Fangraphs lists the value of team by batters and pitchers. If you add up the values for all the teams, batters and pitchers, it comes out to $4.6 billion. At the beginning of the season, MLB payroll was $2.7 billion. Is MLB really that efficient?
The dollar amounts are based on free agent prices. In other words, Chase Utley’s value is much higher than what the Phillies have to pay, because Chase is not a free agent and can’t demand a large contract getting multiple teams to bid for his services.
It’s a nice example of how the CBA distorts salaries in baseball. If there were universal free agency, I suspect total salaries would rise, but be closer to $2.7 billion than $4.6 billion. The supply of free agents would be high every year, including minor league players, which would drive down the demand for any one person. The money would just be allocated to the players who produced the best results most recently. My guess is that 24-year-olds would get six year contracts instead of 30-year-olds getting five year contracts.
I don’t see how both sides don’t benefit from this. Good players make more money when they are young, and end up much richer older due to compounding effects. Rather than being priced out of good older players, small market teams will be able to afford known quantities, something they can’t do today. There would be no need for the draft and artificially high signing bonuses. What am I missing?
We are only rooting for laundry.
It’s the inherent nature of unions to provide benefit to older members at the expense of younger members. While players’ contracts are under its collective bargaining power, MLBPA operates no differently than SEIU or AFSCME: suppress benefits/salary for new members to build loyalty and dispense greater benefits to older members. Would it be better if there was a market for players with dynamic pricing? Probably, like you said, it would be better for teams and players alike. Then, the MLBPA could focus where it should focus – benefits and retirement.
This purely capitalist notion could never work. It would just go against modern American ideals. Gotta have some arbitrary regulation.
I think you’re missing many things:
1. It’s certainly against the interests of the current players – and they’re the ones who get to vote. Why should the players adopt any system that gives them less money? What do they get in return – benefits after retirement? Why is that worth a nearly 50% overall pay cut?
2. Total salaries will only go up until owners start realizing that 90% of the production is worth 10% of the price. Albert Pujols will get his money, but Raul Ibanez won’t, and free-agent pitchers will get peanuts. Even if the median salary goes up, the average goes down, and every major league player is convinced that he is better than the guy next to him. (They pretty much have to be; it’s the only way to get to where they are, and it’s been true their whole lives to date.) If the largest 10% of contracts get cut in half, most players will look at that and think “That’s my future payday going away.” They’re mostly wrong, of course, but …
3. Any statistic rooted in the current spending model will of course be bimodal, because the current talent pool is cost-controlled for a sizeable fraction of their careers, and demand greatly exceeds supply for the top talent. The reason it skews to the high side is because the talent distribution is the same but the financial incentives are bounded at zero on the low end.
a. Owners are assuming almost no financial risk with younger players – they pay them almost nothing, and if they produce anything it’s a value win. If they turn out to be good, then you pay them almost nothing for their good years and *don’t have to pay them after that*.
b. The free-agent pool consists of a limited supply of players – those who are good enough to have lasted six years in the majors and didn’t sign a longer-term contract. (Thus it wasn’t offered, or they’re confident enough they’ll get their payday.) This pool is extremely risky for ownership and not for players (since the contracts are guaranteed).
Marvin Miller has commented several times (or perhaps just once, but been quoted numerous times) that if the owners had countered with “Everyone gets 1 year contracts and is a free agent at the end” that it would have been accepted over his strenuous objections and it would have been a disaster for the players’ earning power.
Actually, I heard Charlie Finley made that proposal for everybody to be free agents each year and it was rejected by Marvin Miller and other owners who had decent teams at the time and would have been most affected by the proposal. Not sure it is true.
Certainly, as the pool of players increases in free agency, prices would go down for all except the most elite players. What would happen is the young stars and those propsects would be gobbled up by the good rich teams, and the older left over players would have small market teams who would offer much lower salaries than a rich team today who is plugging a key hole. We would likely see much younger teams, I look at the Red Sox 67 team it is made of 20-22 yo with a few old timers like Yaz at 28. The older non-elite players left baseball earlier to become insurance salesmen since retirement was not an option on what they made.
The system works well for the players with the exception of those whose careers are shortened by injury. It does not work very well for 25 yo closers for example as it’s a crap shoot if they are healthy by the time they are FA. Also, for players who start their careers in the MLB late, it does not work that well. But arbitration solves some of the inequities so even non-free agents do ok after the 3rd or 4th year.
One big problem: development. Who would develop young players if they can’t get their best seasons?
@Davor: I believe what would happen is that teams would stop developing as many players, since most minor leaguers don’t develop into major leaguers anyway. Instead of affiliations with four or five minor league teams, MLB teams have two levels, where the players are signed to two or three year contracts. Or maybe the minor leagues go back to being independent entities and players develop on their own. The promise of a big pay day (and a lot quicker than under the current system) might encourage players to go into independent minor leagues to show what they can do.