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"It's the end of the world as we know it (and I feel fine)." REM
"Won't somebody please think of the children!" Helen Lovejoy
Baseball's owners and general managers apparently have lost their minds. No. 3 starters are going for $10 million and up. A hitter with less power than the average grandma gets a five-year contract. Hey look, a 35-year-old backup catcher with a .225 career batting average let's build him a lakeside mansion.
"Some of these contracts have been ridiculous, but that's the reality," San Diego Padres president Sandy Alderson recently told The Washington Post.
The recent big-money free-agent signings have stretched the limits of rational decision-making. But this isn't the first time that salaries have startled the baseball world. Far from it huge, puzzling long-term contracts have a long tradition within Major League Baseball, dating back 30 years to when the game welcomed its first free agents.
"Some of these signings don't appear too logical in some cases," Pittsburgh Pirates GM Dave Littlefield also told the Post. "But it takes a lot of discipline to sit back and not jump in."
Indeed. Several seminal events have triggered spending sprees over the years. Factors ranging from maverick owners to changes in the economy to new collective bargaining agreements have helped boost player salaries. But at the end of the day, it's that lack of discipline and common sense that's pushed teams toward making ill-advised decisions, moves that can weigh on franchises for many more years.
We can separate MLB's spending trends into four eras since the advent of free agency.
The Reggie Jackson
Claudell Washington Era
It took a series of events to open the door to free agency. As Alex Belth detailed in his excellent Curt Flood biography, "Stepping Up", in 1969, Flood told MLBPA executive director Marvin Miller he wanted to sue MLB. The goal of Flood's suit was to challenge the reserve clause and get it repealed, which would allow all players to become free agents. Five years after Flood took the first step toward his landmark lawsuit, star pitcher Jim (Catfish) Hunter was granted free agency, after an arbitrator ruled that A's owner Charles Finley had breached a part of Hunter's contract. The next year, independent arbitrator Peter Seitz ruled that pitchers Andy Messersmith and Dave McNally were free agents, after both played the 1975 season without signed contracts, a move which Seitz said freed both players from further obligations to their teams. On Feb. 4, 1976, federal Judge John W. Oliver upheld Seitz's decision, putting an end to baseball's reserve clause and opening the door for free agency.
Those events not only made a select number of players eligible for free agency after every season, they also haunted owners for years to come. For decades, owners had treated players like personal property using, misusing or tossing players aside as they saw fit. When the doors to free agency swung open, some owners refused to accept the new rules of engagement. Others adapted quickly, signing top-tier players to contracts that benefited both parties.
And then there were the two lords of largesse, Ted Turner and George Steinbrenner. The owners of the Braves and Yankees both had a big hunger to win, bigger egos, and two of the biggest pocketbooks in the game. The start of the free-agent era brought about a few big deals. But many point to the offseason of 1980-1981 as a turning point in the game's economics. With the Braves coming off their first season above .500 in six years (and just barely, at 81-80), Turner thought he saw a chance to buy a championship. Steinbrenner always had held that stance, signing Reggie Jackson and other greats to rich contracts. The Yankees had more reason to believe a big signing could put them over the top, too, having made the playoffs in four of the previous five seasons, including World Series titles in 1977 and 1978 and a 103-win AL East division crown in 1980.
Turner and the Braves fired the first shot: a five-year, $3.5 million free-agent contract, with a $250,000 interest-free loan and incentives worth $265,000 a year thrown in for good measure. It was the type of deal only a star player could hope to get. But the Braves didn't get a star player. Instead, Turner bestowed his riches unto Claudell Washington. Considered a gifted athlete, Washington also was known as one of the game's biggest underachievers. Insiders assumed his athletic build and smooth swing would translate into big power but his career high in homers to that point was just 13. Observers felt Washington's tools should have made him a perennial Gold Glover but instead he gained a reputation as an all-world loafer. A sign in the bleachers at Comiskey Park during his White Sox days summed up the outfielder's lackadaisical play: "Washington Slept Here."
The reactions at the time made this year's Alfonso Soriano fallout seem like a gentle breeze. Weighing in on the deal 26 years ago, Peter Gammons reported in the Boston Globe that George Steinbrenner called Turner "crazy." O's owner Edward Bennett Williams said, "I hate Turner that is the most outrageous contract I have ever heard of it's absolutely crazy, a touch of madness." Mets GM Frank Cashen, who lost Washington, called it "stupefying."
Murray Chass' New York Times article on the Washington deal nailed the owners' mentality, then as now:
"The size of the contract established an expensive market for this year's free agents. Each year the owners insist they will not spend so lavishly for free agent[s]. But each year one or more of them do so anyway. 'If this first signing is indicative of what is to follow,' said the president of one major league club: 'Wow.'
