankees/Dodgers just because old era money would now suffice.

 

The one thing that will throw a wrench into all of the ongoing conjecture on the future of 30 year olds getting long term mega deals is the owners own greed and ego. Will someone start inching up to acquire that desired roster piece, and then the rachet continues? Anyway an interesting article by Boswell.

 

https://www.washingtonpost.com/sports/nationals/bryce-harper-isnt-getting-400-million-and-the-nationals-title-window-just-got-bigger/2018/03/14/dba67e5c-279b-11e8-b79d-f3d931db7f68_story.html?utm_term=.c96996960184

[Respy]

I think mega-contracts will still be in play for players like Harper who debuted at very young age, are elite generational talents, and are entering free agency in their mid-20's.  I've long felt that the inflated contracts given to players who are 30-ish are, well, too inflated.  Only a few teams each year were willing to afford those contracts, because the rest of the league knew they wouldn't generally pay off.  It would seem this off-season over-compensated a bit, so I expect the market to correct itself in the next couple years.

 

What I hope, most of all, is that what's happening this off-season doesn't discourage teams or players from locking in career players.  There's something really special about a player playing with one team for most or all of their career.

[Old Twins Cap]

Change is happening in baseball.

 

Tons of young talent coming up. The pool is bigger than ever.

 

Paying players over 30 because of peak performance in their 20s always made little sense and makes even less now.

 

Metrics and sabermetrics creates information that can be charted, projected and monetized so that it influences specific contract provisions.

 

Thus, we are going through a major shake-out in how FA impacts the game.

 

And, potentially, given that veteran players will be the main victims in all this, a labor dispute of epic proportions.

[gunnarthor]

This offseason was an obvious attempt by owners to lower contracts in free agency to keep prices down next year. We'll see if it works.

[bird]

Personally, I'm hoping we're seeing some of the first signs of wringing out the excesses, which would include fans and advertisers putting the squeeze on revenues for broadcasters and teams.

 

I very much liked seeing the Twins promote a $49 pass for all of their April home games after opening day.

[kab21]

 

This offseason was an obvious attempt by owners to lower contracts in free agency to keep prices down next year. We'll see if it works.

I think we need to see 2-3 offseason's before jumping to that conclusion. Most of the usual biggest spenders didn't make very many moves due salary cap and luxury tax considerations. Nobody should be surprised if there just wasn't enough money to spend on all of the free agents this year.

The one big thing that will cause a new contract era is a correction in local TV rights. The cable TV future is a disaster and at some point the ridiculous money getting spent on TV rights is going to dry up.

But until that happens I predict salaries will rebound in the next offseason or two.

[nicksaviking]

Teams all want the young guys in their physical prime. The MLBPA surely will dig their heels in about getting those guys paid in the next CBA.

 

Everyone knows the players are the ones getting the short end of the stick at the moment. With no concern for salary, I too like the young players and want my team full of them, so I'm with the owners on that front. However if the owners don't want a strike they better not try to play dumb about how this new trend is pushing still serviceable vets out of the game and they better agree to some considerable concessions.

 

I think having a very high salary floor would fix a lot. Then teams who want to rebuild will have to figure out where to put their money and the young guys end up getting paid early.

[Platoon]

This offseason was an obvious attempt by owners to lower contracts in free agency to keep prices down next year. We'll see if it works.

I think there was more in play here. Metrics, both the quality and quantity of FA, the impending high end FA market next year, the luxury tax, and the teams trying to reset their basis in prep for next year. Add to that the realization by teams that, despite Brian Doziers contention, fans are not interested in being middling competitive. Meaning tanking is more in vogue than ever. There are no flags for winning 82 games as a rule. Some of these issues will remain in place for the foreseeable future. But it will be interesting, and likely disruptive, to see how it all shells out.

[spanman2]

I believe the days of teams handing out 6+ year deals to guys in their 30's like they are candy at a parade are over.  There will certainly be some but not overly frequent. 

[Rosterman]

I always thought that a team/player should be rewarded for sticking with a team/player. Look at Joe Mauer in Twinsland. We can argue that his multi-year contract was worth the price (it maybe should've gone down as he ages), but the Twins did get a relative bargain for his production the first half of his career, draft signing bonus besides.

 

Yes, the talent pool will continue to grow, and at some point you have to put a dollar worth on production. Is a save worth one million, a winning start two million, a home run $500,000.

 

And, ultimately, how much money do you have to make (except owners WILL continue to get rich rather than lower prices on everything when they lower the price on payroll).

