Owners Emerging As Clear Winners From Last CBA
We’ve reached the point in the offseason where free agency can be called because of the run rule.
The owners have won. Players are losing. Now the owners need to make sure they don’t overdo their postgame celebration.
When Mike Moustakas agreed to a one-year, $6.5 million deal (with a mutual option for 2019) to return to the Royals last night, it was the white flag of an offseason where many free agents found themselves waiting fruitlessly for contract offers that never came.
Moustakas turned down a $17 million qualifying offer from the Royals at the start of the offseason. Coming off a franchise-record 38 home runs, the third baseman understandably expected to sign a long-term deal for much more than $17 million.
Instead, he’s headed back to Kansas City at a fraction of the amount he would have received if he had agreed to the qualifying offer. He joins a lineup that has brought in fellow free agents Lucas Duda and Jon Jay on similarly modest one-year deals.
Moustakas is not the only one who may have to accept defeat. Less than three weeks before Opening Day, Lance Lynn, Alex Cobb, Jake Arrieta, Neil Walker and other quality big leaguers are still looking for contracts. Like Moustakas, Carlos Gonzalez gave up on his hopes of a big payday and returned to the Rockies on a similar one-year deal.
We do not fully know why this offseason has turned into the winter of free agents’ discontent. Maybe all front offices decided unilaterally in the same offseason to exercise newfound restraint. Maybe the luxury tax has become a de facto salary cap, taking the top spending teams out of the market. Maybe there are more nefarious reasons.
But whatever the reasons, the owners have routed the players in the first full offseason of the most recent Collective Bargaining Agreement. In exchange for chefs in the clubhouse and extra off days, the owners managed to severely restrict free agent spending, tamp down international amateur bonuses and keep the qualifying offers that have proven to douse a free agent’s market. The players got some nice perks. The owners figured out a way to save millions of dollars.
The qualifying offer issue was apparent in the past, as a number of free agents found themselves with few, if any, offers because teams didn’t want to lose draft picks. The system was tweaked, but the same issues remain.
Further, the owners managed to win on a variety of massive issues with seemingly little the players received in return. The owners received the cost certainty they looked for on the international market. While they didn’t get an international draft, financially they received a system just as beneficial for them.
The Padres alone spent $80 million internationally in 2016, including overage taxes. This year, the entire industry is limited to roughly $150 million.
As much money as Moustakas lost this offseason, it pales in comparison to how much Angels RHP/DH Shohei Ohtani lost because he was subject to the new international bonus restrictions that limited him to a minor league contract and capped his signing bonus.
Under the previous CBA, Ohtani would have been a free agent subject to the posting system, allowed to sign a major league deal for whatever contract he desired, likely $150 million or more.
The players gamble was that by screwing international players like Ohtani (who, until he signed, was not a union member), additional money would be freed up to spend on free agents.
Lessons Learned From The Royals' Run
Looking back at the Royals run as the core graduates to free agency.
It didn’t happen. It just made Ohtani more valuable to teams since he’ll likely be underpaid by millions over the next six seasons.
Because the current CBA remains in effect through the 2021 season, there’s little the players can do in the short term. They lost.
And, much like the many rebuilding teams around the majors, they will have to accept there are many further losses coming over the next few seasons.
But if baseball is going to prosper heading into the 2020s, the owners would be wise to realize they are better off building goodwill before the sides sit down to negotiate the next CBA.
Anyone who lived through the collusion of the late 1980s and the strike of 1994 (and the near-strike of 2002) will remember no one in baseball benefits from the owners and the MLBPA being at each other’s throats. In the past 15 years both sides have worked together, which has led to record-setting growth, successful initiatives like the World Baseball Classic, and continuous operation without the serious threat of work stoppage, something none of the other four major sports can claim.
Both CBAs have been agreed to and signed without lockouts or strikes, and the fan disillusionment that comes with them.
The next CBA is still years away, but for the health of the game and to create some much-needed goodwill, the owners should consider adjusting the draft pick compensation system. With every front office operating from much of the same playbook, there are very few players for whom teams are willing to give up a first round pick. The owners could simply eliminate draft pick compensation for free agents. By doing so, they also would gain complete freedom to adjust the draft as they see fit, since the MLBPA’s bargaining rights around the draft (which involves non-union members) are due to the free agent compensation rules.
But if that seems too drastic, the owners could also simply eliminate teams forfeiting draft picks for signing qualifying offer free agents. A team that tendered a qualifying offer could still receive an extra draft pick, but by taking away the penalty of a pick, qualifying offer free agents should find a much more robust market.
Like the players, MLB owners are a competitive group. But they would be wise to take some steps to reduce the growing friction, not only for the health of the game, but also for the health of their franchises.