The MLBPA’s Indifference Toward International Amateurs is Coming Back to Bite It

The story of this offseason has been the lack of stories. With about two weeks to go until pitchers and catchers report, roughly half of the league’s top free agents remain unsigned. Top players like Yu Darvish, Jake Arrieta, and J.D. Martinez are still without contracts. The hot stove has been ice cold.

Commentators from around the baseball world have sought to explain the sluggish offseason. Owners have intentionally agreed to act in concert and limit free agent salaries before, under Commissioner Peter Ueberroth in the 1980s, and while there’s been no evidence of that kind of overt agreement among ownership, the game has changed in the last 40 years, and it stands to reason that the patterns of collusion would have changed as well. Collusion is inherently tricky to prove, and after the $300 million penalty imposed on the league in the ‘80s, owners probably know better than to leave a paper trail even if they are acting in concert. Others have pointed to subtler types of anti-competitive behavior, like a general agreement on the part of ownership that free agents are paid too much.

But whether intentional suppression or coincidental decline is to blame, this offseason feels deeply wrong. This is not how baseball’s winter is supposed to unfold. Something is broken, and it needs fixing no matter what the cause is. It’s not just fans who are grumbling; the players also know something is amiss, to the point where some are openly talking about the possibility of a strike. Maybe things won’t come to a head this offseason or next, but tensions are rising, and something will eventually have to give.

As labor peace feels more and more precarious, several analysts have looked at the negotiations over the most recent collective bargaining agreement with a more critical eye. The consensus opinion is that the MLBPA was fleeced and didn’t even realize it. Jeff Passan of Yahoo! Sports obtained the union’s post-negotiation memo, in which the increased luxury tax penalties for big-spending teams are celebrated as a victory, not as the de facto salary cap that they are. Those penalties have been cited as one potential explanation for the lack of free agent spending this offseason. But another change to the CBA has also had an impact, and while the mechanism is less direct, there’s a critical lesson the union needs to learn from its error if it wants to keep this offseason from becoming the norm.

Before the 2017 season, each team had an allotted pool of money to spend on international amateurs. If a team had a good record in the prior year, it got less money, around $2 million in the last year of this arrangement; if a team did better, it got more money, around $6 million. A team that spent more than its pool value had to pay a massive penalty to the league, but clubs still jumped at the opportunity to turn cash into prospects and routinely exceeded their limits, sometimes dramatically so. In 2015, Yoan Moncada got a record-setting $31.5 million bonus from the Red Sox, with Boston paying the same amount to MLB for the privilege. At the time, it seemed like that record would be surpassed within years, not decades.

All that changed in the most recent CBA. Teams now have bonus pools that were set based on market size, and don’t change year to year. The international “amateurs” who can be signed using those pools are defined as players under the age of 25 who have fewer than six years of experience, rather than players under the age of 23 with fewer than five years of experience (as they were under the old CBA). And most importantly, organizations now have no choice but to stay under their spending limits, as the league will void any agreement made using money not in the bonus pools.

As a result of these changes, teams are spending much, much less than they used to on international amateurs across the board. Less than two years after Boston spent $63 million on Moncada, the top international amateur signed in 2017 took home a comparatively paltry $3.8 million.

If I had to guess, I’d say the MLBPA agreed to this change because it thought it wouldn’t have much impact, and that it might get some marginal benefit. Judging by the lack of foresight shown in response to the new luxury tax, there were many in the union during the negotiations who viewed these kinds of spending limits as a competitive stimulus and were therefore willing to embrace a hard spending cap so long as it applied to international amateurs and not major leaguers. At the time the new CBA was announced, I viewed the new international rules in that same basic frame: I criticized the union for selling out these international players, and for not negotiating any comparable concessions from the owners in return, but I didn’t think the players had made a major tactical error as it related to their own compensation.

What the union and I both missed is how this would impact the free agent market. International amateurs are, in Econ 101 terms, a “substitute good” for major league free agents. They’re an imperfect substitute, to be sure: major leaguers can help a team right away, while an amateur needs to either develop or be traded for a major leaguer before making an impact in the big leagues. But an imperfect substitute is still a substitute, and a big enough price differential will gloss over a lot of imperfections. A team has a number of options from which to choose when building for the future; under the new CBA, one of those options has been rendered much, much less expensive than it used to be. The options that still cost the same — like building a team through free agency — are less attractive as a result.

To illustrate, let’s look at this offseason through the eyes of a generic team, one of the many organizations that aren’t among the game’s ultra-rich but also weren’t in the midst of a rebuild in the 2017 season. This could be the Rays, the Blue Jays, the Angels, or a great number of other teams. These organizations are under a lot of pressure from fans to do something to improve themselves, ideally for the upcoming season but at the very least for the near future. The efficacy of that pressure can vary, but there are real consequences if a fan base comes to see its team as complacent.