 

Like a corresponding business...Hollywood and Television-play...a few get really really rich, but the majority are contract or day players (like the minor league guys called up in a pinch) and careers don't last long because many discover that finding a "real" ocupation that they can truly grow into payds better in the long haul.

 

If this off-season showed anything, it was that ownership called the agents bluff. How much interest was there truly in many many players. Considering someone else could've signed Lynn or Morrison by beating the Twins offer by anywhere from a million or so dollars, and seeing offers that other teas made (and got) for players shows the true marketplace, not the lip-service that had materialized in baseball since Rodriguez signed for $200+ million waaaaay back when when the next best offer supposedly was for a fraction of that amount.

 

We still have arbitration, where one good year in three on make a player millions and cause a team to cut the cord and let them walk.

 

Only time will tell. With high school draft picks getting $6 million dollar bonuses to sign and NOT play in the majors for 3-5 years, the system MAY appear even more broken.

 

If anything, if the jobs are there, players will sign to keep playing (look at Ichiro). I mean, the indepdent leagues are still going strong from guys that just want another crack at a minor league contract.

[gunnarthor]

 

 Add to that the realization by teams that, despite Brian Doziers contention, fans are not interested in being middling competitive. Meaning tanking is more in vogue than ever. There are no flags for winning 82 games as a rule. Some of these issues will remain in place for the foreseeable future. But it will be interesting, and likely disruptive, to see how it all shells out.

I disagree with this point. It's absolutely no fun to watch ****ty baseball. What is happening is that teams like the Marlins and Astros were so bad that fans literally went away and may come back if they get good (and they didn't come back right away). The revenue streams baseball has created has rewarded teams for doing this but it's not good for baseball and the fans hate it.

 

The idea that the White Sox, Royals, Tigers, M's, A's and Orioles can all tank and become good right away is flawed. Tanking is a dumb idea in baseball b/c the draft isn't a sure thing. Trading off your solid vets only works if other teams are willing to trade their prospects back but if all teams are tanking, then no prospects get moved - as Baltimore saw when they couldn't get a king's ransom for Machado who is arguably one of the five best position players in the AL. The Rays couldn't get a good offer for Archer. A team might still be able to get something for a Chris Sale type but most rebuilding teams don't have him.

What tanking allows is for owners to pocket more money instead of sharing that revenue with the players. Fans should abhor this.

[Mike Sixel]

I disagree with so much here, I might need to write an article....

 

Owners will make money no matter what, the question is why so many care about greedy players, but don't seem to mind owners making money with no risk at all. Mind. Boggling.

[Squirrel]

I disagree with so much here, I might need to write an article....

Owners will make money no matter what, the question is why so many care about greedy players, but don't seem to mind owners making money with no risk at all. Mind. Boggling.

Concur.

 

I think because the players are front and center, the focus is on them. Owners have a natural deflection away from them and are able to keep it away from them.

[TheLeviathan]

I will root for fans and minor league players in this labor war. And I will root against both of these two sides until one of them decides to stick up for either the fans or the minor league players.

 

Until then I look at both sides as the villains here.

[ashbury]

I very much liked seeing the Twins promote a $49 pass for all of their April home games after opening day.

They aren't doing this to minimize revenue.

 

It's certainly not in response to taking a few million dollars out of Lance Lynn's hide.

 

Revenue management and payroll are virtually independent processes.

[Platoon]

This may be a poor analogy, but here goes. I know someone who has a business, that when she sees someone at a store with a Wix card trying to buy something that is not on the approved list, she goes ape bleep. "They should be kicked off, they are abusing the system"! This same person has an exceptional imagination when deciding what is a deductible business expense. She sees nothing wrong with gaming that system. My point to her is everyone takes liberties to advantage themselves. You cannot stop that deeply engrained personality trait. That leaves you with changing the system to make it correct the abuses as best you can. You won't stop someone from working the new system, but you can try and make it as palatable as possible. None of the problems, real or imagined in the current MLB operation are going away via voluntary actions. The players, teams and agents will continue to push the envelope. In essence it's simply the free market rearing its (ugly) head.

[Twins33]

I'm conflicted on this. I don't want more money in the owners pocket. I'd rather the players get it.

 

But on the other hand, I have no idea how a guy like Mike Pelfrey should be getting 2/16 from the Tigers after three bad years in MN. A 1/4 contract, sure. He's probably worth 1/4, but 2/16 seemed ridiculous then and it still does now.

 

Can we give Pelfrey 4M and the other 12M to a better player? That's what I think should happen. I don't want it back in the owners pocket, but it doesn't feel like it belongs in Pelfrey's pocket either. Give it to Fulmer who was good and making the league minimum.

