MLB Begins Lockout

[Cyrus]

So Ballpark, when do you think this "lockout" will end? April?

[Schad]

Pareto works for goods or products as well. 90% of the classical music you hear on your local classical channel is composed by the top (most famous?) 10% of composers. Same for Top 40 stations. Same the volume of cheddar and mozzarella that flies off the shelves relative to Limburger and all the rest...
Anyway, that's interesting. Are you saying rank and file players are already getting inflated contracts relative to their value because of an abundance of revenue coupled with a shortage of premium players to spend the money on? That actually does explain the respectable median salary data. Or at least the slightly flattened distribution.

I'm saying that older players in general are getting inflated salaries. While $/fWAR growth for FAs has slowed considerably/fallen, it's still not a very good deal overall, compared to the value to be had from pre-FA players. But because teams value team control so highly for that reason, it becomes the only available option without trading prospects (who are valued highly because they have even more cheap team control).

The Jays had an Opening Day payroll of $135m last year. Only 9 of the 25 players had enough service time to be FA-eligible: Springer, Ryu, Semien, Roark, Ray, Yates, Chatwood, Panik, and Phelps. Those 9 players comprised 83% of our payroll. But despite two of those nine being the Cy Young award winner and an MVP candidate, that 83% of our payroll was responsible for about 40% of our wins above replacement. Put another way:

$ per fWAR, post-FA service time - $6.1m.
$ per fWAR, pre-FA service time - $860,000.

And we did better than just about any team in FA in recent years! $6.1m is well below the benchmark for FA cost.

We aren't even the silliest example in our division. The Yankees had an Opening Day payroll of $198m. They had 11 guys with 6+ years of service time, and also their pay-off for Adam Ottavino (who qualifies). That money represented 71% of their payroll...less because they're an older team overall, and more of their youngish players are deep into their arb seasons. But that 71% of their payroll was responsible for just 13 fWAR: about 32% of their total. And almost half of that is Gerrit Cole. The Yankees, a team that spends lavishly in free agency, got a mere fraction of their production from all of that spending. Their breakdown:

$ per fWAR, post-FA service time - $10.8m.
$ per fWAR, pre-FA service time - $2.1m.


Basically, the only reason that salaries haven't cratered is that you have inelasticity in supply of the actually valuable younger players. Teams spend on free agents while being aware that free agents are a poor use of resources because they literally cannot do anything else with that money. In a world where, as in soccer, player contracts are purchased rather than traded, you'd suddenly see the best teams in baseball with $40m-60m payrolls (having throwing $150m at teams to purchase said players), because the majority of the best players are pre-FA.

This is also part of the secret to the Rays' success: paradoxically, having no money also results in the Rays being forced to make optimal decisions in terms of roster construction. They can't afford to give big contracts to older players, and consequently have no choice but to field younger rosters...in an era where younger rosters are generally better. They trade guys before they become less good and it somehow cuts across the grain for the whole damned sport.


So, what should be done? Get salaries escalating earlier. So long as the luxury tax remains in place (and it most certainly will), this will not have a tremendously inflationary effect on overall payroll, but it will result in teams having fewer dollars to spend on old dudes. Having fewer dollars to spend on old dudes will drive down $/fWAR in free agency, and spending will better reflect the actual value of the players getting paid.

[SharoneWright]

I think you've convinced me!

Most encouraging is that there's no frickin way Scherzer gets a vulgar 130MILLION at age 38-40yrs if teams have to re-allocate their money toward the younger guys that generate the bulk of the wins.

[Michael Bradley]

Free agency before six years of service seems to be a non-starter for the owners, so I think what will end up happening is raising the league minimum and then arbitration starting after year 2, with likely some incentives baked into minimum deals where players get bonuses for high performance (ex. top 10 in MVP or Cy Young voting, making the AS game, etc). Players still won't get what the "deserve" in that model, but it would likely be much more lucrative as a whole than what they are seeing now, while owners still get the six years of control over the player.

The MLBPA is at fault in this one. They want nothing to do with a salary cap, and that's pretty much the only solution that ensures 1) revenue is distributed evenly, and 2) money is spread out a lot better amongst the players. The MLBPA are the ones who want the free market economy, but they complain when the owners act within their rights in a free market to not spend. They want their cake and eat it too.

Don't get me wrong, I'm not siding with anyone here. Both parties suck, and I really don't care how things get worked out as long as we have baseball on time, but the players are stepping on their own toes.

[polo007]

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[polo007]

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[billy_hoyle]

This isn't hard. Start arbitration right away. Tie the awarded amount to WAR. Can't afford your young talent? Trade them, or relocate your goddamn **** franchise. Montreal and Vancouver would both support big payrolls IMO. Keep team control, it fosters invested fandom, and grows the game.

