The contract numbers spent in free agency so far are record-setting, mind-bending. Max Scherzer‘s annual salary of $43.3 million is the highest ever for a pitcher. The Texas Rangers spent more money in two days on two players — Corey Seager and Marcus Semien — than they have on their entire roster the last four seasons combined. The New York Mets‘ 2022 payroll is approaching $300 million, after Steve Cohen’s holiday weekend spree.
But some agents and club executives fully anticipate an inevitable fallout from all of the money being thrown around now, and expect that whenever there is a labor resolution between Major League Baseball and the MLB Players Association — whether that happens in the next three days or the next three months — those who will absorb the cost will again be the middle class of the union.
That is to say, it’s those rank-and-file veterans who aren’t superstars and aren’t getting the eight- or nine-figure payouts, a group that has taken a big hit in average salary over the past seven years. “It’s going to get ugly for those guys,” said one general manager.
Said a player agent: “I don’t even want to think about what’s going to happen to them.”
Salary and compensation have been a huge focus for the union in the unsuccessful negotiations that saw the league lock out the players Thursday for the first time in 30 years — but the conversations have mostly been around a league minimum and free agency eligibility. The players’ middle class, which has seen salary diminishment as a lot of teams apply analytics and identify cheaper replacement-level players, while other teams adopt the tanking strategy and cut payroll dramatically, has mostly been left out of those conversations.
According to numbers dug out by ESPN researcher Paul Hembekides, the average salary for middle-class free agents fell by almost 50% from 2014 to 2021. In defining that group, Hembekides essentially set aside the high and the low — the 10 players with the most lucrative contracts in each winter, and any player who signed for less than $1 million or accepted a non-roster invite.
The resulting numbers paint a stark picture for the second- and third-tier veterans:
2014: Average contract $11.8 million
2015: $11.1 million
2016: $8.2 million
2017: $8.2 million
2018: $8 million
2019: $7.8 million
2020: $6.2 million
The players’ overall share of the multibillion-dollar baseball industry has diminished, with the union’s share of the pie shrinking, and the average salary in decline, according to the Associated Press:
2014: $3.95 million
2015: $4.20 million
2016: $4.38 million
2017: $4.45 million
2018: $4.41 million
2019: $4.38 million
2020: $4.43 million (prorated)
2021: $4.17 million
There is enormous concern among some agents that this trend will continue, even after the league and the union agree on the next collective bargaining agreement. They expect that teams will again work to exploit the huge pool of free agents and use supply-and-demand against the veterans.
Last winter, for example, reliever Mark Melancon — coming off a season in which he had a 2.78 ERA as the closer of the Atlanta Braves — could do no better than a one-year, $3 million deal with the Padres (the saves leader in MLB in 2021, he signed a two-year, $14 million deal with the Diamondbacks on Wednesday). Ryan Tepera had a strong performance for the Cubs in 2020 but was not even tendered a contract, and took a pay cut from $900,000 to $800,000 to re-sign. He was traded to the White Sox midseason.
The current strategy of the union leadership in the CBA talks is to drive those numbers upward by pushing from the bottom — getting the majors’ youngest players more pay earlier in their careers, through what one source called a “significantly” higher minimum salary, and by getting young players into arbitration sooner. The union’s hope is that by fostering a system in which the youngest players are more expensive, teams might be more inclined to pay more to an experienced veteran.
What some agents fear, however, is that in prioritizing the goal of getting more money to younger players earlier in their major league careers, and in getting more players to free agency sooner, the union would actually be feeding the systematic machines that have diminished the salaries of the middle class of players.
If players reach salary arbitration earlier in their careers, becoming more expensive, this could incentivize teams to toss them overboard into the ever-growing pool of free agents.
Longtime agent Seth Levinson wrote in an email that “if the new CBA allowed more players to attain arbitration or free agency status at earlier stages in their careers, it would accomplish very little without pressure points requiring clubs to pay. A lower threshold for arbitration eligibility will result in more players being non-tendered, and the consequence for players reaching free agency at five years instead of six years of service will be that the market will be flooded with more players, which will only further drive free agent values down.”
Levinson and other agents strongly hope that union leadership focuses on the overall share of revenue that the players take from baseball’s revenue pie, rather than on propping up one group or another. There is a lot of sentiment that stronger efforts should be made to curb the practice of tanking — teams cutting payroll in an effort to finish near the bottom of the standings and, as a result, pick near the top of the draft. The tanking, some agents believe, has sucked many hundreds of millions of dollars out of potential salary for the union’s middle class.
Levinson would like to see the union pursue a bookend to the competitive balance tax that targets the teams that spend the most — a tax assessed against teams that reach a predetermined salary floor. As it stands, the Pirates, Guardians and Orioles are all set to pay their entire rosters in 2022 less than what the Mets will pay Scherzer. MLB and the union have long discussed a system, Levinson suggests, that would “provide clubs with a choice of maintaining a minimum payroll or paying a tax as a penalty … Strong financial disincentives for tanking will likely result in the Club spending on Free Agents, which improves the on-field product, its relationship with the fan-base, increases the values of free agents, and allows many veteran players to extend their careers.”
For years, Major League Baseball owners have had factions of Haves and Have-nots, with big-market teams like the Yankees and Dodgers favoring very different rules than small-market teams like Tampa Bay and Cleveland. It remains to be seen whether a similar dynamic will develop among the players, because while the elite players continue to set new salary benchmarks every winter, the union’s middle class — the size of which has grown significantly as some teams apply analytics and others adopt a tanking strategy — is losing ground.
About four dozen players worked out deals this winter collectively valued at about $1.5 billion. For the best players at the very top of the baseball food chain, the system is working. But about 300 players remain unsigned, and they might have to wait months to secure a job — perhaps for a lot less than they might have expected when the offseason began.