Why aren't good teams buying?

Sam Miller

There’s always a team or two that tries to run away with the offseason, and this year is no different, except that this year is totally different. This year we’re seeing something that might be unprecedented in what I’ll call the MLBTradeRumors era, which stretches back a decade. This year, the teams that are buying are the teams that need the most help. The bad teams.


This might seem completely normal, right? If some product is available, it is the potential buyer who doesn’t already own that product who should be most willing to buy said product. Bad teams have fewer good players and should thus be the ones more interested in adding good players. So simple! Except that’s not how the world often works. People who own a lot of nice things don’t stop wanting nice things; while people who don’t own nice things (often because they can’t afford them) don’t suddenly start being able to. In fact, the world works the opposite way: Poverty is often a feedback loop, and the people who own nice things hoard all the nice things. There’s an expression for this. There’s an O’Jay’s song about this.  

Which is why the team or two that tries to run away with the offseason is often a team that’s already very good—the Yankees before 2009, the Red Sox before 2010 being the two examples that might first come to mind. Teams that just won 94 games might have fewer holes, but they also usually have a) money and b) an insatiable thirst for more wins. That was true in baseball, until this year.

I took the top 40 free agents available each offseason. (For the past three years, I used our rankings at Baseball Prospectus. For the seven years before that, I used Tim Dierkes’ rankings at MLBTradeRumors.) I declared the top free agent to be worth 40 points, or 40 competitive units, or 40 batcoins, or whatever measure of weighing things’ significance you prefer. The second-best free agent was worth 39, and so on down to the 40th-best, who was worth one point. A team that signed or re-signed the nos. 1, 2, 5 and 16 free agents (as the Yankees did before 2009) would have collected 140 points (out of 820 possible).

I looked at what percentage of these units had been acquired by winning teams, and by playoff teams, in each offseason. (Because the playoffs expanded to 10 teams during this time period, I added an extra column for “adjusted playoff teams”—basically, the 10 teams that would have made the playoffs if a second wild card had existed in those years.) Players who didn’t sign—retired, went to Japan, were never posted after all, etc.—or who haven’t yet signed this year (as of Dec. 31) were removed from the denominators, so they don’t affect the percentages at all. The results were notable enough to justify my writing this article:

Year

Winning Teams%

Playoff Teams

AdjPlayoff Teams

2005-2006

48%

35%

43%

2006-2007

56%

35%

36%

2007-2008

80%

46%

56%

2008-2009

80%

49%

75%

2009-2010

75%

46%

55%

2010-2011

76%

39%

46%

2011-2012

56%

39%

42%

2012-2013

64%

42%

42%

2013-2014

60%

25%

25%

2014-2015

40%

20%

20%

So what are we looking at? With the obvious caveat that we’re still waiting for the full offseason to shake out—for all we know, the Dodgers will sign Max Scherzer, James Shields, Rafael Soriano and Rickie Weeks and change the balance of that table considerably—there are some clear takeaways. One is that this offseason is in line to be the first since 2005-2006 in which losing teams signed more top free agents than winning teams. Another is that it’s in line to be the lowest percentage of free agents signed by winning teams in our timeframe. And, finally, it’s the lowest percentage signed by playoff teams ever—well under half the typical rate established from 2005 to 2012, and (barring the Dodgers/Scherzer/Shields scenario envisioned above) certainly, significantly lower than any year prior to 2013.

So what is happening? Let’s think about this from two directions, one of which is simple and we’ll dispense with quickly, the other of which is a bit complicated.

The simple direction is from the losing teams’ perspective. It’s obvious why more losing teams would be trying to sign players than they did a few years ago: With the fifth playoff spot in each league, more teams are closer to contention than they used to be, and thus more teams are in that sweet spot where they might be only a couple wins away from the big playoff cash payout. Furthermore, even if they don’t make the playoffs, they’re more likely to be credibly in the race throughout the summer, and thus reap the benefits of an engaged fan base and pennant fever.  

It’s also easy enough to figure out that there are fewer poor teams. I’m going to steal this from an essay written by Tim Britton for the forthcoming 2015 Baseball Prospectus Annual (pre-order now):

“The three highest spenders in 2014 dished out 52 percent more cash than they did in 2004. The median, meanwhile, is 71 percent higher than it was back in '04.… The Yankees spent only 12 percent more in 2014 than they did a decade earlier. (Eleven) franchises have more than doubled what they spend on players.”

In other words: The gap between rich and poor teams has shrunk, the middle class has grown, and now everybody can afford to buy a car. In the real world, the market would respond by creating luxury cars, ever fancier, for the rich to distinguish themselves. But there’s no factory to turn out more luxury ballplayers. The rich and the poor are mostly shopping for the same goods, and suddenly the rich can’t outspend the poor without paying unreasonable prices.