"When the provisions of the contract were related to [Dave] Winfield, he said, 'Whooo.' Winfield figures to receive more than twice as much as Washington's guaranteed $700,000 a year."
Winfield did end up landing a contract worth twice as much as Washington's per season. But it was the number of years in the contract that shocked the baseball establishment: Steinbrenner and the Yankees gave Winfield an unfathomable 10-year deal, with a base salary of $1.4 million a year. A legitimate elite player well above Washington's class, Winfield received several unprecedented provisions which some observers said trumped even the length of the deal. They included a $1 million signing bonus and matching donations to Winfield's charitable foundation. The contract also called for an annual cost of living adjustment, up to a 10 percent increase per year in Winfield's salary that if maxed out every year would bring the deal's total value to nearly $23 million. The deal ended up making Winfield a little over $18 million, all told.
Winfield gave the Yankees plenty of production, netting four top-10 MVP finishes, five Gold Gloves, five Silver Slugger awards and eight All-Star appearances. But his massive contract, especially the matching charity donations the Yankees were required to make, eventually drove Steinbrenner to ship Winfield out of town. That was still a better result than the one the Braves got with Washington. The right fielder had a big year in 1984, hitting .286/.374/.469 and making the All-Star team while playing in 120 games. He was an above-average player during most of his career in Atlanta. But his occasional flashes of brilliance were offset by moments of maddening inconsistency and perceived indifference. Most of the sense of disappointment was driven by Washington's astounding contract. The deal was so out of whack at the time that to this day, legend has it that Turner didn't realize he wasn't negotiating with Claudell Washington's agent he thought he was talking to Reggie Jackson's agent instead.
The Collusion Era
The alternate name for this period could have been "The Empire Strikes Back." Tired of massive bidding wars for top talent, let alone paying gaudy contracts for lesser players, MLB's owners came up with a better idea. What if they all agreed to limits on salaries? Their collusion didn't have to be absolute, or overt just enough to bring salaries down to a range that would let owners claim a fatter share of baseball's mushrooming profit pool for themselves. The case of two star players summed up the collusion of the mid-to-late '80s. As hard as it is to imagine now, both players were Montreal Expos.
Tim Raines was one of the hottest commodities ever to hit the free-agent market. As a 21-year-old, Raines stormed onto the scene, hitting .304 with a .391 on-base percentage, swiping 71 bases, finishing second behind Fernando Valenzuela for Rookie of the Year honors, and nearly helping the Expos to the World Series. Raines' star brightened from there, as he became a perennial batting title contender, with stratospheric OBPs, great gap power and durability. A free agent just after his 27th birthday, following the 1986 season, Raines should have been the belle of the ball. Instead, he sat at home and waited. The Expos didn't even bother to offer arbitration to their star player. As time went on, it became clear they wouldn't need to. Raines went untouched all the way until the May 1 date when the Expos could re-sign him. After quickly signing a deal to return to Montreal, Raines returned with a vengeance. His first night back, May 2, 1987, ranks as one of the best Revenge Games of all time. Raines went 4-for-5, scoring three runs, knocking in four and leading the Expos to an 11-7 extra-innings victory. The defining moment came in the 10th, when Raines crushed a grand slam to win the game for Montreal. He played in parts of 15 more seasons, and is one of the most deserving candidates for induction into the Hall of Fame.
Andre Dawson's case was even more improbable. By the time he hit free agency after the 1986 season, Dawson had won Rookie of the Year, played in three All-Star games and won five Gold Gloves. He owned an exciting blend of power, speed and defensive ability. Despite being five years older than Raines, Dawson should have expected a big payday at least in a normal free-agent market. Instead, he heard crickets. Through November, December, January and February, Dawson got no takers. Finally, Dawson approached the Chicago Cubs after the start of spring training. One of the best players of the era, Dawson, hat in hand, told the Cubs to sign him for any amount they deemed appropriate. The Cubbies happily obliged, low-balling him to the tune of just $500,000. Raines, Eric Davis and others were arguably better that season. But Dawson's 49 HR and 137 RBI made him one of the greatest bargains in major league history. They also made him the National League MVP.
The owners eventually would pay damages for their collusive conspiracy. Baseball's salary structure would again loosen up over time, with a few bloated deals pointing to more owners who simply couldn't help themselves. But free-agency spending reached a reasonable equilibrium for much of the 1990s. And then the 2000-2001 offseason happened.
