The Other Alleged Collusion Scandal: Baseball’s Unemployed Free Agents

Major management-labor troubles are brewing below the surface in Major League Baseball. With the 2018 Spring Training camps opening in a few days, over a hundred free agents remain unsigned, including many of the best players on the market. The Players Association is preparing to open a special training camp just for all the unsigned players, and shouting foul. They are alleging illegal collusion among the team owners to keep salaries down.

A lack of signings on this scale has never happened before, and agents and their player clients are increasingly hinting that dark forces are afoot. Fanning the flames are sportswriters and commentators, whose left-wing sympathies are only slightly less dominant than in the rest of the journalism field. The content on MLB’s own radio station on satellite radio has become an almost unbroken rant about how unfair it is that the players aren’t getting “what they have worked so hard for.” The theory appears to be that employees decide how much they are worth, and their self-serving assessments shouldn’t be challenged.

It is not that many of the free agents haven’t offers for their services on the table. It’s not that they don’t have multiple year contracts that will pay them millions of dollars on the table. They do, and thus  many of the unsigned players can substantially fix the bitter impasse by saying “yes.” Oddly, they are finding that public opinion is not substantially in their corner as they choose to bitch instead.

The poster boy for this controversy is, as luck would have it, a player who is sought by my very own Boston Red Sox. He is J.D. Martinez, a slugging outfielder just entering his thirties who had the best year of his life in 2017. Naturally, he wants a large, multi-year contract that will leave him set for life; this is his big and probably only shot. He also has the most aggressive, successful and, in my view, unethical of sports agents,  Scott Boras, who began the free agent auction season by announcing that J.D. would be seeking a contract worth 250 million dollars or more.

The problem is that not a lot of teams can afford such a contract, and those that can are, finally, wising up. Multiple year contracts have a way of blowing up in a team’s face. Analytics are now widely used to allow teams to make intelligent projections regarding just how much a player will add in value and wins. This year, most of the richest clubs are not hurting for home run hitters or outfielders, which leaves the Red Sox, who despite winning their division last year for the second year in a row didn’t hit as many homers in doing so as the spoiled Boston fans are used to, as the most obvious landing place for Martinez. Sure enough,  the team offered Martinez a five year deal reputed to be worth 125 million bucks. No other team has offered anything close, and it is unlikely that any team will. Boras and J.D. still say it’s not enough. They want a sixth year, and more cash. The Red Sox see no reason to bid against themselves, and have said, in essence., ‘There’s our offer. Take it or leave it.’  Somehow the baseball writers and the player see Boston as the villain in all this.

As George Will likes to say, “Well.”

The world doesn’t work like that, and never has. I heard one of the MLB mouths, a former and unemployed general manager (and now we know why), go on an extended rant about how it was outrageous and unfair that players like Martinez “who have worked so hard to earn a big contract” weren’t getting it, “it” being defined as their fondest dreams. To begin with, for a player like Martinez, his complaint is about numbers and ego, not reality or genuine need.  According to records, he has already made at least 22,000,000 dollars in his career. Unless he has a drug habit or collects sold gold cars, he’s already set for life. So are his grandchildren yet conceived. All of the usual arguments about how athletes have short careers and how a player is obligated to take care of his family are disingenuous at this point. Martinez doesn’t have to work another day in his life right now. He also gets a guaranteed six-figure pension for the rest of his life once he retires. It’s good to be a baseball player.

What, in terms of quality of life, is the difference to J.D. between a five-year $125, 000,000 contract and, say, a six-year $150, 000,000 contract? Nothing. Absolutely nothing. Now, the difference means a lot more to his agent, but that is, or should be irrelevant. The difference also mean a lot to the Red Sox and other players. Money they have to pay to J.D. is money they can’t use to improve the club elsewhere. It is bad business and incompetent management to pay any player millions more just because he has his little heart set on more.