Finally, the losing teams are no longer losers because they were born in a poor caste. Rather, losing-to-win is strategy embraced by relatively big markets. The Astros, Cubs and Red Sox alone account for a quarter of the top-40 free agent signings last winter. All finished well under .500. All did so partly by choice, or at least on account of their own surrender postures.  And all have commonly had payrolls in the upper half of the league when they’re competing. That these three terrible teams have done so much this offseason is less surprising than if, say, the Royals, Pirates and Rays had done so in 2001.

Intermission

It’s also very possible this is a flukish one-year outlier, a simple matter of timing and chance that I wouldn’t have even noticed if, say, the Dodgers had re-signed Hanley Ramirez and the Giants had won the bidding for Jon Lester. Both of which could have happened. Counterfluke argument: The percentage of free agents signed by playoff teams was also notably low last year, so there’s at least a hint of a two-year trend here; one could just as easily say “and imagine how striking the table would look if the Cubs had landed Russell Martin!”; and we haven’t even talked about the trade market, which has similarly been strangely lopsided in favor of non-playoff teams. Still, “one-year fluke” is always a very strong explanation for “one-year phenomenon.”

End Intermission

So for the tougher question: Why aren’t good teams buying? Why have the Giants, Tigers, Nationals, Angels, Pirates, Cardinals, A’s and Orioles—eight of the 10 playoff teams—almost completely sat out this free-agent period? Why have the Dodgers limited themselves to one signing plus a handful of trades, subsidized by the salary dump of Matt Kemp? Why have the Royals only picked at the bottom of the top 40, instead of using their 2014 windfall to add a marquee free agent? Why is Oakland acting like a rebuilding team, why did the Angels trade their (arguably) second-best player for a prospect, and why are so many of the Nationals trade rumors about trading away a star instead of adding one?

Partly we can say it’s a result of all those lower-half teams buying players, obviously. Free-agent acquisitions are a zero-sum game, so “why didn’t this team do X” can be literally explained with “because this other team did it first.” And there are small factors that might come into play: Losing teams’ draft picks are usually protected from the free-agent compensation system, for instance, so they have a bit more incentive to shop on the free-agent market. (Plus other small hypotheses that are too small yet too wordy to want to get into here.) But I think it goes beyond those. Let’s consider why teams would sign a player. Presumably, a team thinks that player will do one of three things:

1. Make a non-playoff team a better non-playoff team

2. Make a non-playoff team a better playoff team

3. Make a playoff team a better playoff team

As alluded to up there (control+f “sweet spot”), the greatest gain of all is scenario two. That’s not to say scenario one isn’t swell—75 wins might not be that much better than 72, but it’s still better—but it’s obviously not as swell as scenario two. If you knew for a fact that you were going to finish a game out of the postseason, but that Shaun Shortstop would add two wins to your ledger and put you in the postseason, you’d probably pay $30 million bucks for him and not look back.

But what about the difference between scenarios two and three? Ask the Yankees of the last decade how much an early exit from the postseason was worth. To them, not much. To them, getting deep into the postseason was what separated a successful season from an unsuccessful one.

And we saw what that meant. The Yankees were spending thrice as much as the median-payroll team was. They weren’t playing for 92 wins and a probable playoff berth. They were playing for 103 wins and the promise of postseason dominance. They were signing guys for scenario three.

But it turns out that the promise of postseason dominance was a big lie, bigger still today. With a fourth round of playoffs, making it to the postseason has never been further removed from winning a World Series.

Further, the same forces that make it easier for a bad team to imagine contending for the playoffs make it safer for a good team to consider its spot safe; the Tigers, or the Nationals, or the Dodgers, or some other good team certainly could miss the playoffs in 2015. It’s just not as likely as it used to be, before a third of the league made the postseason.

So to a very good team, there seems to be a) less incentive to try to be great (either way, the October crapshoot will get you) and b) less incentive to worry about being only pretty good (either way, you’ll be in a good position to make it to that crapshoot). So why bother being great? Why not just relax, save your prospects, save your draft picks, avoid the six-year contract, and try instead to settle in at 87 to 94 wins from here to eternity? That buys a lot of crapshoots.

Teams didn’t have to come to this conclusion—the benefits of a division crown overwhelm the benefits of a wild card spot, for instance, so we might have hypothesized that the second wild card would inspire more good teams to try to become great teams—but, thus far, the offseason activity suggests they have. These seem to be the incentives of Bug Selig’s Major League Baseball.

In the 15 years before the second wild card spot was added, 20 teams won 100 games in a season. In the three years since, none has. It’s way too soon to say this is more than a coincidence, just as it’s way too soon to say that this season’s spending patterns are more than a fluke. But I’m not sure there’s a better way to explain this:  


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