Prior to the most recent CBA, these teams didn’t have any inexpensive options to satisfy that drive for improvement. Signing impact free agents isn’t cheap, of course, and as discussed above, adding to your team via the international amateur market wasn’t either, requiring an expenditure of at least $30-$40 million every few years. Progress required spending, and teams that didn’t spend in some way were sure to end up with a host of angry and dissatisfied fans.

But starting this offseason, the international market is a cost-controlled way that an organization can improve its  outlook. You can assuage your fans by committing $150 million over six years to Darvish, or if you’re the Angels, you can sign Shohei Ohtani for about $25 million and blow your fans out of the water. Under the old CBA, Ohtani would’ve cost as much as $300 million, and the Angels would be looking at lot more closely at Darvish.

Of course, not every team was lucky enough to be able to sign Ohtani, or any international amateur who can make an impact in the big leagues starting in 2018. Most of the players signing these ultra-cheap deals are 16-year-olds, with the better part of a decade between them and the majors. But more so than ever before, fans can be satisfied by a team planning for the long-term. In today’s game, “windows of competition” and “win curves” are familiar concepts, and payroll flexibility is fetishized and valued nearly as much as actual talent. General managers have no trouble convincing fan bases that their focus on the future is deliberate and prudent, and that spending a few million dollars on Cuban and Dominican teenagers is actually preferable to spending nearly $200 million on J.D. Martinez or Eric Hosmer.

Look at the Rays, for example. They were not known for their prodigious free agent spending before the new CBA took effect, but dissatisfaction with their stinginess was common, even among their own players. Under the new CBA, however, they can spend just a few million dollars in the international market to make some real splashes — by Baseball America’s rankings, they penned deals with the best and 13th-best available players in the most recent signing period — and point to those signings as proof of their commitment to sustainable success. Tampa Bay can now be stingy and simultaneously sign excellent amateur players, thus keeping their fans relatively satisfied and greatly reducing the pressure to spend in free agency.

With the new international spending rules, the MLBPA thought it was giving up something that didn’t have any value to the established major leaguers that form its membership. But by imposing an incredibly low price cap on a path to improvement that doesn’t run through free agency, the union made it easier than ever for teams to bypass veteran free agents entirely.

The owners of major league baseball’s 30 teams have immense control over and power in all the markets for talented baseball players. To combat capital’s control in any type of market, laborers needs to stand in solidarity, not sell each other out for temporary and illusory gains.

Baseball is no different. International amateurs are not part of the MLBPA — it’s not obligated to advocate for their interests. Indeed, the Players’ Association has repeatedly compromised the negotiating position of minor leaguers and amateurs in exchange for short-term gains for veterans. But what this offseason shows is that the interests of the different groups of major league baseball laborers cannot be so neatly divided from one another. If the MLBPA wants this offseason to be an outlier and not the new norm, it has to broaden its focus, and start protecting the rights of international amateurs, domestic amateurs, and minor leaguers too. Undoing the recent changes to the international market would be a good start.

References and Resources

• • Associated Press, “MLB international spending soars above $200M for first time”
  • Ben Badler, Baseball America, “2017 Team-by-Team International Signing Tracker”
  • Ben Badler, Baseball America, “Where The 2017 Top 50 International Prospects Are Signing”
  • Dave Cameron, Fangraphs, “Price Controls and the International Market”
  • CBS Sports, “MLB Free Agent Tracker 2017-18: Latest Hot Stove signings, best players available”
  • Chris Cwik, Yahoo! Sports, “The luxury tax is bad for MLB, and is already destroying the game”
  • Ben Diamond, Baseball Prospectus, “Baseball’s Suspiciously Slow Offseason”
  • Henry Druschel, Beyond the Box Score, “The MLBPA just screwed international amateurs”
  • Maria Guardado, MLB.com, “Coveted 2-way phenom Ohtani picks Angels”
  • Zack Moser, BP Wrigleyville, “Collusion By Any Other Name Would Smell as Foul”
  • Marc Normandin, SB Nation, “The Past, Present, and Future of MLB Collusion”
  • Marc Normandin, SB Nation, “Maybe 2018 will feel less like MLB’s owners are colluding”
  • Jeff Passan, Yahoo! Sports, “Here’s why baseball’s economic system might be broken”
  • Jeff Passan, Yahoo! Sports, “Sources: Players, teams digging in for protracted standoff despite Lorenzo Cain’s $80 million deal”
  • David Roth, Deadspin, “The Hot Stove And The Triumph Of Shamelessness”
  • Bill Shaikin, The Los Angeles Times, “Dodgers’ Kenley Jansen: ‘Maybe we have to go on strike'”
  • Jon Tayler, Sports Illustrated, “Nobody went to Wednesday’s Marlins-Phillies game in Miami”
  • Matt Snyder, CBS Sports, “Chris Archer calls for Rays to spend more, blasts term ‘competitive disadvantage’