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The State of Collusion in Baseball

With the 2019 regular season in full swing, it’s about time I did another baseball article. This time we won’t be talking about specific players or themes though. I’m going to delve into the collusion (or lack thereof) between owners and front offices around the league regarding high-priced free agents.

After nearly four months of waiting, one of the big fish had finally been reeled in. Manny Machado (26 years old and still very much in his prime), formerly of the Baltimore Orioles and Los Angeles Dodgers, has just signed a 10-year $300 million deal with the San Diego Padres. After the news broke, many questions arose. Why so much money?

Why so many years? Why San Diego? None of these questions were more pressing than that last one. As a 26-year-old superstar, why would Machado go to a franchise that hasn’t made the playoffs since 2006? As you’ll soon find out, he didn’t have much of a choice.

Analytical Revolution

The overarching reason for long drawn-out off seasons in major league baseball is the adoption of top tier analytics in front offices across the country. As contracts get larger and larger, general managers are beginning to think more long-term in terms of the luxury tax rather than flushing out huge contracts for years on end.

Now, where do the analytics factor in all this? The numbers, primarily WAR (Wins Above Replacement) and WHIP (Walks and Hits per Innings Pitched), say that its smarter to overpay per year for 4 or fewer years than dole out a reasonable contract per year for 5 or more years so you can have deeper teams. The man who started this revolution, Astros GM Jeff Luhnow, in an interview with The Quarterly, said, “Back then, when I talk about analytics and information, it was looking at historical performance to predict future performance – very much like in the financial services industry, where you’re looking at the performance of stocks and the economy and trying to figure out what factors are predictive and sticky and what the future might look like. Today it’s completely different. we now have so much technology around the ballpark and information about the trajectory of the ball, the physics of the bat swing, the physics and the biomechanics of the pitcher’s delivery – so many components now that advanced sciences have worked into our game.” It’s these advanced sciences that are leading to these free-agent standoffs. When analytics first started coming into the fold, front offices felt content giving $200+ million contracts to aging superstars Albert Pujols and Miguel Cabrera based on what they had accomplished in their past. But now with modern technology, franchises are getting more and more selective over how much and how many years to give these bigtime free agents because the analytics don’t justify these contracts.

Big Markets Are Out

A second major reason for such a long wait for bigger name free agents to be signed is that the largest markets that are generally making huge free agent pushes are not in the running this year. Teams like the New York Yankees, Los Angeles Dodgers and Chicago Cubs are either up against the luxury tax salary wise or are satisfied with their rosters. Because most of the $100 million players want to be in the major markets, their agents will wait until they can field offers from some big markets before they even entertain offers from small markets like San Diego and Kansas City. But in a free agency period like this where none of the big markets are players, a small market should step up and offer a lucrative deal.

How All This Ties Back to Collusion

Before we get started on why or why not collusion may be taking place, it would be helpful to understand what is meant by collusion in major league baseball. Baseball collusion is when the owners work together to avoid competitive bidding for player services. Now, this isn’t the first time this has been suspected of major league baseball. From 1985 to 1987, then commissioner Peter Ueberroth called owners “damned dumb” for buying their ways to world series. Ueberroth also said that it was not smart to sign long-term contracts. It has since emerged that owners agreed to only give a max of three years for position players and two years for pitchers. So, what makes players think that a new era of collusion has begun? Longtime agent Jeff Borris who’s represented the likes of Barry Bonds, Mike Piazza, and Rickey Henderson, believes league owners want the gross revenue to go up but keep the cost of labor down. “When you look at the revenues coming into the game…it broke an all-time record and over $10 billion, the cost of labor should hand in hand go up as well.”, said Borris. “When that doesn’t happen, I think that is an indication of a tremendous collusive effort on behalf of the owners to suppress salaries for players.” In 2018, gross revenue hit $10.3 billion for the MLB (per the league office) even though salaries took a slight hit.

The Final Verdict

It’s very hard to clearly state if there is collusion or not because there is no overbearing public evidence like there was in the ‘80s. Owners aren’t nearly as blatant today in their efforts to tamp down salaries so it’s hard to pinpoint when or where collusion is taking place. But based on the lack of evidence that has been compiled in the public eye and the similarities to what happened in the 80s, I think it’s at least rational to say that something shady is going down across Major League Baseball.

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