Is baseball headed for a disastrous strike?
Are baseball's owners trying to break the players union or destroy free agency? It's hard to know what else to conclude after a languid off-season that has been about as exciting as a taped deposition. Two dynamic, 26-year-old star free agents — Bryce Harper and Manny Machado — remain mysteriously unsigned deep into February, along with dozens of other established veterans. Overall, players are likely to see the second consecutive reduction in their aggregate salaries, and those who grumbled anonymously last offseason are being more vocal this time around, with St. Louis Cardinals pitcher Adam Wainwright musing about a mid-season player walkout and Astros ace Justin Verlander launching tirades about it on Twitter.
What's going on?
If you ask the owners, they would tell you that the lack of interest in this year's free agents is driven by changes that are out of their hands. The average age of MLB players has plummeted in recent years, as more and more careers seem to stall out around age 30 or 31. Steroids and performance-enhancing drugs contributed to a late-1990s and early 2000s boomlet for 30-something stars, but the ensuing crackdown has inadvertently chipped away at the economic basis of free agency. Younger players are providing more value and careers are ending earlier, taking free agent paydays with them.
With teams employing sophisticated data analysis designed to maximize the value of every dollar spent on player salaries, the market for a player like 30-year-old free agent third baseman Mike Moustakas has just naturally disappeared. Fifteen years ago, Moustakas might have had five good years in front of him — today, it's barely even money that he'll be any good this year. That's why he was just forced to crawl back to the Milwaukee Brewers on a one-year contract.
Do you want us to waste money on players that we know aren't going to earn it, ask the owners?
But the players aren't buying it. They believe that the owners are colluding with each other, agreeing not to go beyond certain years or dollar amounts with free agent players, and forcing them to sign for much less money than they could have gotten absent secret collaboration. It's not wild-eyed conspiracy-mongering either. The owners did precisely this thing during the 1985-1987 off-seasons and eventually had to pay a huge, $280 million settlement to the players.
Whether they are colluding this year is impossible to know with the information available, but there is no question that the icy free agent market is having ripple effects on younger players. Last week star pitchers Luis Severino of the Yankees and Aaron Nola of the Phillies both signed contract extensions buying out their arbitration years, for annual dollar amounts that are far below their near-term value to the teams, a sign that players are getting panicky about their free agent prospects.
This off-season's frustration has been years in the making. Over the past decade, many clubs "tanked" — stripping down the major league roster to maximize losing on purpose and guarantee future high draft picks. While this is a rational response to the sport's underlying incentive structure and paid off handsomely for teams like the Kansas City Royals and Houston Astros, it also means that a number of teams, including rich ones like the Phillies and Cubs, spent years raking in cash and then not spending it on player salaries at all.
With perhaps half the teams in baseball not trying seriously to compete in any given year, the market for any given class of free agents has gotten smaller and smaller. It's why the players want to either establish a salary "floor" — requiring teams to spend a minimum amount of money on major league salaries, punish tanking organizations by lowering their draft position, or to reduce the years of service time required to gain free agency in the first place.
These forces are now clearly on a collision course that might result in a work stoppage. The last work stoppage in baseball was the 1994-1995 player strike, which ruinously wiped out the 1994 postseason after owners insisted on imposing a salary cap in any new labor agreement. The players took the product with them and forced the owners to capitulate. But the cost was high. Total attendance dropped by 10 million between 1993 and 1996, as people livid over the cancellation of the playoffs promised never to return.
Yet since then, the sport has enjoyed 24 years of relative peace and is awash in cash. Last year baseball grossed $10.3 billion, but spent just over $4.5 billion on player salaries, a 4 percent decline from 2017. Since the turn of the new century, every single team in baseball has made a playoff appearance, and 13 different teams have won the World Series. It's a record of parity unmatched by any of the other three North American sports. In the NBA, 15 of the 19 championships this century have been won by just four teams — the Spurs, Lakers, Warriors and Heat. Not fun.
It is therefore not at all clear why, if everyone is making money, the owners would choose once again to plunge the sport into a period of uncertainty and strife. There is no obvious rift between small and big market clubs. And it is, ironically, the owners' own analytic savvy that has probably led to the decline in attendance from a high of nearly 80 million in 2007 to just under 70 million last year.
The glut of intentional losers is clearly bad for gate revenue. The tanking craze may have wielded championships for the long-suffering Cubs, among others, but no one wants to spend $200 taking the family to see a 58-win team even in baseball-crazy markets. And in some cities, the fans just aren't coming back. Instead of sitting down with the players and addressing this problem, owners instead see an opportunity to break the 43-year-long grip that the players union and its signature achievement of unrestricted free agency hold over the sport.
Baseball free agency dates only to 1974, when a dispute between Oakland Athletics owner Charlie Finley and star pitcher Catfish Hunter resulted in the latter being granted free agency by an arbitrator. Prior to that time, baseball clubs ruthlessly wielded the "reserve clause," which guaranteed team control over players for their entire careers. Subsequent negotiations between the union and ownership have been about the terms of free agency, rather than the practice itself. And for the most part, free agency has served the sport well — it guarantees news coverage and excitement for baseball in an off-season that would otherwise be dominated by the other three sports, and gives uncompetitive clubs the option of going on a spending spree designed to yield immediate success. Most of all, it serves as a kind of reward for the decade of indentured servitude players owe the teams that draft or sign them.
The current crisis is therefore more dangerous than a bridgeable disagreement over salary caps or minimum compensation. If the owners are determined to obliterate free agency as it is practiced by freezing out dozens of players every offseason, it will threaten the very basis of the peace between owners and players.
The terms of that relationship involve a shot at making crazytown money if players defy very long odds to become big-league mainstays. Most aspiring major leaguers in the sports' sprawling seven-level minor league system have basically no hope of ever making The Show — they are there only to provide spirited competition to the few players who will actually make it. The overwhelming majority of people who play baseball professionally, including players from Latin America who are badly exploited, make basically zero dollars at it even though they serve a critical role in the industry, because the owners can't even be bothered to pay minimum wage to minor leaguers. In other words, the existing structure is already incredibly beneficial for owners.
Baseball's owners really should just be grateful that the MLBPA doesn't care at all about the plight of minor leaguers. Yet baseball's owners have always looked yearningly over at their NFL brethren, who dole out non-guaranteed contracts to players whose careers last about seven minutes before they limp off the field half dead from blunt force trauma. Baseball owners wouldn't dream of locking the players out, as they do in the other three sports, because the players' union is a legitimately powerful and feared organization.
What if the owners are using light collusion to undermine free agency and weaken the union without completely destroying them? They don't want to stage a Reagan versus the Air Traffic Controllers moment, but rather to warp the incentives of free agency so badly as to effectively end it. Knowing there was no big payday coming for most free agents, all but the very best players would be inclined to sign long extensions with the teams that developed them, covering most if not all of their productive years.
Small market teams could indefinitely keep franchise players who would otherwise have walked away to the highest bidder. And the sport's behemoths, the Yankees and Dodgers and Red Sox, could still throw money at the handful of free agents deemed young and valuable enough to spring for. Everybody on the ownership side wins, and as has been the case for most of baseball's long history, the players will get shafted.
A midseason walkout is unlikely, but these dynamics are setting the sport up for a major confrontation when the current labor agreement expires at the end of the 2021 season. As for this offseason, Harper and Machado will find homes, perhaps before you even finish this article. But the players are very angry, the fans are bored, and the collection of self-interested fat cats who run the sport should start paying closer attention to the discontent they are creating.