Holy Crap! Era
Unlike many winter meetings of recent vintage, the 2000 affair led to a spending orgy that would change the game's fiscal landscape. The first one was for a player who lacked the star power supplied by fellow free agents Alex Rodriguez and Manny Ramirez. But Mike Hampton was considered one of the best pitchers on the market. That assessment said more about the scarcity of free-agent pitching talent that year than it did about Hampton. A solidly above-average pitcher, Hampton had nonetheless benefited from two of the best pitching parks in the game, the Astrodome and Shea Stadium. His high walk rates and good-but-not-great strikeout rates belied his impressive ERAs and winning percentage, pointing to a solid pitcher who wasn't quite ace material. But the Rockies, frustrated by years of poor starting pitching, were ready to spend big. When the details of the deal became public, the baseball world gasped: eight years, $121 million. When asked why he chose the Rockies, Hampton pointed to the Denver-area schools as being one of the biggest attractions.
In the next few days, several more huge deals went down. Ramirez jumped on an eight-year, $160 million offer from the Red Sox. The Dodgers signed Darren Dreifort to a five-year, $55 million contract, arguably the worst deal in the game's history as injuries ruined Dreifort's career, with the pitcher making only 26 starts over the life of the deal. A few weeks later, the Yankees re-upped with Derek Jeter, giving him a 10-year pact for an amazing $189 million.
But no contract caused more divisiveness, fist-shaking and spilled ink than the 10-year, $252 million bonanza the Rangers gave A-Rod. Owner Tom Hicks defended the deal every way he knew how. Just 25 years old and already arguably the best player in the game, Rodriguez was the best free agent in history. Hicks hoped to parlay Rodriguez's appeal into big profits for his media holdings, his ownership of the Rangers and the NHL's Dallas Stars feeding off broadcasts, and vice versa. The Rangers' owner also planned a retail and commercial mega-complex adjacent to the Arlington ballpark, a development likely to spike in value after A-Rod's signing.
In those respects, Hicks actually calculated right. But there were holes in his thought process too. The Rangers never surrounded A-Rod with the right personnel to win games. Despite signing Chan Ho Park to a deal worth well into eight figures a year and throwing darts at countless other arms, the Rangers' awful pitching sank the team year after year.
But the bigger problems were the same ones that have plagued owners for the past 30 years: greed, and an inability to make sound decisions. Hicks bid mostly against himself that year, with rival teams said to be nowhere near the $252 million figure laid out by the Rangers. Hicks and his fellow owners also fell victim to the biggest greed generator of all the stock market. Owners were feeling flush that offseason, as the Nasdaq had generated massive returns throughout most of the 1990s, culminating in a gigantic final run-up in late '99 and early 2000. But MLB's owners didn't seem to read any stock charts that year. If they had, they would have seen the Nasdaq top in March 2000, then start a precipitous decline. Corporate and individual owners alike were spending far more money than they ever had, at a time when they were about to lose more of their collective wealth than they ever had before.
The Good Luck With That Juan Pierre Deal Era
Owners again turned more conservative three years ago. A spate of deals in the 2003-2004 offseason, for instance, seemed to cluster around identical or very nearly identical figures. Reggie Sanders was one of what seemed like 400 players signed to two-year, $6 million deals that winter. Once again spending would soon return to normal, with the usual suspects overpaying for past-their-prime vets and players rewarded for past performance they weren't likely to repeat.
When the owners and players ratified a new collective bargaining agreement this October, the floodgates opened again. We know the numbers by now: five years, $44 million for Juan Pierre, lifetime .377 slugging percentage; five years, $50 million for Gary Matthews Jr., 32 years old and with only one significantly above-average season in his career (the most recent one). Then there's the always off-target Baltimore Orioles, who gave pedestrian reliever Danys Baez more than $6 million a year because his manager decided to use him in the ninth inning instead of the seventh for a couple years and Jamie Walker a three-year deal at nearly $4 million a year because he's left-handed and appears to be a sentient human being.
Bad timing has doomed multiple teams to make terrible decisions this offseason five years of increased revenue certainty during one of the worst free-agent markets in history is a lethal combination. But the nature of how teams work and how GMs dictate their future will continue to create these kinds of colossal mistakes, whether it's a rules change, a new CBA, a huge bull market on Wall Street or something else that triggers the frenzy.
Owners give GMs budgets every season, and player salaries often get treated like mere line items, as if everything's linear, and a 38-year-old middle reliever is just a less expensive widget than a 27-year-old cleanup hitter. Many GMs, faced with limited job security, pressure from fans, ownership and media, are only too willing to spend every penny they can now to save their hides. If they don't spend the cash, that money might not carry over to next year and they might not be around to even see a next year. Creative roster management and aggressively pursuing trades is a lot more work than throwing a three-year deal at a 32-year-old catcher with a bad body that no one else wants. Paying for past performance instead of systematically considering likely future output remains the norm for many teams.
Free agency is an inherently limited, inefficient way to acquire talent and yet every year, teams just can't help themselves. They never will.