Wednesday, January 17, 2018

The Economics of Baseball

Jeff Passan writes an excellent article on the state of mind of the players, the union, the owners, and the league office in what has been the coldest hot-stove season since the 1980s collusion. There are a number of excellent ideas in the piece:

“I’m just not sure that the structure that’s been in place for all of these years makes sense anymore,” one union official said. “Now, whether anybody is prepared to blow that up is a completely different question.”

“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?”

My desire for universal free agency looks better all the time.

On the last collective bargaining agreement process:

During the negotiations leading to the 2016 basic agreement that governs baseball, officials at MLB left bargaining stupefied almost on a daily basis. Something had changed at the MLBPA, and the league couldn’t help but beam at its good fortune: The core principle that for decades guided the union no longer seemed a priority.

“It was like they didn’t care about money anymore,” one league official said.

Though something of an oversimplification, there was more than a kernel of truth to it. Meaningful negotiating time was spent on issues the league happily accepted in exchange for stronger financial positions. The players wanted a chef in the clubhouse. The players wanted two seats apiece on spring training buses. The players wanted more off-days. Lifestyle and amenities took precedent more than ever.

There was a time when commentators, especially retired players, thought that records would not be broken. Their reasoning was that players were making so much money, there would be no reason to stay in the majors long enough to break the records. I never took that argument seriously. Professional athletes are hyper competitive. They will stay in the game until no one wants them. Very few players actually retire. In the end, no one wants them anymore.

Making a lot of money is part of that competitiveness. It’s often not enough to be the best; players seem to have a need to set records in signing contracts to validate their greatness. It would appear that the union thought they could have their chef and eat his food, too.

This is what baseball teams in 2018 do: They push, bend, cajole, twist and massage every last rule. They cheat in Latin America. They hack one another. They fail because it might later give them a better chance to win. They operate with the ruthlessness of corporate raiders. And if they will go to incredible lengths in every other corner of the baseball world, why wouldn’t they do the same in free agency?

The inefficiency of the operation and the expectation that they must spend money there offends their sensibilities. And they’re not wrong. Players’ best years come in their 20s. Most free agents, then, are asking teams to guarantee them large sums of money for multiple years based on the performance of years they’re statistically unlikely to repeat. It’s not impossible, sometimes not even improbable, for them to do so. It’s just a risk, and as teams weigh the risk against that of seeking the same production from low-cost players they have developed, it’s one they’re less and less willing to take.

As I read the whole piece, it became clear to me that big change from the early days of the union is that the team management is now smarter than the union management. In the earliest Baseball Abstracts I read, Bill James noted that players peaked at seasonal age 27. Yet in the 1990s I would hear that players peaked at 30. A great many owners didn’t believe they were buying a decline when they paid for a free agent. Now any GM worth his salt knows how to value a players based on age and previous performance.

Toward the end of the article, there’s this:

The trends show no sign of abating. Teams love this market. One assistant GM interested in center fielder Lorenzo Cain thought about the possibility of offering him a multiyear deal. “I’d rather just give him one year at $24 million,” he said, and maybe he didn’t realize that the one-year deal was a hallmark of collusion, and maybe he did.

And there’s the rub. Free agents want long-term contracts. Teams are not willing to pay big money for those. They are willing to pay big money short term. For the player, that means negotiating again in a short time frame, moving again, etc. The players may be better off financially, however. As long as they keep playing well, they’ll get big contracts.

As I’ve written before, throw out the rules. Make a simple system where everyone is a free agent all the time. Maybe win a concession that at least 50% of revenue goes to players, with any underage made up with dynamic pay.

Make the CBA less complicated, and it will be tougher to game the system. Let young players earn what they are worth. Convince players that short term deals might be better for the whole system. It won’t be easy.



from baseballmusings.com http://ift.tt/2DG6fm7

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