By Jordan Kobritz
The Royals’ victory over the Mets in the World Series signals the official end of the 2015 baseball season. Now fans in need of their baseball fix can turn their attention to the hot stove league, the off-season maneuverings where teams try to improve through trades and free agent signings.
In today’s media-centric world, trades don’t normally generate the same buzz and expectations of a free agent signing. Most of the time, players involved in trades are younger than the typical free agent. Many are Minor Leaguers who have yet to make their mark in the majors and are therefore known only to baseball insiders and savvy fans.
Free agents, on the other hand, are universally known having spent a minimum of six seasons in the big leagues accumulating stats and developing a reputation. Free agents also come with a stiff price tag – upwards of $200 million in some cases – which brings higher expectations. After all, the more we pay for an item the better we expect it to perform. But that isn’t always the case with free agents. Any baseball fan can point to examples of free agent signings gone bad.
Red Sox fans need only look to last year when the team signed the two most expensive – and arguably the best – hitters on the free agent market, Pablo Sandoval and Hanley Ramirez. Sandoval received a five-year $95 million contract and Ramirez was signed for four years and $88 million. Both players were unmitigated busts in 2015. Sandoval finished with a WAR – “wins above replacement,” a complicated, imprecise but increasingly popular formula that essentially tries to determine how much better a player performs than a typical replacement player – of minus 0.9. Ramirez was even worse, finishing the season with a WAR of -1.3.
In other words, if the Red Sox had replaced both players with the average player at their positions they would have won a minimum of two more games and saved themselves tens-of-millions of dollars. But that conclusion is based on hindsight and free agent signings must necessarily be based on foresight. The signings impressed the so-called experts who installed the Red Sox as the pre-season favorite to win the World Series. Instead, the Sox finished last in their division and general manger Ben Cherington, who was responsible for the botched signings, was fired, two years after a raft of free agent signings led to the Red Sox winning the 2013 World Series.
Was Cherington a genius in 2013 and an idiot in 2015? Hardly. When teams wade into the free agent marketplace they might as well be shooting craps. Based on substantial research by a number of baseball analysts, signing free agents is closer to a roll of the dice than a guarantee of either their future performance or the team’s success. But GMs, members of their staff and team owners are competitive by nature. Every team wants to be the one holding the Commissioner’s Trophy at the end of the World Series. And with the game awash in money and rampant socialism in effect – each team was guaranteed $200 million this year from the pool of media, internet and licensing fees before the first pitch was thrown – free agent contracts amount to little more than monopoly money.
That same economic system makes it particularly challenging to improve a team through free agency. The best players rarely ever become free agents. Teams have the financial ability – and incentive – to sign their best players to long-term contracts early in their careers when the players are only able to negotiate with one team. That assures both cost certainty and a lower payroll. The free agent marketplace is similar to an auction. Teams under pressure to win now end up overpaying, by as much as 50% according to some studies, for players they hope will make a difference.
In reality, pennants are no longer won through free agency but with a foundation of homegrown players who aren’t paid anywhere near their value on the open market. For examples you only need to look at the rosters of this year’s World Series participants. Both teams were populated with young, inexpensive talent.
There’s no harm in enjoying the hot stove league and fantasizing over the free agents available to your favorite team. Just don’t expect the results to match the hype.
(Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor and the Chair of the Sport Management Department at SUNY Cortland. Jordan maintains the blog: http://sportsbeyondthelines.com and can be reached at firstname.lastname@example.org.)