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Free agency has been broken in Major League Baseball for the last couple of winters, which means there have possible solutions floated by media and the fans for the same amount of time. Soon enough, we’ll see what fixes players have in mind for the busted system, too, as MLB and the Players Association recently agreed to have economic discussions well before 2021’s collective bargaining begins.
This reminded me that, about a month ago, Travis Sawchik published an article at FiveThirtyEight titled “How To Save MLB Free Agency.” His plan? Restricted free agency, which he reminds readers the owners wanted to implement back in 1994:
So how would restricted free agency help beyond getting players to the market earlier? It should also increase their share of revenue.
Players with more than three years of service time but less than six are eligible for arbitration. The first year of arbitration eligibility is supposed to garner a player about 40 percent of their open-market value, the second year 60 percent, and the third year of arbitration approximately 80 percent, though that estimate does not always apply. While arbitration earnings are far greater than pre-arbitration salaries, which are typically near the minimum salary, they are still short of market value.
The type of restricted free-agency system that owners attempted to implement in 1994 seems increasingly beneficial to players today. That system could have made young star Francisco Lindor a 25-year-old free agent this winter and Mookie Betts a 25-year-old free agent last winter.
I see where Sawchik is going with this, but I disagree about how it would end up playing out — in fact, moving to a restricted free agency system would likely just further dampen the earnings of players. Sawchik’s belief in restricted free agency, which he’s presented as a solution in the past well, might work in a system where teams aren’t acting in concert to suppress salaries. It doesn’t matter if teams are colluding to suppress salaries like they were for three seasons in the 80s — or like they did in 2002-2003 when they paid a settlement to the MLBPA to put a collusion grievance to bed, or like they very well might have when Barry Bonds’ lack of suitors forced an early retirement — or if this is simply the “legalized” form of collusion I’ve referenced in my writings many times in the last year-plus, where the system is designed in such a way that everyone is compelled to act similarly, in a way that reduces salaries and free agent activity. In either case, restricted free agency would simply exacerbate offseason issues instead of solving them.
Consider this: barely any teams are bidding on free agents. Bryce Harper had something like 2.5 suitors, between the Giants, the Phillies, and the Nationals’ half-measure attempt to re-sign him that reportedly included significant deferred dollars that reduced the present-day value of the offer. Manny Machado’s second-best offer came from a team unwilling to pay him in guaranteed dollars — the Padres ended up signing him, and sure, it was partially because of their exciting prospect core, but also because no one else showed up offering the kind of cash Machado was looking for. If teams aren’t getting out of bed for true superstars, if it’s mid-March and the likes of Dallas Keuchel and Craig Kimbrel remain unsigned, how exactly is more free agency the solution to player woes?
Restricted free agency would cut into arbitration years, which are mostly free from the shadow cast upon free agency. Yes, arbitration salaries are based on projected free agent value, so they are tied to free agency and its recent demise in an unsettling way, but there is still the chance of a player to take their destiny into their own hands and come out victorious through this route. Arbitration is a one-on-one negotiation between team and player, and if the two can’t come to an agreement, an arbitrator makes the decision for them. So, Mookie Betts can demand $10.5 million, the Red Sox can offer $7.5 million, and the arbitrator can recognize that Betts is in the right and award him the $10.5 million contract he seeks, as happened prior to 2018. If Betts had been a restricted free agent, and the Red Sox felt that offers weren’t going to pour in for their star right fielder, then what exactly would have compelled them to go much higher than they did during arbitration? Restricted free agency has the potential to take even more power out of the hands of the players, by placing even more of it into those of the teams.
There is a reason the owners have wanted to get rid of arbitration essentially since the moment they agreed to its existence, and that’s because it created a situation they didn’t have complete control of: a situation that cost them money they would rather not spend.
It’s possible that restricted free agency would work for the top-tier players like Betts, Harper, and Machado, earning them their long-term contracts that can be measured in their relation to a billion dollars sooner than later. What about for the rest of the players, though, the ones impacted far more by the demise of free agency? Kimbrel and Keuchel are available to everyone right now, and have been met with silence for months. There might be more interest if the two were younger and had been eligible for restricted free agency instead of arbitration years ago, but that’s just a guess, and not one I’d be willing to bet on were I a member of the MLBPA and getting ready to talk economics with MLB.
And here’s why: The risk in restricted free agency is instituting another round of player valuation where no one is bidding on the players, which will reduce player control of their salaries even further. If you assume that teams aren’t bidding on players because free agents are too old, as Sawchik has done, then yes, restricted free agency injecting the market with younger options might help the situation a little bit. However, free agents aren’t being bid on because there are cheaper alternatives, and those alternatives also happen to be younger than the free agents. Restricted free agency won’t change that, especially not by itself.
Mike Moustakas, in true free agency, had to settle for consecutive one-year deals from the team he had just been with despite being a league-average or better player in both of the seasons that “earned” him those contracts, and he was still in his 20s for the first of them. Restricted free agency feels like it would just be that result, again and again, for anyone who isn’t a superstar, in order to keep the price of those players low. Or, if a player was willing to sacrifice in order to receive guaranteed money, as happens again and again on team-friendly deals signed by players who see how much of a nightmare free agency has become, maybe they’d do better in restricted free agency… but without the buffer and alternative of arbitration and its payouts behind them in their negotiations.
Restricted free agency works in the NBA, where teams are up against the salary cap with regularity, and are working within a system where every salary has to fit under that cap: just one team in the NBA is spending under $100 million against the cap in the 2018-2019 season, while the other 29 are either right below the $109 million cap or are over it thanks to the NBA’s litany of exceptions and exemptions that allow clubs to exceed it. MLB doesn’t have a salary cap (and should not), but they do have a luxury tax, one that almost no team approaches or exceeds. Just two teams, the Red Sox and Nationals, paid the tax for 2018. The Yankees and Dodgers want nothing to do with the tax threshold anymore. Clubs like the Rays, Marlins, and Pirates are closer to spending zero dollars than they are to reaching the tax threshold. You can’t really compare the NBA’s (or NFL’s) situation to what MLB is going through, not when the goal of even a losing NBA team is to attempt to work relatively close to the cap and even exceed it whenever it makes strategic sense, while the goal of MLB’s teams seems to be spending the least amount possible within a system that, in theory, allows a team to spend as much as it wants to in order to win.
As long as MLB teams are incentivized to utilize low-cost players over any other kind of player, restricted free agency won’t be the solution that fixes free agency. And if that culture can be changed, if the inexpensive, less-experienced players are compensated more fairly and more in line with their production level, then restricted free agency wouldn’t be necessary at all, as it would be a solution to a nonexistent problem. It’s an idea that should remain in 1994 where it was last left, when it came from owners intent on dismantling the systems they believed benefited players. When the MLBPA is figuring out what should be on the table in economic talks with MLB, they would be wise to remember that, as well as the reason the owners have hated arbitration so much since its inception.
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