Saturday, February 16, 2019

Saturday Morning Hot Links: The New Baseball Gilded Age

The external glitter of wealth conceals a corrupt political core that reflects the growing gap between the very few rich and the very many poor.
-Mark Twain

I've been thinking about the Reserve Clause lately. For background, the Reserve Clause (sometimes the C is not capitalized, but I like capitalizing random words...for Effect) was a thing for close to 100 years of professional baseball history. It essentially was a baseball rule that bound a player to one specific team basically for the duration of his career. A player could not change teams unless he was unconditionally released, which doesn't exactly send a strong message to other teams.

The National League (est. 1876) had a secret reserve list circulating among owners as early as 1879 which included five players that other owners were not allowed to sign - those five players were reserved by the teams. The list was leaked and, rather than confront the collusion this indicated, they simply wrote the reserve list into the National League's rules.

This was the height of the Gilded Age, in which guys like Cornelius Vanderbilt, John D. Rockefeller, J.P. Morgan, and Andrew Carnegie essentially ran the economy. There's a reason that I can barely remember who was president in the 1880s and 1890s (Garfield, Arthur, Cleveland, Harrison, Cleveland again) - they weren't really in charge. Laissez-Faire economics made it so the government took a backseat to the explosion of the post-Civil War economy. Cleveland needed - and obtained - a $65m loan from J.P. Morgan to keep the government afloat in the 1890s (and in 2008 the government returned the favor to JPMorgan Chase). This "Gilded Age" of American history - between the Civil War and, say, the passage of the Sherman Anti-Trust Act - was coined by Mark Twain. Corruption and rot laid underneath the shiny, gold-plated post-Civil War economy.

Over the course of the 1880s the reserve list was expanded to include basically a team's entire roster, so that the team had control of every player on their roster until they no longer wanted their services. When that number of players was no longer sufficient, here comes Branch Rickey and his "farm system" innovation. Rules were implemented for the length of minor-league contracts - it was a way to control the careers of more players.

Today, a given baseball team holds the rights of a player for up to twelve years - six in the minors, then six in the majors before they are eligible for free agency. Free Agency is the driving force of modern baseball economics. Outside of being one of the first few picks under the current system of the MLB Rule IV Draft, free agency is the one chance at a Big Payday a player has. Rarely does a player get two major shots at free agency.

In 2011, the Pirates gave outfielder Josh Bell a $5m signing bonus. He was the 61st Pick of the draft. In 2018 the 61st overall pick had the slot value of $1,086,900. Under the soon-to-expire CBA - to which the MLBPA agreed - owners have to pay a tax if they go over their slot value for the draft. The premise of this is so that bad teams have more access to better amateur players. On the surface it makes sense, and it even makes you root for math and DEEEEELZ. How much of our idolization of this front office began with them being able to leverage Carlos Correa enough to also get Lance McCullers? But we need to realize that the entire draft system (as well as the July 2 international signing period, and the posting system for Japanese players, and...) is designed to suppress player salaries.

Back to the Reserve Clause in light of this off-season: Free Agency, obviously, has ground to a halt. The Astros play their first Spring Training game of 2019 one week from today, and Dallas Keuchel, Marwin Gonzalez, Bryce Harper, Manny Machado, etc do not know if they'll report to Florida or Arizona. The "smart" teams (like the Astros) have placed a value on every player in baseball and will not exceed the value they place on them. Player A wants a ten-year contract. It doesn't matter if the player will help them win for the next seven years, they simply aren't going to guarantee money for Years 8-10. (That the Nationals offered Harper 10yrs/$300m is still just a report, and who knows who planted it?) The MLBPA, which seems remarkably Bad at this, has long held the strategy of the best players signing the biggest contracts, as it sets the market for the next tier of player. It makes sense, but the MLBPA hasn't kept up with the shifting goal lines of MLB ownership. Ownership, to me, seems to be dipping back into the Gilded Age well of player control.

In the past few weeks we've seen Whit Merrifield, Jorge Polanco and Max Kepler, Aaron Nola and - today - Luis Severino trade in, or at least delay, some years of free agency in return for guaranteed money in the form of an extension. Uncertainty over free agency is making it so that players are more willing to not even mess with it, and extend with the team that holds their rights for a lot of money, don't get me wrong, but less than what they envisioned.

It's an insane amount of money for a regular person. Normal Folk (like me) can't fathom the amount of money you can make by being good at baseball. In a depressing exercise I completed this morning, I would have to work from now until May 2096 to make what Lance McCullers will make this year, and he will rehab his elbow all year and not pitch a single inning for the Astros. But the amount of money you can make by owning a baseball team is exponentially more unfathomable. How the owners have managed to make the players seem like the bad guys in this is impressive. Player salaries can be found within seconds. But try to find out how much money a team made in a given season requires Congressional-levels of paperwork and security clearances.

Raking Harper over the coals for reportedly turning down $30m/year after Altuve signed an extension with an AAV of $31m/year seems somewhat short-sighted. After all, these benchmark financial details have been a part of baseball free agency since it truly began [squints] 44 years ago. The National League has been around for 143 years. Management has been playing this game far longer than Labor.

Behold the New Reserve Clause.

*Position players reporting to camp yesterday: George Springer, Aledmys Diaz, Derek Fisher

*A.J. Hinch got on Robinson Chirinos' level.

*Unsurprisingly, Gerrit Cole and Justin Verlander aren't fans of someone coming in and pitching the 1st inning, and then letting them take over from there.

*What Collin McHugh learned from the bullpen in 2018.

*Jake Kaplan writes that the rising action on Chris Devenki's fastball was flat last year and, if he can rediscover some life on it, he could return to dominance.

*Captain Obvious Richard Justice says the Astros would be a lot better off if they just signed Keuchel and Bryce Harper.

*Roberto Osuna is working on a sinker he learned from Marcus Stroman.

*Jose Altuve ranked 6th on the MLB Top 100 Right Now. (Bregman was 7th, Verlander 20th, Correa 31st, Springer 37th, Cole 42nd, Brantley 75th,

*El Chapo is probably going ADX in Colorado, a prison "not designed for humanity."

*A catfishing might have just changed college recruit rankings forever.

*While it's looking increasingly like my brief appearances in The Athletic are over, this feels relevant: The psychological trap of freelancing. (Anyone want me to write stuff for them for money?0

*A Musical Selection from (NAME DROP ALERT) a sort-of-buddy of mine:

1 comment:

Anonymous said...


Can you really defend paying a player what he "envisions" rather than what his employer determines as his worth? If it would take you (or me or most others) the next 77 years to make what McCullers will make this year as he rehabs, maybe that is a reflection of our worth to our employer. I would consider that "market value".

Of course, if MLB owners are colluding to determine market value, that is very wrong and should be punished. But if they separately decide Bryce Harper is not worth 10 years at 30 million per, it is smart management not to hamstring their respective rosters for the next decade.

Most of us "regular" folk are free agents throughout our employable years. If my boss doesn't want to pay me what I feel I'm worth, I'm free to find someone who will. And if I feel I'm worth more than anyone will pay me, I must adjust my expectations or go without a job.

Just because MLB owners are making large profits is no reason they should agree to exorbitant player contacts because a player "envisions" such. Players should enjoy large paying contract that make sense for both parties.

jj