A recent spate of signings this spring continues a trend that began happening in baseball a few years ago. Young players are being signed in their second year in the big leagues to extended contracts. Ryan Zimmerman of the Nationals and Evan Longoria of the Rays were two of the first to ink their name on a dotted line to what were deemed as team-friendly deals. On the other hand, the players signings voided any attempts at arbitration and extended the original five-year length of a major league contract. Recent signings have been by Anthony Rizzo of the Cubs and Paul Goldschmidt of the Diamondbacks. Both players knowingly signed their contracts to focus on just playing baseball. Rizzo signed for an additional 7 years and $41 million with escalators and incentives. Goldschmidt signed for five years and $32 million. While Rizzo’s contract was based on less than a 140 game sample, Goldschmidt had almost 2 years under his belt. For Goldschmidt, the signing bought him a release from the pressure and he is having an all-star type year as is Rizzo. But Goldschmidt has not put up these type of numbers before. Rizzo, meanwhile, is on page to hit 40 homers and drive in 110 runs. These players are just two players that might signal a death in free agency as we know it. The test will come when Mike Trout and Bryce Harper, who are both in their second year, either reach arbitration or ink similar type deals to keep the players in the fold during their peak years.
Free Agency began shortly after Curt Flood‘s ill-fated lawsuit against Commissioner Bowie Kuhn. However, shortly thereafter, Andy Messersmith and Dave McNally became the first free agents in 1975. At the time, the average salary for a professional baseball player was less than $30,000 a year. 4 years later, Nolan Ryan signed a 4 year $4.4 million contract with the Astros. One year later, Dave Winfield was making $2.5 million. By the end of the 1980s, Minnesota’s Kirby Puckett inked a 3 year $9 million contract.
The 1990s saw an unchecked growth in free agency and a rise in steroid use. I, for one, think the two go hand-in-hand as players looked for any advantage to get that big free agent deal. In 1996, Albert (aka Joey) Belle, signed a deal worth over $11 million a year with the White Sox. It took a while for the White Sox to get out from under the deal. On December 10, 2000, Alex Rodriguez signed a 10 year $252 million contract with the Texas Rangers. That deal would be torn up in 2007 when he signed a new deal for pretty close to the same numbers with the Yankees.
In response, five events in the 2000s changed how baseball executives looked at free agency.
1. Steroids – The Mitchell Report (2007) took away any competitive edge steroid and amphetamine users had in the game. Now, if a players risked using them, they also risked suspension of major dollars. The heydays of the 1990s of McGwire, Sosa, and others grooving mammoth home runs was going to be over. There were now too many dollars at stake. Home runs plummeted after the Mitchell Report from a high of over 5600 in 2000 to a low 4552 in 2011.
2. Moneyball – In the early 2000s, the price of competition had created big market teams that could afford to go after high cost free agents and those that could not. Most notably, Oakland General Manager Billy Beane stood out by finding other ways to win by focusing on Sabermetrics like on base and slugging percentages taking on more value than batting average and runs batted in. The resulting book by Michael Lewis highilghted Beane’s methods in evaluating and drafting talent. For teams that did not have cathedrals for ballparks to bring in the much needed cash, Moneyball became another way to compete between the lines with the large market teams.
3. Youth Movement – In the wake of the Mitchell Report, the players got younger as youth was valued more and more. They had fresher legs after all and more strength. In the steroid era, it wasn’t unusual for a player to hit 40 homers at age 36. Alex Rodriguez is now that age, along with many other greats of the 2000s and they are now shells of the players they were in their prime. Steroids were not the only drug that shaped baseball. For years, amphetamines had just as much an influence in the game for players in a grinding 162 game schedule, especially for those who played day games after night games. The need for younger players who could sustain their strength through a season was needed. The Tampa Bay Rays (GM Andrew Friedman) and the Washington Nationals (GM Mike Rizzo) began the trend of signing players to keep them in their prime years (27-30 years of age). The Cubs recently have done the same with Stalin Castro in addition to Anthony Rizzo. For all three teams, they were trying to build teams by developing talent. For Friedman, signing Longoria was the foundation for the franchise as was Ryan Zimmerman for the Nationals. For the Cubs, they refer to the term “core pieces.”
4. The Market Changed – In recent years, many teams have begun to shy away from long-term free agent deals. When players hit free agency for the first time, they are usually in their late 20s. To sign them to a long-term deal is not seen as financially sound anymore. Case in point, Alfonso Soriano. His $18-19 million a year contract was seen as an albatross hanging over the franchise when Theo Epstein too over the team. Unexpectedly, Soriano was seen as not living up to his contract. Then last year, he slugged over 30 home runs and drove in 108 runs. Soriano’s contract with the Cubs has been up and down as has Alex Rodriquez’s when he has been healthy. Most General Managers now view a signing as paying for future performance.
In the past, while the GMs hoped they were paying for future performance, but in reality, the contract was roll of the dice. Today’s market signings lock up their “future” stars through their prime years and a little beyond. The two winters signing of Albert Pujols for ten years will test those “old” assumptions in the coming years. However, the signing of Josh Hamilton might be a new market force. Hamilton’s contract lasts only for five years but his production is already bringing that contract into question just based on the staggering amount of dollars involved even if only for five years.
5. The Branch Rickey Effect – Most people know Branch Rickey cemented his place in history by signing Jackie Robinson. What most people don’t know is that Rickey set up what is today the minor league system in the late 1920s. Rickey’s belief was that by using a farm system that developed players, a team could be competitive indefinitely. The St. Louis Cardinals have not deviated from that philosophy in the 80 years since.
In today’s market, that development of players now includes foreign markets in the Dominican, Japan, Korea, and Venezuela as well as others all over the world. Scouting, whether it be by sabermetrics or old school scouts, or as Cubs Pro Scouting Director Joe Bohringer calls for, a mixture of both, has taken on a new dimension of finding the latest talent at the cheapest price all over the globe. While Rickey did not mine Latin America for players as it is done today, his followers are doing so in his shadow of the minor league system. Why waste $250 million when you get the same production by investing a few million and develop that talent. In fact, for $250 million, you can get 50 or more players rather than just one player. In addition, teams are now pouring money into scouting as well as player development to avoid that large loss of production and dollars via free agency.
Free Agent Trends for the Future: Free Agency, most likely, is not dead. But it is changing. Role players are becoming more in demand. Specialists like a “loogy” (left handed reliever) garner more attention because they fit a certain niche. The team’s need is dictating what teams spend their dollars on. If they can bring up a player like the Orioles did with Manny Machado last fall, teams will. The Pujols, A-Rod, and Soriano contracts are warnings of the dangers of long-term contracts. As the dollars increase for free agents, some teams just will step out of the way, while other GMs and owners will step up, some foolishly. While the Rizzos and Goldschmidts contemplate their deals, for GMs, the contemplation is smaller and less risky.
In the end, I think Bryce Harper and Mike Trout will set the future role of free agency as they will reach the market at the ripe old ages of 25 and 26. They would still not have reached their prime years of 27-30. That, to me, is unfathomable what they could bring on the open market. Will they be the first $30 million a year players? On the other hand, they might be the outliers rather than the norm. Their GMs will do everything they can to not let them get to the open market.