The same MLB radio host argued last week that anyone who objected to J.D. or the other players getting the salaries they covet are just plain jealous. Balderdash. (A Facebook friend—a teacher— snapped when I used that word in an online debate last week, saying that it was rude, arrogant and cruel. I replied that I regretted using the word, and that I ought to have used “Bullshit.”) I don’t begrudge players the millions they earn: they have unique talents, they are the main product in a multi-billion dollar industry, I love baseball beyond all reason, and I believe in capitalism. I just know that placing money above all other values is stupid for anyone, and that players are being irrational when they behave and talk like Martinez, who is now saying that he doesn’t want to sign with Boston because the team has been “inflexible”.

Teams learn slowly, but they learn. In the graphic above are the six largest long-term contracts signed by free agent players in recent years From left to right, the results have been BUST, BUST, BUST, not too bad (Cano), BUST, and BUST.

Yesterday, I heard a lesser player, who has signed a paltry contract for just a couple million dollars to be a reserve outfielder with the Pirates, say that his fellow players are perplexed because the practice used to be that you would be paid by teams according to what you had done in past seasons, and suddenly teams are basing salaries in what you are likely to do in the future.

Imagine that!

Bill James, the baseball stats pioneer who devised the concept of signature significance that I often cite here, wrote years ago that a player’s career was like a watermelon. His first team that controlled him in his early and peak playing days before the age of thirty will pay a reasonable price for the heart of the melon. Then that team, or succeeding teams via free agency, must pay larger salary dollars, based on that now-consumed fruit, for the less tasty fruit and the rind that has been left behind. (James, not coincidentally, works for the Red Sox.) He posited in that essay that this makes no sense. Why it took so long for baseball management to catch up, I do not know.

Martinez is 30. Virtually all players decline after that age, and all but the best and luckiest are on their way out by 34 or earlier. The Boston contract offer for J.D. reflects the market, projections, and reality, and the players and their pro-labor shills in the press are calling unethical what is neither unfair nor unreasonable.

The Red Sox are nicer than I am. I would tell J.D. that his offer will be reduced by $250,000 every day he doesn’t sign, and will disappear entirely in a week.

It’s called, appropriately enough, “hardball.”

45 thoughts on “The Other Alleged Collusion Scandal: Baseball’s Unemployed Free Agents

  1. Anyone who thinks long term contracts for aging ballplayers are peachy keen, I have two words: “Albert” and “Pujols.” Has to be the most catastrophic contract in the history of Major League Baseball.

    • Martinez had to be one of the best rent-a-player trades last year for the Diamondbacks in the history of MLB. Too bad they can’t afford to keep him. Maybe now that he and Scott Boras are hurt by the Bosox, they will be nice to the Diamondbacks and he’ll sign with them for an affordable amount.


  2. I feel extra Lucky to be residing in a relatively warm climate, where the options for watching baseball are more abundant, over a longer season – two seasons per year, actually, when talking about the amateurs. If the MLB players walk, so will I. I can’t promise I’ll come back, either. That’ll depend on the ticket prices, and on my personal economic State of the Pocketbook. Plus, my health and fitness have aged into that delightful phase of life I can call “Assisting with Player Development of Grandchildren.”

      • The fact that this argument is now being conducted by the union’s de facto spokespeople in the sports journalist community is a measure of how weak the MLBPA knows its negotiating position to be.

          • Reminds me of Reagan and the air traffic controller strike.

            The ‘labor’ side was sunk the minute a whiny, pampered white lady with rhinestone glasses was interviewed in from of her upscale house, with her kids swimming in her in ground pool, and the two nice SUVs in the driveway. She went on about they just did not get paid enough, and how hard it was to make it on her husband’s income…

            This did not play well in front of a nation that had just endured the economically disastrous Carter years.

            Just like the Baseball players sound today.

    • No sport has ever tried harder to drive its fans away than baseball. Interleague play, the strike, steroids, if the game wasn’t so gosh darn beautiful and nearly perfect in every way it would have no fans left.

  3. One note: six of the 103 unsigned free agents turned down a “qualifying offer” from their club, a one year contract for about 18 million dollars. Needless to say, I have no sympathy for any of these.

  4. I don’t really care about fights between millionaires as a general rule. But why do these discussions always focus on the players’ demands? Obviously, the salary demands seem high to me, but that also suggests that the team owners/franchises ALSO must be making a lot of money. So what are the real economics at play here? Explain it to me, and you can use your beloved Red Sox as an example. How much does the franchise make each year and how much does it pay its players each year? Perhaps $250M isn’t an absurd demand — I need to know the context.

