By the Numbers
---- — Big-time free agent signings are an endangered species not soon to make a comeback in a post-steroids world.
As the winter meetings completed in Nashville, fans waited with bated breath for their team to make a big splash in free agency. In truth, there are few to be made because steroid testing is doing for owners what collusion couldn’t do. It’s lowering the explosion of player salaries and creating a much more level financial arena.
There are three major factors at play: steroid testing, the luxury tax and free agency changes.
Clean players can’t
In the steroid era, from the late 1980s through 2007, players could expect to reach free agency twice in their careers, initially around 30 and then in their mid-30s as performance enhancing drugs significantly prolonged their careers.
With the advent of PED testing, however, the second free agent contract is becoming a thing of the past. Its elimination, coupled with the “luxury tax” and loss of draft picks, has driven salaries down and encourages small and mid-market teams to sign their players before they get to free agency.
Teams which didn’t react to the changing climate see their rosters littered with apocalyptic contracts like the Yankees, who have over $300 million tied up over the next five years in the aging Derek Jeter, Alex Rodriguez and Mark Teixeira.
Ben Cherington and the Red Sox have done a good job of cleaning out the same mistakes that his predecessor Theo Epstein made.
Look at the journey of a 20-year-old drafted out of college. On average, it takes a player four years to make the major leagues. While in the minor leagues they will make an average of just $1,500 per month.
If he makes the majors at 24, for the first three seasons he will make the minimum of $480,000. At 27, still under club control, he becomes eligible for salary arbitration for the next three years, where his salary will jump signficantly.
At 30, he becomes eligible for lucrative free agency. In the era of steroids, he could expect a 4-5 year contract, and then one other contract taking him from his mid-30s to 40. But now he can expect only one free agent contract as his body breaks down in the mid-30s.
So teams are locking up their stars in their late 20s in advance of them reaching free agency. The Rays did this with Evan Longoria. The tradeoff is a contract at slightly below free agent value, but with the security of a contract when their performance may have eroded.
Cheap high picks vs. expensive free agents
In the past if a team lost a Type A (a stud) to free agency, the departing team would receive a compensation draft pick. The receiving team wasn’t “penalized” for signing the free agent.
But beginning this year, teams will lose their first round pick, with the exception of the top seven picks, which are protected.
Teams are reluctant to part with first round picks. They’ll be under the team’s control essentially for 10 years while a Type A free agent presents risk.
Take Josh Hamilton, for example. One of the top five hitters in the game, he enters free agency at 30 years old. Yet, due to his past struggles with alcohol and players breaking down in their mid-30s, the Angels were the only team to offer him five years. He signed immediately.
Tax and spend
In 2003, MLB instituted the luxury tax, which acts as a competitive balance. The threshold this past year was $178 million. Teams that exceeded that amount for the first time had to pay 22.5 percent of the amount they are over the threshold. For the second time its 30 percent and after that 40 percent.
Only the Yankees and Red Sox have exceed it twice, with the Yankees having paid $206 million dollars since 2003 in “luxury taxes” and the Red Sox $18.6 million.
Both organizations are on record that they won’t exceed it in the near future.
All of this puts a premium on scouting, drafting and player development.
In other words, Manny Ramirez isn’t walking through that door, Pedro Martinez isn’t walking through that door, and Carl Crawford isn’t walking through that door any time soon.
Pete Delani is a former Masconomet Regional baseball coach. His column will appear periodically in The Eagle-Tribune.