Free Agency Follies
Why are baseball GMs making so many stupid deals?
In 2002, Red Sox owner John Henry and GM-to-be Theo Epstein half-jokingly pleaded with Michael Lewis to ditch a book he was working on. Lewis' tome would detail the stubborn inanity of baseball executives who relied on the often-incorrect wisdom of lifelong baseball insiders. Henry and Epstein told Lewis that if he laid bare the advantages of teams that sought out market inefficiencies when gauging players' worth, those advantages would evaporate. But as this offseason has once again demonstrated, the Red Sox execs had no reason to worry about Moneyball. There are just as many mind-bogglingly stupid deals as ever.
Exhibit A: the five-year, $44-million contract the Los Angeles Dodgers gave to 29-year-old Juan Pierre, a player with a notable lack of both power and patience. Then there's the five-year, $50-million contract the Angels bestowed upon 32-year-old Gary Matthews Jr., a career .263 hitter. Granted, Mathews did hit .313 last year, but that was 38 points better than he'd ever done previously. Assuming that's evidence of a new level of talent as opposed to a one-year blip is exactly the opposite of what a smart executive should do.
Those are just the most egregious examples in an offseason full of inexplicable long-term contracts. So, what's going on here? Wasn't this supposed to be baseball's Age of Enlightenment, an era in which savvy GMs knew which players to sign and which to avoid? Here are three explanations for this year's spending spree.
Revenue sharing. Four years ago, Major League Baseball increased the amount of money transferred from higher-revenue teams to lower-revenue ones. As part of 2002's labor agreement, teams were required to share 34 percent of local revenue rather than the previous 20 percent. As a result, teams like the Minnesota Twins and the Milwaukee Brewers now have enough money to sign their precocious superstars to multiyear deals before they accumulate the service time necessary to declare free agency. The Twins' Johan Santana and the Brewers' Ben Sheets are both locked up until 2008, when they'll be 29 and 30 years old respectively. Albert Pujols (who's still only 26) is signed through 2010—for about $3 million less per year than the Cubs recently agreed to pay 30-year-old Alfonso Soriano (for the next eight years). If Santana, Sheets, and Pujols hadn't signed long-term deals after the 2004 season, all three would have hit the open market this year. Free-agent classes like the one we saw in 2003—when once and future MVPs Miguel Tejada and Vladimir Guerrero were available—could very well be a thing of the past. If that's the case, GMs desperate to unload their disposable income on proven major leaguers will have few options outside of over-the-hill, overpriced free agents.
The mirage of parity. In the last seven years, seven different teams have won the World Series. This sequence has given owners and GMs the sense that they're perpetually one move away from winning it all. But it's harder to crash the playoff party than it seems: In those seven years, 30 percent of major league teams—the Yankees, Braves, Cardinals, A's, Twins, Angels, Astros, Giants, and Red Sox—have snatched up 71 percent of the playoff spots. Winning takes patient planning; blindly throwing money at free agents like Juan Pierre and Gary Matthews Jr. does not count as planning. In 2000, the year before the Rangers offered Alex Rodriguez $100 million more than the next highest bidder, Texas finished last in the American League West. They finished last the three years he was with the team, as well.
The baseball world's echo chamber. The 24-hour news cycle is just as much a reality in sports as it is in politics. This fosters an instant-gratification mind-set that makes executives, journalists, and fans only too happy to overlook the long-term consequences of multiyear deals. Mets GM Omar Minaya was lauded for signing Pedro Martinez (before the 2005 season) and Billy Wagner (before the 2006 season) to four-year deals, even though the likelihood that either pitcher will be worth anything close to his salary at the tail end of his contract is minuscule. Martinez will miss somewhere between a quarter and five-eighths of the time in which he'll be cashing Mets paychecks. In his first year in New York, Wagner allowed more baserunners per inning then he has since 2000. Imagine what he'll look like in 2009.
You could argue—as many baseball executives have—that the game's cash surplus gives teams no choice but to overpay for the available talent. But all the money in the world doesn't change the fact that there are only 25 spots on a major league roster. An overpaid veteran with declining skills and a long-term contract often blocks a future star coming up through the ranks. Last year, Dodgers rookie outfielder Andre Ethier had a higher batting average, on-base percentage, and slugging percentage than Juan Pierre, all for a salary around $300,000. Even Alfonso Soriano, whose $136 million deal is the fifth largest in baseball history, will create a logjam in the Cubs outfield, forcing them to jettison, bench, or trade a prospect with lots of potential.
So, what's a savvy baseball executive with an overstuffed wallet and a dearth of attractive options to do? One choice is to take a flyer on an old or injury-prone player like Moises Alou or Kerry Wood. Another is to take a big gamble on a young foreign star, as Boston is doing with Daisuke Matsuzaka. But those all-in opportunities are both rare and risky. If weaker free-agent classes do become the norm, teams that want to crash the postseason party should resist the urge to spend, say, more than $25 million for three years' worth of a below-average starter like Adam Eaton. Instead, they should devote more of their resources to player development. The model of this approach is the Tigers, who resisted trading away their up-and-coming stars even during a five-year stretch in which they went 307-502. Last year, Detroit relied on Zach Miner (24), Jeremy Bonderman (23), Justin Verlander (23), and Joel Zumaya (21) to anchor a pitching staff that led the team to the pennant.
But the team that's playing today's market better than anyone is—no joke—the Yankees. After years of binging on overpaid veterans, the Bronx Bombers have developed a sudden fondness for developing and acquiring young players. Cy Young runner-up Chien-Ming Wang was a rookie in 2005. Catalysts Robinson Cano and Melky Cabrera are 24 and 22. And the Bombers executed one of the better trades of the offseason when they picked up a trio of hard-throwing pitching prospects in return for 38-year-old Gary Sheffield, to whom the Yankees owed $13 million for the 2007 season. The team that gave up those prospects? The Detroit Tigers.