    • It’s a complex question to be sure. A while back, the player salaries were about 53% of total revenue; now its about 40% The question of how much the teams should pay for players generally is answered by the terms of the Basic Agreement, which apparently has to be tweaked. A player like Martinez individually is a different story. There are ways to calculate the monetary value of a particular player’s season in a particular year with a particular team: winning teams make more money than non-winning teams, though how much depends on the team, its market, its TV revenues, etc. A team like the Red Sox, who have a young rooster of stars and who have won two titles in a row, can reasonably reason that JD even having the best season of his life again (2017) won’t be worth the pay-out, and definitely won’t be worth the risk that he won’t be that good again over the life of the deal. The best seasons of MVP level players are typically worth 5-8 games to a team at most measured against a generic MLB player in the same year, but even that isn’t quite right in an individual case where the “replacement” won’t be average, but better than average. And as explained in “Moneyball”, there are cheaper ways of picking up the same benefits of one superstar by unbundling. Also relevant is Sauce Bernaise Syndrome: the Red Sox are still sick over paying Pablo Sandoval over 20 million a year over multiple years and watching him be, in turn, fat, injured, and hopelessly lousy in the field and at bat. Finally they released him, so they are paying him all that money to play for the Giants. Sandoval was Martinez’s age…a little younger, actually…when tehn contract was signed. So risks have to be factored in, in the context of the whole team.

      To really complicate things, player salaries are treated as depreciable assets.

      The Red Sox would be willing to offer somewhat more if more teams were competing for his services. None are. Like any business, baseball teams are not being unreasonable to seek the lowest costs they need to achieve the same revenue, as long as they maintain quality. Baseball is a business, but also more than a business: Red Sox fans are used to management that “spares no expense” for the fan experience and the city. They are also used to, now, the highest ticket prices in baseball, for the privilege of seeing games in Fenway Park.

    • Other than in a Communist country, why should what the enterprise is making, rather than the market value of employees, determine what the employees are paid? I’ve never understood these labor agreements in sports that require the owners to make no more than an amount equal to what the employees are paid. I guess we have Marvin Miller to thank for that. And Karl Marx.

      • Baseball management engaged in such obvious labor abuse for so long, underpaying players and restricting their ability to seek other places to play by use of the “Reserve Clause,” which bound players to teams for life, that it begins every such dispute with the presumption of villainy and greed. If you wanted to find an example of business owners acting in ways that would make Lenin and Marx point and say, “See! See!”, it would be hard to find a more disturbing example than how teams treated players before the Reserve Clause was killed by arbitrator Peter Seitz in 1974. We talk about the World Series being fixed in 1919, but seldom about how the Black Sox players were being cheated and exploited by their team owner, leading directly to their openness to bribes.

      • Of course it matters. I am at attorney, but over the last few years I have moved into a 100% business generation mode. Sometimes I do a little light consulting, but my primary job is to bring clients into my company and then other people will do the actual work. For my services, I get paid a base salary plus a commission on every single invoice that goes out the door that I generated. The more money my company makes from my work, the more money I take home. If they decided to change that agreement, I would go elsewhere — because the financial health of the company completely depends on me and others in the same role as me at my company. I am the face of the company — my role matters.

        Similarly, a baseball player (or any other entertainer) is bringing huge value to his organization because of his or her unique set of skills. This is not factory, secretarial, or other work that can be done by any trained staff — these are jobs that require skill/specialized training, personality/charisma, dedication — the reason ticket sales, merchandise, etc. (again, I don’t pretend to know the economics of baseball) is because fans are spending money to see those specific individuals. The brand would not be as lucrative without them. So, again, while I think $250 is an absurd amount of money, perhaps it isn’t if the math results in the organization making an additional $400 million because of that individual player.

        What is interesting about Jack’s blog above is that there might be collusion afoot. If these players really are worth $250 M but the organizations have a gentlemen’s agreement NOT to negotiate with any of them to increase profits across the board, then there is a problem. And if they are doing this, I hope they have to pay big — probably as a result of a settlement.