[nicksaviking]

 

I disagree with so much here, I might need to write an article....

Owners will make money no matter what, the question is why so many care about greedy players, but don't seem to mind owners making money with no risk at all. Mind. Boggling.

 

I agree, but I don't know that anyone intentionally sides with the owners, it's just that the owners just so happen to have interests that more align with the interests of the fans, particularly fans of mid-market teams.

 

Fans: I want the Twins to be competitive ---> Affordable quality players

                                                                                                               

Owners: Let's maximize profits ---> Affordable quality players  

 

 

 

[ashbury]

Fans: I want the Twins to be competitive ---> Affordable quality players

                                                                                                               

Owners: Let's maximize profits ---> Affordable quality players  

Fans: I want the Twins to be competitive ---> Make competitive offers

                                                                                                              

Players: Let's maximize income---> Make competitive offers

 

 

Bottom line for me: players should look out for themselves. Nothing should be simply handed to them. Owners should look out for themselves. Nothing should be simply handed to them. Fans should look out for themselves. Nothing should be simply handed to them.

[markos]

 

I disagree with so much here, I might need to write an article....

Owners will make money no matter what, the question is why so many care about greedy players, but don't seem to mind owners making money with no risk at all. Mind. Boggling.

I don't have any love for the owners - I think they are a corrupt, dishonest, greedy bunch of swindlers that are running a cartel.  That said, you can still recognize that the players have done A LOT to put themselves into this situation. For decades now they have put more and more of their eggs in the Veteran Free Agency basket.

 

At every single opportunity, they have agreed to cut or cap the earning potential of draft picks and international signings. Draft signing bonuses are now slotted, and teams get more or less fixed bonus pools to work with. Internationally, bonus pools are completely fixed. 10-15 years ago, there were no limits on this, and players could even negotiate major league contracts right off the bat. Today, no drafted player is allowed to sign major league deals, and even the largest signing bonuses today are behind the deals inked by Cole, Strasburg and others almost 10 years ago.

 

Similarly, they have agreed to limit earnings of minor leaguers and even MLB players on the league minimum. In the last decade, MLB overall revenue and Free Agent $/WAR valuations have basically doubled while the MLB league minimum has only increased by 40%. This is making players on the league minimum more and more valuable relative to veteran players. And the league minimum growth rate is only slightly faster than GDP growth over the same time. So it hasn't done much to make the young players FEEL that much more weathy during their first few seasons, which in turn makes team-friendly extensions that much more attractive to them. I'm sure discussions around extensions would be a lot different if the league minimum was $1m instead of it current $535K.

 

And the pay for minor leaguers is a major issue on its own. I wasn't able to find any good data for the growth of minor league wages, but I did read indications that minor league salaries haven't even kept up with inflation since the 1980s.

 

For the last two decades, the players have enthusiastically supported the luxury tax system, as it does funnel extra money to small-market teams that should make its way to player salaries. In practice, in the last decade the tax threshold has only increased by 30% - way, way, way behind revenue increases during that same timeframe. Further, almost every single team uses it as a de facto salary cap - the Yankees and Dodgers are the only two teams to be more than $10M over the threshold for multiple seasons since its inception in 2003.

 

All four points I've mentioned are supported by the players union. All four, in theory, contribute to competitive balance. And all four have led to the current situation where veteran players are not getting contracts they think they deserve.

 

Mike, I agree with you that the owners are going to take their cut no matter what. That is why I think the best way to increase the overall amount that owners will spend on players is to encourage owners to compete against each other for players. In my opinion, that would include:
1) don't limit or discourage the amount teams can spend, either through taxes, caps, or other penalties. (Yankees/Dodgers/Giants are not competing for free agents this offseason because of the luxury tax)
2) increase the number of areas where teams need to compete financially against each other to acquire players. (no longer really exists in the international and draft markets. Rule 5 changes have kept players on teams longer)
The player's union has repeatedly advocated for the opposite in both of these areas.

[Shaitan]

I question if this offseason wasn't more about posturing by the biggest market teams to get rid of the luxury tax in the next CBA: "see what happens without us."

 

[bird]

 

They aren't doing this to minimize revenue.

 

It's certainly not in response to taking a few million dollars out of Lance Lynn's hide.

 

Revenue management and payroll are virtually independent processes.

 

 

Of course not. They're reducing prices to create demand that they anticipate will not otherwise be there. This may actually increase revenue but reduce margins.

 

Revenue and expense decisions are complex, and you'd never see a promotion resulting from a single contractual obligation. I don't think we can say that "revenue management" and payroll are independent or unrelated. But yes, the decision processes can certainly be at times.

