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Why Has Baseball's Hot Stove Been So Cold?

January 29, 2019
Major League Baseball's hot stove hasn't heated up this offseason, with more than 100 free agents still available less than a month before spring training games begin.

Eno Sarris of The Athletic has studied and written about the current financial state of MLB and clubs' approach to free agency. He spoke about the plodding market and its ramifications in future collective bargaining discussions on The Bat Around with Stan "The Fan" Charles Jan. 12.

The 2018 season was one of the first times major league teams spent less in free agency than the prior year, Sarris said. Payroll expenditures declined $18 million from the 2017 season to 2018, a relatively small amount in the industry but significant nonetheless.

"Even something small like that means there's no inflation," Sarris said. "Usually there's about a 10 percent inflation. Deflation is a really big deal."

Sarris called the 2017-18 offseason "a big eye-opener." Even if free agents Bryce Harper and Manny Machado sign what are expected to be massive deals in the coming weeks, the 2018-19 offseason will result in a stagnant market or a small amount of inflation, according to Sarris.

Many teams have drastically reduced payroll, included the Baltimore Orioles. The team has cut $71 million in payroll from last season, Sarris said, and that number could balloon to $80 million or $90 million if slugger Mark Trumbo and right-hander Andrew Cashner are shipped out midseason. 

"Of course it makes sense because they're gonna be a pretty bad team this year, but at the same time, it's meaningful," Sarris said. "You have a lot of teams that are tanking, and … it's making for super teams and bad teams -- 100-win teams and 100-loss teams -- which can make [for] not compelling baseball."

As for the possibility of a labor strike when the current Collective Bargaining Agreement expires in 2021, Sarris didn't rule it out. He expects the Players Association to focus on doubling the minimum salary and removing a year of arbitration eligibility, not exactly music to the ears of ownership. The major television deal the league just reached with Fox could help ease the concern of owners, as could the sale of parts of MLB Advanced Media, which netted each owner around $50 million. 

As far as free agency, Sarris said the primary issue is a combination of better analytics and the threat of the luxury tax. Teams are being smarter about recognizing the decline of players and avoiding lengthy deals that pay them deep into their post-peak years. The luxury tax then acts as an additional cap, suppressing salaries because of the harsh penalties, which include losing international spending money and top draft selections. 

"For a team that's trying to remain competitive while they spend money, those penalties are actually worse than some of the monetary penalties," Sarris said. "They can run a payroll up there, but if they also start losing picks then they start losing the ability to remain competitive." 

The Players Association has hired additional litigators with the current CBA expiring in 2021, Sarris said. This is a positive step toward a resolution, as the MLBPA in the past had focused on player accommodations like food and travel.

"They did make the life better, but they didn't focus on the financial aspect," Sarris said.

For more from Sarris, listen to the full interview here:


Photo Credit: Ed Sheahin/Gary Sousa/PressBox