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The MLB lockout is over after 99 days, but it will take longer to tell if an offseason of hostility and discussions of baseball economics over on-field performance will have a lingering impact on anyone involved.
A new collective bargaining agreement is in place and it will bring some on-field changes but the economics of the game have not been markedly altered, so it will be up to the owners and the powers that be within the sport to determine how their respective teams balance winning and profit. This spring that picture needs to come into focus quickly, as teams need to rapidly finish up their offseason moves now that the transaction freeze is over. Some of the game’s most prominent players are still free agents, but likely need to find homes quickly if they’re going to be ready to play on the new Opening Day on April 7.
One of those stars still looking for a home is emblematic of the game’s lingering economic challenges. Freddie Freeman is a former Most Valuable Player, a perennial All Star and the face of a franchise for over a decade with Atlanta, a franchise that just won a World Series. He’s a free agent this winter, and six months ago it seemed like a virtual slam dunk that he’d spend the rest of his career in the same uniform.
But, even while teams were rapidly completing deals before the lockout and the transaction freeze, Freeman remained on the market. Then, during the lockout, the rumor mill brought news that seemed unthinkable: Not only had Atlanta not re-signed Freeman before the lockout, it seemed increasingly unlikely that they would at all.
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From a baseball perspective, it seems impossible that Atlanta and Freeman won’t come to an agreement. For most of modern baseball history a 32-year-old face of a franchise would be due a long contract. He’s been a huge part of the Braves’ success and, due to the Braves’ somewhat unique ownership, the fact that they can afford to give him that big deal is public knowledge.
And therein lies the problem. For as long as the sport has been under its current economic model (now nearly 50 years, since free agency came to the sport in 1976), players have been compensated nearly exclusively based on the contributions they make to help their team compete. As teams evolve to prioritize profit over competitiveness, however, it becomes increasingly plausible for a team like Atlanta to evaluate a situation like Freeman’s from a business perspective instead of a baseball one.
Winning vs. Revenue
In November MLB Trade Rumors predicted Freeman would receive a six-year contract valued at approximately $180 million. In baseball numbers, that contract makes sense. On the business side, however, Atlanta’s possible decision not to offer it makes more sense: Their business is making record revenues and history suggests that they’ll do even better in 2022, coming off a World Series victory. While signing Freeman makes them a much better baseball team, it may not generate them $180 million in new revenue over the next six years, plus the level of return on investment that a corporation like Liberty Media would require.
One of the MLBPA’s stated goals heading into the latest round of collective bargaining was incentivizing competition, as there have long been concerns that teams across the sport’s revenue spectrum are prioritizing profit over spending money to win games. It’s traditionally been a concern for organizations like the Pirates and Marlins, who the union has alleged do not reinvest the full amount of the revenue sharing money they receive in player payroll. It’s not just them, however: In 2021 Grant Washburn of Pitcher List developed an ownership ranking model that estimated the Yankees have left more than 17 wins per season on the table by underspending since Hal Steinbrenner took over the franchise in 2008.
The new collective bargaining agreement reduces one incentive for “tanking” by establishing a draft lottery for the top picks in each year’s MLB draft in place of the current system, which simply assigned picks to teams based on their previous year’s winning percentage. While losing for future competitive reasons may now be less prevalent, opting not to spend for economic reasons was not addressed in the agreement.
In the brief offseason window before the lockout teams rushed to get transactions done, including some significant spending from non-traditional contenders. During the lockout the owners repeatedly pointed to that spending as a sign that the game’s economic system was working fine and no changes were needed. Now, with the ink dry on a new collective bargaining agreement, it’s time to find out which owners are actually committed to competing and which are simply satisfied to collect increased revenue.
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