Are baseball owners colluding against the players?

Christmas is over and free agency is still crawling along. Recently there have been a lot of tweets and other social media posts flying around wondering if baseball owners are colluding against the players. Compared to recent years spending is definitely down as pointed out by our own Shaun Newkirk:

Shaun isn’t necessarily accusing anyone of collusion and may not have even been considering the possibility. But it seems reasonable to raise a few eyebrows when league-wide free agency spending has dropped to less than half of what we’ve seen in any of the last four years. In fact you have to go back to 2009 for the last time so little was spent on free agents this late in the off-season. You can even see a trend of significant drop-offs starting to begin over the last two years if the small sample size can be believed.

Let’s back up for a moment, though, just what is collusion in baseball? To start to answer this question we have to go back to the 1965-1966 off-season. The Dodgers had just won the World Series and were planning to make another run in 1966. Their star pitchers, Sandy Koufax and Don Drysdale, felt they were underpaid. This was before anything resembling the modern free-agency system had been implemented into baseball so they could only negotiate with the team that owned their contract or retire. They chose to negotiate together against the Dodgers to try to increase their salary. Because neither of them would sign without the other and the Dodgers felt they had to have them in order to have a shot at competing in 1966 they eventually capitulated and signed the two pitchers for close to the amount they had asked for.

The actions of those two pitchers were a large part of what led to the first collective bargaining agreement between the player’s union and the owners. It directly led to one of the owners’ demands - that the players would never again be allowed to negotiate together. The players were willing to give in on that point so long as the owners similarly agreed to not operate in sync. Since then every Collective Bargaining Agreement has included this sentence regarding utilization of free agency rights, “Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs.” This, theoretically, should increase the honesty of bargaining process for both sides, allowing for fairer deals.

Players have stuck to their end of this deal ever since but owners haven’t quite been so steadfast. During the off-seasons following the summers of 1985, 1986, and 1987 the owners colluded together to keep the price of free agency down by refusing to negotiate with any other team’s free agents unless that team didn’t want to resign the player in question.They also agreed to refuse to give out contracts above certain lengths.

This resulted in only four free agents changing teams in each of the first two off-seasons. Many or most contracts were only one-year deals, and some players - such as Tim Raines - had to wait until partway through the season to even return to their old teams. The 1987 season was the first time the average major league salary had dropped since free agency started.

The owners did this with not only the knowledge of but with the explicit consent and aid of the MLB commissioner, Peter Ueberroth. The players sued each off-season and because the owners left a paper trail the courts found in favor of the players every time. In the end $280 million dollars were paid out to the MLBPA to distribute among the affected players and many of those were offered an opportunity to seek new deals with other teams without first sacrificing their current contracts.

That was the last time MLB was successfully prosecuted for collusion but it was hardly the last time the MLBPA made rumblings about it. As recently as 2002 and 2003 players accused the owners of colluding which may have led to the owners agreeing to pay them $12 million from luxury tax revenue in the next CBA despite no admission of guilt. During the 2007 winter meetings general managers spoke openly to each other about which players they would make available. This, combined with rumors that Commissioner Bud Selig was attempting to influence the market for superstar short stop Alex Rodriguez again caused the MLBPA to raise concerns of collusion despite no lawsuits being leveled.

Could the owners be colluding once again? The three signs of collusion back in the 1980’s were contract length, MLB average salary, and the lack of players switching teams. The picture of this off-season is necessarily incomplete until at least spring training, but based on what we’re seeing right now no free agents have signed a contract longer than three years and only six players have even signed contracts that long (remember that Justin Upton was not a free agent when he signed a five-year contract extension).

By this time last year three players each had signed contracts of four-years or more. By far the biggest free agent contract given out so far this off-season was Carlos Santana’s three-year deal for $60 million, a $20 million Annual Average Value (AAV). By this time last year Yoenis Cespedes had already signed the largest free agent contract given out in the 2017-2018 off-season, 4 years at $110 million for a $27.5 AAV.

At this point last year, five other contracts had been handed out that were as long or longer and with higher AAVs than this year’s current runner up, Tyler Chatwood, who has a contract scheduled to pay him $38 million over the course of the next 3 years for an AAV of $12.67 million. As for changing teams 8 of the top 10 highest-paid free agents so far this off season did switch teams.

As much as we don’t know yet how much the big-name free agents are going to make this off-season we also don’t really know how many of them will end up switching teams. Sure, guys you may have never heard of like Jake McGee and Tyler Chatwood have changed teams. But where will Yu Darvish, J.D. Martinez, and Jake Arrieta end up? Or, more importantly to Royals fans, Mike Moustakas, Eric Hosmer, and Lorenzo Cain?

Only 18 of the MLB Trade Rumors Top 50 Free Agents have signed. Of those Carlos Santana is the highest ranked free agent to be signed at rank eleven (Masahiro Tanaka who would have been ranked fifth chose not to opt out of his contract and stayed with the Yankees.) In simpler terms, none of the top 10 free agents of this year’s off-season have signed yet. In contrast 6 of the top 10 had already signed by the end of December in 2016 and more than half of the top 50 were similarly off the board.

Things could still even out. All of those top ten players could be weighing multiple nine-figure options and the reason no one has signed is because there’s so little collusion that the players just can’t decide where they want to play. But typically the longer it takes you to sign a new deal the larger the negative difference in the actual contract a player signs as compared to what he was predicted to receive at the start of free agency. One or even a handful of players could buck the trend, but most of them? That seems unlikely.

It’s also possible that teams have just independently and suddenly all decided to be wiser about how they spend their free agency dollars which could cause the same result without any collusion. There is a de facto salary cap now, after all, without a corresponding salary floor to keep things competitive. Most of the big spenders are sitting right up against the luxury tax threshold and looking for ways to shed salary rather than take on more. Even if the owners are colluding we may never know. Chances are they’ve gotten smarter about hiding or doing without the paper trails that led to their failed endeavors before.

We’ve largely spent this off-season pondering about the deals Cain, Hosmer, and Moustakas will get in terms of how it might affect the club. Some fans want them back so they can continue to root for them as they always have. Others want them to leave so the team will gain draft picks/pool money, commit to a rebuild, and hopefully become competitive again sooner. But perhaps we should be looking at this from a player perspective. If things continue as they have it becomes more and more possible that all three of the big free agents could return to KC, next season. If they do you’ll have to wonder if they only did so because the owners colluded to prevent them from getting the deals they should have been able to command.