        • “Similarly, a baseball player (or any other entertainer) is bringing huge value to his organization because of his or her unique set of skills”

          I think a big piece of the new analytics is that most major league players aren’t as unique as is usually assumed. There has always been a strong prejudice that the major leagues are qualitatively different from the leagues below, and that a young player could fail just because he didn’t have “it.” Young players would be consigned to the minors after failing in very brief trials, while “proven” veterans would hang on for years in the expectation they’d start hitting again sometime. Ironically, the main player at issue here, J.D. Martinez, is exactly this type of player. A fine minor league hitter, he didn’t hit in his early major league opportunities and was eventually released. In earlier times, he would have been labelled a minor league hitter and been buried for several years, but instead he was rapidly promoted by his new team and has proved to be something of a hitting star.

          • LS, J.D. Martinez was more than something a of hitting star for the months he was in Arizona. He was a home run and RBI machine. I’ve never seen anything like it. The Diamondbacks needed a clutch hit, he’d produce it. It was uncanny. I have no idea what he’s worth going forward but he put on an incredible display of hitting last year after he left the Tigers.

        • Sparty, you’re paid on what you produce, not on some arbitrary portion of the total take of the over all organization. Which is as it should be? If you don’t like your deal, you go somewhere else. Would you want to be put into a pool with the other sales people?

          If the MLB owners were proven to be colluding to keep salaries down, there would doubtless be an NLRB case, plus congress would threaten to take away MLB’s anti-trust exemption. (Since MLB is a monopoly.)

          My point was simply that the notion that NBA players or NFL players or MLB players MUST get in salaries an amount equal to some portion of the owners turnover is pretty darned strange.

          And yes, professional sports team owners have a long history of exploiting their employees. But to a certain extent, I wonder who is exploiting whom these days. Owners take on a fair amount of risk in owning and operating a team. Sure they foist much of that risk onto local taxpayers, etc. But still, should a guy who happens to be able to hit a major league fastball and curve ball be entitled to gazillions of dollars because that would be “fair” since an owner is making gazillions of dollars? Some teams or wildly profitable while others (arguably) lose money. Does an owner have to make his players partners? Would players want to be partners?

          “I never treat my employees like partners. You start treating employees like partners, they start acting like partners.” –Will Rogers.

        • No single player, even Babe Ruth, brought in that kind of value. Baseball is not like basketball. There are no franchise making players. The number of times when a so-called superstar—and JD isn’t that, he’s a very good, often injured player who had one great season—has left a team and it improved are legion. The p[layers like the public to share in the misconception. The PLAYERS as a group are essential, but few players individually are. The consensus best player in the game is Mike Trout. His team has made the play-offs once since he joined the squad. That’s not atypical. The best pitcher over that same period is Clayton Kershaw of the Dodgers. His team has mane it to one World Series, which they lost.

          The evidence of MLB collusion is like the evidence that the Trump campaign colluded with Russia, only weaker. An interest group wants to blame others for a result that displeases them. When Boras mad his 250 million dollar claim, everyone, and I mean everyone, said, “For JD? That’s ridiculous.” Including Boston fans, who usually take the position of, “Hey, pay the man, it’s not our money!”

          I don’t think he’s worth $125 million to this team. I think they will win 100 games without him or with him.

        • One of the reasons distrust and bad blood between the owners and players has historically been so high in MLB is that a while back the owners were, in fact, proven to have engaged in that sort of collusion against the players.

          Now I would certainly figure that the owners (who are not stupid) would have learned that particular lesson. I think they have looked at the prior 7, 8, 9, 10 year contracts and noticed how few worked out for the teams involved, and they have learned that lesson as well.

          The Angels are a strange case — they’ve signed a number of really high quality players on big contracts but the Angels somehow keep flaming out when it comes to winning as a team. Maybe they are the anti-Yankees.

          The market for ace pitchers, on the other hand, is different. There are never enough to go around and they keep getting hurt. Just in the past day or two Yu Darvish signed a six year contract with the Cubs for some big bucks. That may help loosen up the market.

    • Forbes Magazine usually does a feature each year about the economics of baseball franchises. Red Sox revenues were estimated at $434 million in 2017, with operating profit of $78.6 million. Major League payroll was about $179 million, or just over $7 million per roster spot. The franchise was valued at about $2.7 billion.