 

As I've said before, I can't help but wonder what the market research is telling them that we don't see...yet. My hunch is that this is a multi-billion dollar industry that sees a risk that they've reached the clearing price with respect to many components within the demand spectrum. Just my hunch, but I can imagine a narrowing and winnowing of interest in a number of demographics, such as youth, persons of limited financial means, persons of color, etc.

[nicksaviking]

 

Bottom line for me: players should look out for themselves. Nothing should be simply handed to them. Owners should look out for themselves. Nothing should be simply handed to them. Fans should look out for themselves. Nothing should be simply handed to them.

 

Well that last one is at least for sure true despite the fact that we're the ones ulitmately funding the entire industry.

[Mike Sixel]

I don't have any love for the owners -

 

,.......union has repeatedly advocated for the opposite in both of these areas.

I would have to read this again to be sure, bit I agree with all of this on first read.

[kab21]

 

I question if this offseason wasn't more about posturing by the biggest market teams to get rid of the luxury tax in the next CBA: "see what happens without us."

Perhaps but I think it has more to do with the penalties for going over the cap becoming more severe. I think repeat offenders that are in the highest bracket over the cap would pay double on everything over the soft cap. That $20M/yr contract just became $40M/yr. The Yankees might be making a ton of money but that is a lot even for them.

[Shaitan]

 

Perhaps but I think it has more to do with the penalties for going over the cap becoming more severe. I think repeat offenders that are in the highest bracket over the cap would pay double on everything over the soft cap. That $20M/yr contract just became $40M/yr. The Yankees might be making a ton of money but that is a lot even for them.

 

Agreed, and I forgot about that change.

 

In the end, we're all speculating here with little real info.

[kab21]

 

Agreed, and I forgot about that change.

 

In the end, we're all speculating here with little real info.

I could see a push for a more relaxed salary cap (soft cap/luxury tax) or at least something that was tied to revenue increases. A few articles has mentioned that revenue increases have significantly outpaced  the soft cap adjustments.

[bean5302]

The owners are spending. These are the median opening day payrolls in the league over the past 10 years. Based on this information, median payroll increase a cumulative average annual increase of 4.6%, and 7.6% over the past 5 years.

2008 - $81M
2009 - $82M

2010 - $84M

2011 - $87M

2012 - $88M

2013 - $91M

2014 -$107M

2015 -$115M

2016 -$116M

2017 - $127M

http://www.stevetheump.com/Payrolls.htm

 

The owners are spending, but this year's free agent crop was exceedingly poor with next year's potentially being epic.

 

While you'll get no argument from me more money should be paid to younger players, the competitive balance rules aren't going anywhere and they shouldn't. None of the 4 major sports have more competitive balance than baseball. All teams in baseball need to rebuild from time to time.

[bizaff]

 

I disagree with so much here, I might need to write an article....

Owners will make money no matter what, the question is why so many care about greedy players, but don't seem to mind owners making money with no risk at all. Mind. Boggling.

 

The owners are taking pretty much all of the risk.  It sure doesn't seem like much of a risk based on how revenues have been increasing over the last couple of decades, but really they're the ones in for hundreds of millions of dollars.  If people decide to stop watching (which they probably won't.. but they could), how much would owners lose?

 

If anyone really ISN'T taking a financial risk, it's the players. 

 

That being said, I would still like to see more money go to non-owners, specifically minor leaguers and other staff.  Not sure how to deal with how much players should get.  I do scratch my head when someone makes $30MM a year playing baseball and wonder if that's right. 

 

I suppose that's what the CBAs tend to even out over the long term.

 

For all the metrics that baseball operations are digging into, I'd be very interested to see the metrics on business side - how to advertise, how much to spend on players, how much to charge for a beer.. what drives the baseball decisions?  Maximizing profit over the long term?

[flpmagikat]

I guess just to add my two cents, and have people more knowledgable than I refute or counter my beliefs, but I think minor leaguers should make a lot more money. Im not really worried about guys like mauer or now machado and harper making whatever ridiculous millions they make. They deserve it in my opinion, but it is more important to guarantee some more to the players just starting out, and not just in mlb and the fact they have basic control over a player for those 6 years. I think minor league players should be making close to the mlb minimum, maybe like $100,000 for A, 200 for double a, something like that. these guys are often time forgoing college or whatever else might help them later in life, and obviously most don't even get a cup of coffee. the teams are all making enough to pay like, 10-15 mil for these guys. that is the biggest issue in my book.