[bluerap23]

Pareto works for goods or products as well. 90% of the classical music you hear on your local classical channel is composed by the top (most famous?) 10% of composers. Same for Top 40 stations. Same the volume of cheddar and mozzarella that flies off the shelves relative to Limburger and all the rest...
Anyway, that's interesting. Are you saying rank and file players are already getting inflated contracts relative to their value because of an abundance of revenue coupled with a shortage of premium players to spend the money on? That actually does explain the respectable median salary data. Or at least the slightly flattened distribution.

I'm saying that older players in general are getting inflated salaries. While $/fWAR growth for FAs has slowed considerably/fallen, it's still not a very good deal overall, compared to the value to be had from pre-FA players. But because teams value team control so highly for that reason, it becomes the only available option without trading prospects (who are valued highly because they have even more cheap team control).

The Jays had an Opening Day payroll of $135m last year. Only 9 of the 25 players had enough service time to be FA-eligible: Springer, Ryu, Semien, Roark, Ray, Yates, Chatwood, Panik, and Phelps. Those 9 players comprised 83% of our payroll. But despite two of those nine being the Cy Young award winner and an MVP candidate, that 83% of our payroll was responsible for about 40% of our wins above replacement. Put another way:

$ per fWAR, post-FA service time - $6.1m.
$ per fWAR, pre-FA service time - $860,000.

And we did better than just about any team in FA in recent years! $6.1m is well below the benchmark for FA cost.

We aren't even the silliest example in our division. The Yankees had an Opening Day payroll of $198m. They had 11 guys with 6+ years of service time, and also their pay-off for Adam Ottavino (who qualifies). That money represented 71% of their payroll...less because they're an older team overall, and more of their youngish players are deep into their arb seasons. But that 71% of their payroll was responsible for just 13 fWAR: about 32% of their total. And almost half of that is Gerrit Cole. The Yankees, a team that spends lavishly in free agency, got a mere fraction of their production from all of that spending. Their breakdown:

$ per fWAR, post-FA service time - $10.8m.
$ per fWAR, pre-FA service time - $2.1m.


Basically, the only reason that salaries haven't cratered is that you have inelasticity in supply of the actually valuable younger players. Teams spend on free agents while being aware that free agents are a poor use of resources because they literally cannot do anything else with that money. In a world where, as in soccer, player contracts are purchased rather than traded, you'd suddenly see the best teams in baseball with $40m-60m payrolls (having throwing $150m at teams to purchase said players), because the majority of the best players are pre-FA.

This is also part of the secret to the Rays' success: paradoxically, having no money also results in the Rays being forced to make optimal decisions in terms of roster construction. They can't afford to give big contracts to older players, and consequently have no choice but to field younger rosters...in an era where younger rosters are generally better. They trade guys before they become less good and it somehow cuts across the grain for the whole damned sport.


So, what should be done? Get salaries escalating earlier. So long as the luxury tax remains in place (and it most certainly will), this will not have a tremendously inflationary effect on overall payroll, but it will result in teams having fewer dollars to spend on old dudes. Having fewer dollars to spend on old dudes will drive down $/fWAR in free agency, and spending will better reflect the actual value of the players getting paid.

It definitely makes sense but it will be the end of Tampa.

[Schad]

It definitely makes sense but it will be the end of Tampa.

Increase revenue sharing. If MLB is going to inexplicably keep a team in a market that has no baseball fans, it's incumbent on MLB to make it viable.

[Schad]

Free agency before six years of service seems to be a non-starter for the owners, so I think what will end up happening is raising the league minimum and then arbitration starting after year 2, with likely some incentives baked into minimum deals where players get bonuses for high performance (ex. top 10 in MVP or Cy Young voting, making the AS game, etc). Players still won't get what the "deserve" in that model, but it would likely be much more lucrative as a whole than what they are seeing now, while owners still get the six years of control over the player.

The MLBPA is at fault in this one. They want nothing to do with a salary cap, and that's pretty much the only solution that ensures 1) revenue is distributed evenly, and 2) money is spread out a lot better amongst the players. The MLBPA are the ones who want the free market economy, but they complain when the owners act within their rights in a free market to not spend. They want their cake and eat it too.

Don't get me wrong, I'm not siding with anyone here. Both parties suck, and I really don't care how things get worked out as long as we have baseball on time, but the players are stepping on their own toes.

The PA's approach made perfect sense when players remained good into their mid/late 30s. The benefits accumulated with guys who had reached FA, but those players had a good decade of being useful ahead of them. Having younger players making sweet fk all was an incentive to actually play younger players, in an era where rosters were clogged with 35 year olds.

But those days are behind us now. Players actually eat real food and have real workout equipment in the minors, and consequently are okay at baseball when they reach the majors, and an average 95 fastball velo hurts older players. So now baseball's economics need to change to fit the adaptations that have already occurred in the game.

[polo007]

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