(Photo by KateBlueSun)
Entering this MLB offseason, the free agent class looked to have numerous free agents commanding deals in excess of $50 million and even $100 million.
On the pitching front, the group was spearheaded by Yu Darvish, Lance Lynn, Alex Cobb, and Jake Arrieta, who were asking for deals of five to seven years with average values in the $20m range. There was also a strong contingent of relievers, including Wade Davis and Greg Holland. In terms of position players, the highlights included sluggers J.D. Martinez, Eric Hosmer, Mike Moustakas, and Carlos Santana. Fast forward to now, deep into spring training, where numerous prominent free agents have either signed deals far below what was predicted or remain unsigned.
Though several have signed recently, most notably Jake Arrieta and Lance Lynn, there has been a steady drumbeat of speculation. Some players have been voicing their displeasure, alleging owner collusion. For their part, teams are saying it’s just the market.
I cannot definitely state that owner collusion did not happen. However, I find it unlikely, especially given that a combination of factors provide an explanation for the events of this offseason. I also find it unlikely because, for all the outcry, the top free agents have, for the most part, been paid. Yu Darvish got 6 years at $126 million, J.D. Martinez got 5 years at $110 million, Eric Hosmer got 8 years at $144 million… I could go on. In addition, several free agents have gotten added value in the form of numerous opt outs, like those present in the contracts of Eric Hosmer and J.D. Martinez. In a way, some free agents actually got The point is that there hasn’t been a massive drop-off in free agent spending.
Nonetheless, while most players got paid, several prominent names have not, including Alex Cobb and Greg Holland, who remain unsigned; Mike Moustakas and Lance Lynn, who took one-year deals far below their expected value; and Logan Morrison and Jay Bruce, who got far lower multi-year guarantees than they, and many others, expected. So again, why? I would attribute it to the following factors:
1. The Rise of Sabermetrics: The use of advanced statistical evaluation has become a constant around the league, leading to teams having more similar views of players. Teams know more about free agents and use advanced statistics in how they value them. One example of this effect is Lance Lynn who, although boasting a very solid ERA of 3.43, also had a FIP (fielding independent pitching) of 4.75 and only about 7 strikeouts per nine innings. The rise in peripheral statistics that can be referenced as red flags has certainly depressed the interest in certain free agents.
2. Fewer Free Agents in Their Primes: A trend has emerged, especially for small and mid-market teams, to sign young players in extensions that buy out their arbitration years as well as several years after they would have otherwise been free agents. These extensions are tradeoffs: the players receive the certainty of guaranteed money in return for foregoing free agency for several years. Thus, many players entering free agency are 30 or older, not 26 or 28. This results in older free agent classes made up of veterans past their primes. Of the top free agents, most (including Martinez, Santana, Darvish, and Arrieta) are all 30+ years old. Eric Hosmer and Mike Moustakas were the highest-valued free agents under 30. In recent years, long (5+ years), big contracts have been given to players in their early thirties who ended up being busts; see Jacoby Ellsbury (7 years/$153 million), Albert Pujols (10 years/$240 million), and Jordan Zimmerman (5 years/$110 million). Teams have learned, and thus we see some smaller values but more often shorter deals: Arrieta and Bruce got three years, Martinez five, and Lynn and Moustakas one. The one exception is Eric Hosmer (eight years), but unlike the rest, he’s just entering his prime.
3. Different positional values: As always, certain positions and skills fluctuate in value. With an overall rise in home runs, power hitters have become less valuable, and thus smaller contracts are offered to first basemen and DHs like Yonder Alonso, Lucas Duda, and Logan Morrison. Of course, J.D. Martinez was an exception here because of his slugging prowess. Although this diminishes contracts for some position players, the flip side is that there has never been a better time to be a relief pitcher not named Greg Holland. Wade Davis, Addison Reed, and Bryan Shaw (among others) raked in multiyear deals with average annual values in the $10-20 million range, a relative high for relievers.
4. A Strong Trade Market: The trade market was absolutely stacked this year and involved several big contracts. Thus, teams didn’t need to spend in free agency to address needs, and at the same time absorbed significant money via acquired contracts. For example, the traditionally big-market San Francisco Giants spent relatively little on the free agent market, but they acquired the large contracts of Andrew McCutchen and Evan Longoria. The Yankees took in Giancarlo Stanton’s massive deal, the St. Louis Cardinals traded for Marcell Ozuna rather than signing a free agent, and the Houston Astros traded for Gerrit Cole rather than shelling out for a pitcher. Why spend when there’s cheaper talent on the trade market?
5. The Luxury Tax and Next Year’s Free Agents: Most of the classic big-market teams--Boston, New York, San Francisco, Chicago--spent significant money either on free agents or trade acquisitions. Nonetheless, several teams (including the Yankees, Giants, and Dodgers) operated with the clear goal of resetting their luxury tax penalties in advance of spending heavily on a free agent class next year. The 2019 crop includes talents like Manny Machado, Bryce Harper, and Clayton Kershaw. This new dynamic means that, although there are still clear differences between big-market and small-market teams, rich teams now have to strategize their spending more than they previously did.
If the situation can be summarized in one sentence, it’s that a perfect storm of factors came together to make this offseason one of the strangest in recent history. Some of these factors are long-term and will continue to have an effect on the market, especially the rise of sabermetrics, the luxury tax, and fewer young free agents. However, several were unique, one-off events, like the Marlins’ fire sale and the lack of contenders in need of a third basemen (which hurt Mike Moustakas). Ultimately, it seems like the market reset somewhat, especially for starting pitchers and slugging first base/DH guys, but it’s also a great time to be a relief pitcher. For those of you distraught by the slow action: not to worry--even the most underpaid free agents’ salaries still register in the millions, so I think they’ll end up just fine.
(Contract figures and biographical information via Spotrac and mlbtraderumors)
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