      Major league owners were sanctioned in the middle 1980’s for colluding against the players in violation of the prevailing labor agreement. Damages were eventually settled for about $280 million. There was another claim and settlement in the early 2000s, for the relatively small amount of $12 million.

      There are a lot of threads contributing to the current standoff. A major one arises from the latest collective bargaining agreement. The agreement has provided for a “luxury tax” on payrolls over a certain amount (c. $200 million, or $8 million per player). The new agreement has an innovation, in that the tax increases if a team exceeds the limit several years in a row. Several major free agents will probably be available a year from now, and there is thinking that traditionally high spending teams may be trying to stay under the limit this year so that they can pay a lower rate next year.

      Under their collective bargaining agreement, the players and owners have relentlessly and legally colluded against anyone they can. Veteran players have arranged so that younger ones’ salaries are virtually fixed, minor leaguers are paid tiny salaries (and are suing under minimum wage laws), caps have been placed on how much can be bid for amateur players just coming into the system. Part of what’s happening this offseason is a realization by management that “well-paid” is a synonym for “expensive,” and now they’re looking around for something cheaper that’ll serve just as well.

      • Another good analysis. And the new analytics allow teams to look past traditional stats and find ways that really are just as effective and cheaper.

        It doesn’t help that players, as a group, just aren’t very bright.

        • Yeah, and the term “analytics” has changed meanings over the last five years or so. It used to be a focus on the aging curve, on-base percentage, “buy low, sell high,” and the like. Now it’s pitch-by-pitch data, not just the speed of a pitch but its movement, the exit velocity of batted balls. It’s given management much more confidence in deciding who can play, who’s just slumping, and who’s done.

  5. I first read about this a few days ago in the WSJ. They focused on the competitive balance or luxury tax. I had some thoughts then, and George Will has nicely captured them and more (“32 is the new 36” in the post- PED era). And you are the last word in tracking Boras’ conflict of interest.

    What I would add is that this year there’s a glut of older players on the free agent market with big price tags, possessing so-so talent, looking to cover very long periods – end of life cycles, in many cases. Seven is the magic number. You point out there have been a number of busts – 5 of 6 players identified, though I would add Cano and make it total. I have my doubts about the reliance on baseball analytics, but about market inefficiencies, none.

    The owners are passing on this year’s talent with good reason. The players will never deliver on their contracts for the amount money and time invested. They can trade out for draft picks or hold an end on season fire sale a few years and shop for some franchise picks and save some money for the future. And next year’s crop of free agents looks to be sensational. Though we forget it like the weather, whose extremes are predictable, there are 2 seasons in baseball (or any sport): the long one and the playoffs. The latter is the only one that matters for fans. For owners revenue during the regular 162 games comes first. But for the rest of us, one championship is worth more than 5 or 10 winning seasons or playoff appearances which go down in flames.

    Putting Boras aside for the moment, a lot, if not most of the blame must be assigned to the largely uniformed media who put pressure on owners to “lock up players” and even management early, late, and often. Where are they when these ultimately fail? Pointing fingers elsewhere.

    Examining Boras’ Wikipedia entry I was struck by the sheer number players he represents, the number of nonentities and washed-up talent who he helped secure fantastically lucrative contracts, and the number of players who have left him. Probably the players quite rightly recognized that Boras’ interests trumped theirs. Also of note: he holds a doctorate of pharmacy as well as a law degree. So you can be assured he had an informed look at baseball’s PED problem and how to advise clients on ways around it. You’ll notice a few prominent players from the steroid era on his roster. Many of them received the highest contracts ever handed out.

    From my perspective a look to the past will provide a case study the problems with free agents, along with his representation, and big multi-year contracts: Jason Werth. He was overpriced then at 20 million per for 7 years & never delivered. Going in, everyone knew he was essentially a platooned outfielder, with an attitude, and a history of injury, who had a breakout year. And you can check his stats before and after – fair to middling & often injured. The argument that was used in his favor was that he would bring in more talented players and show the baseball world that the Nationals were serious. And he was a veteran player who be a good clubhouse presence. (Yeah, and I was there when he hit the walk-off HR against St. Louis, a 12 or 13 pitch AB that had to be one of my career baseball highlights as a fan. But we know how that series ended.) Really? Wouldn’t big fat, multi-year contracts to these other players demonstrate this better? And where was that veteran influence during each of the playoffs that the Nationals failed to advance beyond the NLDS?

