The stories began appearing three winters ago and accelerated in pace in the winter of 2017-18: Some of the richest teams in baseball appeared to be getting their financial houses in order, trimming payroll, clearing space and getting under the luxury tax threshold, all in apparent preparation for what was coming in the winter of 2018-19: what was expected to be the most anticipated free agent class in baseball history.
“Why the incredible Class of 2018 will change MLB as we know it,” read a Yahoo story from December 2015.
But now, the winter of 2018-19 has come and almost gone — spring training camps open in a little more than three weeks — and the free agent market is as cold as the January weather. The two biggest prizes of this offseason, 26-year-old superstars Bryce Harper and Manny Machado, remain unsigned, with few teams known to be bidding for them, and the industry-wide shift away from long deals and veteran players, which began in earnest last winter, has continued.
The slowdown in spending has drawn the ire of baseball’s labor side, with agent Jeff Borris recently going public with accusations, typically only whispered privately, that owners are colluding to depress salaries, and players such as Jake Arrieta, Dallas Keuchel and Evan Longoria taking to social media to voice their own concerns.
Baseball’s union, faced with another slow-moving free agent market, increasingly depicts the trend of teams being “unwilling to compete” as damaging the sport. In 2018, according to Forbes, overall spending on payroll declined for the first time in eight years, despite revenues reaching a record $10.3 billion.
“It’s mid-January and for the second consecutive year players are seeing a historic pattern of inactivity in the free agent market,” Bruce Meyer, the MLB Players Association’s senior director of collective bargaining and legal, wrote in an email this weekend. “There is a widespread lack of interest among clubs, who can well afford to do so, in improving their rosters through free agency. This unwillingness to compete is bad for players, fans and the game itself.”
In response, MLB said in an emailed statement: “All of our general managers try to put their clubs in a position to make the postseason as often as possible — that is what they are paid to do . . . But our fans understand that making unwise decisions on long-term, multiyear contracts could hamstring a club’s competitiveness for years. There are plenty of examples of that. Without knowing the demands of the unsigned free agents, and the offers they have already received, the union has no basis to attribute blame for why those players have not yet signed."
The rising tension threatens to break an unprecedented streak of labor peace — 26 years long and growing — when the current collective bargaining agreement ends after the 2021 season, with many observers already predicting a work stoppage if the atmosphere does not improve. But whatever changes are made then — with some in the industry advocating granting free agency to players after five years of service time instead of the current six — it will be too late for the vaunted free agent class of 2018.
A number of factors conspired to rob this winter’s market of some high-end value from the outset. Josh Donaldson got hurt, and settled for a one-year deal with the Atlanta Braves. Clayton Kershaw signed a new extension with the Los Angeles Dodgers rather than opt into free agency. Machado, too, undoubtedly damaged his own value with some public comments last fall about his unwillingness to run hard on every groundball, and Harper didn’t help his value with a 2018 season that fell below his career norms. (Another pitcher expected to be at the head of this class, Miami Marlins pitcher Jose Fernandez, died in a boating accident in 2016.)
But when it comes to the speed and trajectory of this market, the biggest factor is arguably the limited or non-participation of some of baseball’s perennial big spenders — the same teams everyone expected to drive the markets for Harper and Machado, but that, at least publicly, have shown only cursory interest.
The Dodgers, aside from re-upping with Hyun-Jin Ryu and David Freese on one-year deals, have signed only one major league free agent: reliever Joe Kelly, for three years and $25 million.
The New York Yankees, for the second straight winter, made their splashiest move via trade. Last winter, they acquired slugger Giancarlo Stanton from Miami. This winter, it was lefty James Paxton from Seattle. Although the Yankees have spent roughly $140 million on free agents this winter, the vast majority went to retaining their own players: Brett Gardner, Zach Britton, J.A. Happ and CC Sabathia.
When the Dodgers and Yankees both trimmed tens of millions of dollars a year ago to duck under the 2018 luxury tax threshold of $197 million, it was widely viewed as a strategy to reset their tax rates ahead of this winter’s star-studded free agent class. Instead, both the Dodgers and Yankees, having gotten themselves under the threshold, appear committed to staying there in 2019, when the threshold rises to $206 million.
Two other traditional top-five payroll-spenders, the Chicago Cubs and San Francisco Giants, have all but sat out this winter’s free agent market, spending less than $16 million combined. And the World Series champion Boston Red Sox — one of only two teams, along with the Washington Nationals, to pay a luxury tax in 2018 — spent $74.25 million to retain 2018 stalwarts Steve Pearce and Nathan Eovaldi early in the winter, but otherwise have not signed a single major league free agent.
At the same time, teams such as the Seattle Mariners and Arizona Diamondbacks — both in the upper half of payrolls in 2018 — have been shedding salaries, further diluting the talent pool. And at the bottom sit nine teams that are at least $100 million below the 2019 luxury tax threshold.
At least from the union’s perspective, the luxury tax (or as it is officially known, the competitive balance tax) was never supposed to create such a drag on spending. The Nationals’ tax bill for exceeding the threshold in 2018, for example, was just $2.4 million — about the cost of a fourth outfielder. Even the Red Sox, the game’s biggest spenders in 2018, were hit with a tax bill of just $12 million — a pittance compared to the revenue generated by their title run.
In effect, however, the luxury tax has acted as a de facto salary cap, with teams increasingly resolved to staying under the threshold.
At one time, Harper and Machado were thought to be seeking deals in the neighborhood of $400 million, which would have shattered Stanton’s record-setting $325 million deal as the largest in history. But while little is known about the true state of negotiations, recent reports suggest Machado’s latest offer from the Chicago White Sox was for less than $200 million. Meanwhile, Harper, who turned down a 10-year $300 million offer from the Nationals in September, has yet to top that number, at least to the extent of the media’s knowledge.
It’s not only Harper and Machado who have had to adjust expectations in this sluggish market. According to MLBTradeRumors.com, only 79 of the more than 200 available free agents have signed major league deals so far this winter, and of those only 10 have signed contracts for more than two years.
Explanations for the slowdown in spending vary, and depend upon one’s perspective. The current wave of analytics-driven general managers has created an industry that is more risk-averse and guided by the principle of efficiency — for which lengthy, expensive contracts for veterans don’t apply. And the same can be said for paying a luxury tax.
Some economic analysts also wonder about the sport’s long-term health — with total attendance declining for a third straight year in 2018, revenues that continue to grow but at a slower rate than in the past, a potential work stoppage looming after 2021 and trepidation over the future of regional sports networks in the age of cord-cutting — and connect that to the slowdown in spending.
“If [owners] say, ‘We’re heading toward a lower rate of growth, and potentially even flat,’ that could be a big part of it,” said Matt Cacciato, a lecturer in sports administration at Ohio University and a former executive at ESPN, Fox Cable Networks and YES Network. Noting the 10-year contracts given to Alex Rodriguez by the Yankees in 2007 and Albert Pujols by the Los Angeles Angels in 2011, he added, “You’ve also had some massive contracts that didn’t work out in the past.
“You could build an argument that between trepidation in the marketplace, when stacked up with the attendance concerns, you’ve got a lot of conditions combining for what is a pretty big storm,” Cacciato said.
Even now, with Harper and Machado waiting on the cusp of spring to find out their new destinations, the talk has already turned to the prizes that are still to come. Colorado Rockies third baseman Nolan Arenado hits free agency next winter. Maybe that’s who the Yankees really want. Angels outfielder Mike Trout comes available the winter after. Maybe that’s who the Dodgers are saving up for.
But the lesson of this winter should be clear: Never count on it.
Read more MLB coverage from The Post: