One reporter questions baseball’s economic system

The column published Tuesday by Jeff Passan of Yahoo Sports was interesting and thought-provoking. It was about the economic system in place in baseball due to the brutally slow-to-move free agent market right now in the game.

Click here to read the column. It is worth your time. I applaud the effort, research and time that went into this, but I will say that I don’t see the system as broken or in need of a major overhaul.

To me, baseball seems rather financially healthy with revenues in the $10 billion ballpark. Many teams are doing very well at the game and with broadcast revenues. Ratings are good throughout the sport. In recent years, former second division clubs like the Royals, Astros and Cubs have won the World Series.

But Passan presented some interesting points. He also asked this question:

“Is the foundation of the sport, a structure in place since the advent of free agency in the 1970s, still viable? Or is baseball’s economic system, its underpinning, broken?”

Passan would add: “What’s clear is the free-agent impasse represents a reckoning long in the making - one that marries shifting power in labor relations, the emergence of analytics and cookie-cutter front offices, and the willingness of teams to treat competitiveness as an option, not a priority.

“Combined, they pose the greatest threat to a quarter century of labor peace and have people at the highest level of the sport asking whether a game-changing overhaul in how baseball operates isn’t just necessary but inevitable.”

“Of course it doesn’t make sense,” a league official concurred. “We pay you the minimum for three years and arbitration for three or four years, and then you get paid more in free agency for your decline?”

This last point may be one hurting the current market as much as any. Teams seem less inclined than ever to fork over huge contracts to players whose best days may be numbered or even in their rear-view mirror. Why pay so big for past performance if they don’t believe it can be duplicated?

Scott-Boras-sidebar.jpgPassan writes of agent Scott Boras, whose list of current free agent clients includes Jake Arrieta, J.D. Martinez and Eric Hosmer: “Of all the agents in the game, Boras is the likeliest to loiter in the market until the best deal reveals itself. That fact does not capture the reality of his nine-figure free-agent contracts. He has negotiated 13. Eight came before January. And not once has he taken multiple high-end free agents into a new year, let alone four.”

My take is that those previous eight deals were not signed in a market similar to this one, I would bet. Boras is in no hurry, and no doubt his client base that includes some of the current top free agents is yet another reason the market has been slow.

It was around this time in 2016 that a Boras client, the Orioles’ Chris Davis, agreed to a seven-year deal worth $161 million. Zach Britton, not yet a free agent, is a Boras client, as are O’s top draft picks DJ Stewart and DL Hall.

To me, the current slow market is about to heat up. Yes, finally. The slowness is not about any attempt at collusion as much as it is a confluence of events. Those include Boras not being in any hurry to get deals done. They include big spendors like the Yankees and Dodgers trying to get under the luxury tax. They want to reset their tax before next winter’s free agent class that could include Manny Machado, Bryce Harper and maybe Clayton Kershaw. And clubs are less willing to pay for previous performance. Teams are also relying more on younger, less-expensive talent than ever before. Some teams that see little chance to win in 2018 are less inclined to spend big on free agents.

All these factors are conspiring for a slow market and all these factors will not be prevalent this time next year. Just in the last two weeks we’ve heard of offers in the $140 million range for Hosmer and the $100 million range for Martinez. The big bucks are still out there.

I see the current situation in baseball as a temporary scenario. There is no need for any economic overhaul of the sport’s sytem of dispensing dollars and contracts or for a showdown between the players union and management. This too shall pass.

blog comments powered by Disqus