An Off-Season of Contract Extensions

As we approach the start of the 2019 season, it was a notable off-season for the way in which big money contract extensions eclipsed all but the top three free agent signings.  As Spring Training started, it seemed like every single team was determined to lock in their best players for many years at big money, bigger money it sure seems than the free agents got at least in grand total.

A couple of things seem to be in play here.  First, it seems like the owners have finally figured out what Charlie Finley had realized around 1975, which is essentially that only the superstars are worth the really big contracts and that more average players and aging stars are fungible enough that teams shouldn’t go around overpaying them.

When the players won the Andy Messersmith free agency arbitration, Finley suggested that all players should be allowed to be free agents every year.  That way, the biggest stars would get huge salaries, but all the other players would be competing with each other for contracts, which would drive their prices down.

However, the other owners thought Finley was a kook and wanted to hold on to their best players as long as they could.  Thus, the owners negotiated a six-year service requirement for free agency, which meant that there would always be more demand for free agents than there were actual players who satisfied the six year service requirement and were still playing well.  As a result, for a very long time, free agents received enormous contracts, and the players’ association used those contract amounts to get higher contracts for younger players through the salary arbitration process they had successfully negotiated for a few years earlier.

The pendulum back towards a freer market began when teams began to non-tender an increasingly large share of their arbitration eligible players as arbitration salaries also got enormous.  More available players each off-season meant more competition for second-tier free agents, and the non-tendered players were and are more likely to sign one-year contracts for less money just to guarantee themselves major league jobs.  That surely drove down the market for second-tier free agents.

Also, teams may be realizing that their own superstars are worth more to them than anyone else.  While it is certainly exciting to bring in a high profile free agent like Bryce Harper or Manny Machado, there is probably just as much good will to be gained from the fan base when a Mike Trout or Nolan Arenado is locked into play all or nearly all of his professional career for the team that developed him into a superstar.

Given how much more generous the recent spate of extensions feels compared to the free agent signings this winter, I would if teams aren’t acting collusively to send a message to players: sign with the team that developed you for big money, or test an increasingly uncertain free agent market.

Of course, if more superstars sign long-term extensions covering their prime and declining years, the superstars who do elect to become free agents will find even less competition for their services.  In short, the Bryce Harpers of the baseball world who elect free agency will continue to set contract records.  Instead, it’s the second-tier free agents who will be feeling greater pressure to accept any extension offers their current teams are willing to offer them.

Explore posts in the same categories: Anaheim Angels, Baseball History, Denver Rockies, Oakland A's, Philadelphia Phillies, San Diego Padres

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: