Moneychangers...and Changes

     The fall of 2015 was a festive time in Kansas City, with a November parade to celebrate the fact that the Royals were on top of the baseball world. It started an off season that in retrospect would become the end of an era, a gilded age, for baseball free agents. There was still big, big money being thrown around as teams geared up for 2016, but that seems like a distant memory for ballplayers who watched solid players get rich, and stars get richer.

      As we saw this week, the biggest stars of the game like Manny Machado will still get their monstrous contracts, but for the next tier down, there has been a gigantic adjustment by ownership, which has created a landscape where many very good players are still on the market when teams go to spring training.

     Mike Moustakus is one of the poster children of this sea change. Moustakus was two years away from free agency as he rode the parade route, and in that off-season he saw his own team fork over 70 million dollars over five years to Ian Kennedy, an average starting pitcher with a career five hundred record who had just posted a 4.28 ERA for San Diego.

     Kennedy was coming off his age thirty season. This offseason, former Cy Young winner Dallas Kuechel of the Astros, a far better pitcher, and a left-hander, coming off a far better age 30 season, and a three-time Gold Glove winner to boot, still doesn’t have a job. Someone who did sign, also an age comp to Kennedy, with afar superior track record, is Lance Lynn. He got three years and 30 million from the Rangers. That’s a nice deal, but it’s way less than half.

     The Royals that off-season also surprisingly inked up Alex Gordon for four years and 72 million. The fact that it was a surprise came from the expectation in the market of the time that Gordon might get 100 million. If this exact scenario for a player at age 32 had happened this off-season, it’s hard to imagine Gordon getting anything better than maybe two years for 30 million.

     This creates an unusual dynamic. Gordon and Kennedy are still on the Royals under those contracts and are easily the highest paid players on the team. There is only hope, not expectation, that they can be integral parts of an improved squad. Their 16 (Kennedy) and 20 million (Gordon) salaries this year have a somewhat dinosaurish quality to them. Young players like Ryan O’Hearn or Brad Keller know that production identical to their older teammates will not produce anything like the contracts they hold.

     The rapid change in the landscape has caused players nightmares, and their agents even bigger headaches. Moustakus would not be out of bounds in considering firing Scott Boras for the advice he has received the last two years. Heading into 2017, Moustakus turned down a 17.5 million-dollar qualifying offer thinking he would get a fat multi-year deal, and ended up slinking back to the Royals for 6.5 million. This off-season the qualifying offer was 15 million from the Brewers. Again, he turned it down, again he went back to his offering team, this time for ten million.  That’s 16 million dollars left on the table.

     The NBA is now the place where barely above average players make the giant money. Granted the Minnesota Timberwolves were expecting more, but Andrew Wiggins is the fourth or fifth best player on a team that likely isn’t even going to be in the playoffs, and he is on a guaranteed 147 million-dollar deal. It’s routine for solid regulars to make in the tens of millions.

      Nobody is going to cry for the average to above average major leaguers. Unlike other sports, their contracts are completely guaranteed. But when one glorious reality is replaced by a lesser one, it’s a tough adjustment. Just think about yourself. Obviously, the scale is completely different. But just think if things were going swimmingly in your industry and you were pulling down 175 thousand a year. Then, with things still going as well or better for your company, they asked you to take one hundred thousand. You wouldn’t likely think that it’s nice you are a top ten percenter, you would be pissed.

     That is what is creating restlessness among the rank and file, and the expectation of labor trouble next year. Baseball revenues are way up, and mid-market teams like the Padres can give out the richest contract in baseball to Machado, and overpay Eric Hosmer, perhaps the last example at least for a while of a non-superstar getting mega-dollars. Yet, despite the obvious ability to afford it, the owners have hatched a serious market correction.

     Is it collusion? I doubt it, at least to the point of proving it. But let’s not forget it has been done before.

     The complication comes because baseball owners won’t open their books, and baseball players won’t accept a salary cap. Each is understandable, and each causes a problem. A cursory handle of mathematics tells you the game is swimming in money, but we don’t know how deep the pool is.

     But the way that players in other sports have been able to guarantee a specific share of the pie is to agree to a cap. Basically, football, hockey and basketball players get somewhere in the vicinity of half of the revenue. It’s unlikely to me that baseball players are getting that, but we have no way of knowing, and for them to get the owners to tell them they would have to agree to a cap, and that isn’t going to happen.

     The baseball union has always designed their strategy from the top down. It takes a while even to get to arbitration let alone free agency, so young major leaguers have to pay their dues, literally, for a while. But good players making the minimum, or just above it, thus far have not squawked because they think they can become stars. And they especially didn’t complain in the past decade since merely good play was rewarded with big money.

     If that middle ground is going to continue to crash, there might be some appetite for negotiating for a higher minimum, or earlier free agency. But something would have to be given up to get that. On the owner’s side, they have somewhat emulated corporate America in deciding that the best way to cut salary costs is by dinging the rank and file, while still paying out monstrous deals at the top level. The Padres could sign four darn good players for thirty million per, what they are paying for one Manny Machado.

     You probably have figured out by now that this is complicated business, which creates a real possibility of a protracted labor battle. We haven’t had that since 2011 in the NBA and 2012 in the NHL. But it seems like a real possibility, which of course sucks.

     Because as usual everybody has plenty, and it will be another dose of millionaires fighting with billionaires. The owners always somewhat have the upper hand in these things, because for reasons I have never been able to understand, the fans generally side with them. Fans say the players are getting rich playing a kid’s game, which is true. But the owners are getting richer by using a kid’s game.

     Ownership has never been able to figure out how to modify their behavior with a light touch, and the mid-market salary crash of the past three years is another example.

     It is setting the stage for a showdown that no one wants to stomach.

Danny Clinkscale