    If Mr. Werth hasn’t paid off for the Nationals, Mr. Boras has been a disaster for baseball. With 175 “clients” he’s a controlling presence in MLB and their ever escalating salaries. Many are currently unsigned free agents. You can call Mr. Boras many things: he’s kind of a part owner and general manager from the individual team’s standpoint and kind of a commissioner, labor leader, and media mogul in the realm of PR from the players’. But nowhere is he a representative of the fan. He is a walking, talking conflict of interest. He knows the fine art of manipulation. If there’s an argument to be made for collusion or a strike he will make it, guaranteed. If baseball wants to cap anything, they should cap the number of clients an agent can accept per team, per league. Mr. Boras knows how to exploit leverage, but this time it’s not on his side.

  6. “The Players Association is preparing to open a special training camp just for all the unsigned players, and shouting foul. They are alleging illegal collusion among the team owners to keep salaries down.

    A lack of signings on this scale has never happened before, and agents and their player clients are increasingly hinting that dark forces are afoot.”

    What market forces keep new teams from forming? Is there a league cap on total # of teams?

    This sounds to me like there being a need for a market adjustment that expands the # of teams, and if everyone were cool about it and recognized how markets work, they’d simultaneously recognize that hey, your salary may go down a little, but you’re gonna get to play and still get paid nicely.

    Or, is the glut of unsigned players actually manifesting in a shortage on team rosters?

    • A former player made exactly this argument on MLB radio over the weekend. An argument can be made that the addition of international players has meant that there are MLB calibre players and no place for them to play. There is no doubt the qualify of play is much, much higher than even 30 years ago. Adding two teams would make sense, and coincidentally would provide jobs for almost exactly the number of unsigned players who realistically could be signed, which is around 50. MLB’s problem is that several teams need to be moved, because they are not doing well: both Florida teams most of all. Baseball is exempt from antitrust laws, believe it or not, because Harry Blackmun wrote a majority SCOTUS opinion that ruled it wasn’t really a business.

      Harry, as you know, also wrote Roe v. Wade.

    • Part of the problem is markets – there’s no longer big cities to go into. San Antonio is often proposed, but it would be a smallish market. The most rational expansion now would probably be additional franchises in New York and Los Angeles, but there are pretty powerful teams that wouldn’t want to share their territory.

      • Although the current cities with teams contains a lot of anomalies. Vegas, Charlotte, Indianapolis, San Bernadino, Sacramento and Portland..and San Antonio…have larger or similar markets than such traditional MLB sites as Cincinnati, Pittsburgh, and Kansas City. Then there is Mexico City…

  7. Seems to me that the players – or a smart agent – need (needed) there own analytics team, at least when they renegotiated the collective agreement in late 2016.

    Baseball, like many industries, is in a constant state of flux. The rules fixed at one time won’t always align with current realities as players and management adjust to get the most out of those rules. By rules here, I means any which could apply to on field or off field activities.

    Baseball has done a good job of making some changes to on field rules (e.g. outs at second base and home plate to reduce injuries), made some that many don’t like (damn video replays destroy the flow of the game) and are avoiding others (balls and strikes still called by home plate umps when video is good enough for everything else – why?).

    Off the field, they are slower to change, especially when things swing in the favor of owners and they is a collective agreement with a long term in place. The current arrangement penalizes younger players with low entry and initial contracts (minimum pay was just over $500K in 2017, which is extremely low for a pro sports league) and free agency is unobtainable for 6 years. In the past, good performance was later rewarded and, in many cases, over rewarded. It appears that a transition in pay arrangements is needed to align with the new realities. Unfortunately for the players the current collective agreement doesn’t expire until 2021.

  8. Man, the commentary here is better, much, much better, than on any medial outlet I’ve ever run across. Jack, you should consider running an MLB blog and take a bunch of these guys along with you.

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