MLB Teams Attempt to Drive Down Prices Could Drive Down Production too.
This year’s MLB off-season has been without doubt the slowest in the post-Global Financial Crisis period. As of January 12, no free agent had signed a contract longer than three years and half of the eight, 3 year deals handed out by teams have been given to relievers. A month away from Spring Training, top free agents JD Martinez, Yu Darvish, Jake Arrieta, Eric Hosmer and Mike Moustakas are all still available with almost no momentum towards signing with a new employer. In fact, the only ‘impact’ free agents to have signed, over 2 months into the off-season, are Carlos Santana, Zack Cozart and Jay Bruce.
This is without a doubt one of the most unique off-seasons in recent baseball history.
The trade market has been similarly quiet with, Giancarlo Stanton and Marcel Ozuna the only notable players to change teams. While it was originally thought that the markets for Japanese Star, Shohei Ohtani and MVP slugger, Giancarlo Stanton were responsible for the hold up it has become quite clear that this was not the case – it has been a month since those transactions were finalised and the free agent market has gained no notable momentum.
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A number of explanations continue to be raised for the lethargic free agent market. Angels GM Billy Eppler, suggested there were a number of contributing factors with this years off-season schedule high among them. Eppler felt that the GM and Winter Meetings fell at awkward points during the holiday season, perhaps interrupting the flow of negotiations between teams and players. And while there is likely multiple factors at play here – risk profiles of this year’s free agents, quality of next year’s class and the prominence of the ‘rebuild’ – the most popular explanation for the pace of this year’s market is that teams are waiting out free agents, trying to force them to panic and take smaller deals during free agency. The idea being that perhaps players will be more likely to agree to smaller contracts as the potential for starting the year unemployed increases. As Travis Sawchik wrote at Fangraphs recently:
“With each day that elapses after Jan. 1, asking prices are more likely to decline than increase.
When free agents start seeing spring-training camps open on MLB Network, players stretching and playing toss on sun-soaked fields, anxiety will increase and asking prices will drop.”
MLB teams have become increasingly aware of the inefficiency of free agent spending where, as quoted by a front office executive in the post above, “It’s not whether you will lose on a free-agent deal, it’s how much a club will lose on a free-agent deal.” Teams know they have to overpay free agents in order to acquire their services and as such, MLB rosters are featuring disproportionately more pre-arb players than in previous years.
So the idea then, is that by waiting out the free agent market and signing players late, once their asking price has dropped, teams will have to overpay these players less than earlier in the off-season. That’s fine. What they’re not accounting for however, is that by eating away at player’s preparation by preventing them from joining Spring Training, they are also potentially hurting that players value. Not only might that player have to start the year in the minor leagues to catch up on the missed innings or at-bats, missing Spring Training can have a significant adverse effect on player’s in season performance.
While, gathering actual data on this issue would require a fairly complex query (one outside the abilities of the author), we can at least get a feel of the impact of missing Spring Training from the player’s perspective. Said Johnny Cueto after missing 19 days of Spring Training in 2017:
“We all know that spring training is when you get ready…the more I pitch, the more I feel I’m getting ready. I just have to keep working. I don’t have my control yet, but I’m working on it.”
David Freese echoed similar remarks after having MLB teams wait out his market until Spring Training last season:
“It was a tough situation to handle, Freese said. The waiting, it challenges your heart. Sitting around while guys are out playing… seeing games, seeing guys in the field, it makes you appreciate the game a lot more.”
For what it’s worth, Cueto under performed his WAR from 2016 by almost 4.5 Wins last year and it was the first time in nearly 10 years that Cueto had provided a team with below average production. Cueto’s poor showing was at least one of the major reasons for the Giants last place finish in 2017.
Now it is of course entirely possible that Cueto’s experience more the exception than the rule. Perhaps most players would be largely unaffected by the time off in Spring Training. Perhaps Cueto’s struggles were deeper than simply missing Spring Training but nonetheless, when as a team, you are gambling tens-of-millions of dollars a year in a single asset, does the reward of saving a couple of million dollars, really outweigh the risk of potentially losing some $30M in expected production?
Perhaps if we took the average production of every player who had missed significant time in Spring Training we would find that, on the aggregate, there is no significant effect. Even so, the existence of even a few cases like Cueto’s hidden behind the averages, presents tens-of-millions of dollars of risk for teams.
MLB teams may be saving themselves money by waiting out this year’s free agent market but they’re doing so at their own risk
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