A look at why the Hot Stove has turned Ice Cold

With the Hot Stove seeming to finally warm after Spring Training warmed up, what kept it so cold all winter?!

As a sluggish free agency continues for players across the spectrum and some are starting to speak out about the curious timing of their offers through the Hot Stove season. Mark Reynolds and Francisco Liriano have said they had no offers for months but then suddenly had multiple minor league offers on the table.  Brad Brach also detailed how teams came at him with similar offers and had this to say:

“I really don’t know [what to make of the state of free agency],” Brach said. “We talked to certain teams and they told us, ‘We have an algorithm and here’s where you fall in that scale.’ It’s just kinda weird that all offers are the same that come around the same time and everybody tells you there’s an algorithm, but you figure teams have different ones, but I don’t know.”

Players are starting to be more vocal about their concerns on the state of free agency and the fact that teams are waiting later and later to sign players.  It is late February, spring training is underway, Bryce Harper and a bunch of other quality players don’t have deals.  With the collective bargaining agreement expiring after the 2021 season, we are hearing discontent from the players union and the whispers of an impending strike and another word, collusion.  Now, are teams colluding with each other to depress free agent salaries across the board?  I don’t think so but let’s investigate why it could appear that way.

Let’s start by looking at those who run the teams.  Most of the top decision-makers in baseball and their lackeys have ivy league degrees and Wall Street backgrounds.  Theo Epstein, Andrew Friedman, and Jeff Lunhow all have impressive corporate backgrounds before they ended up in baseball.  Teams always try to copy each other, many teams that were looking to modernize their baseball decision-making began poaching executives from successful teams.  For example, David Stearns (Brewers) and Mike Elias (Orioles) are disciples of Jeff Lunhow (Astros), Farhan Zaidi worked under Billy Beane in Oakland and Andrew Friedman in LA.  Brian Cashman is rarely mentioned in the top executive conversation because he runs the Yankees, but Billy Eppler left NY to take over the Angels.  Simply put, the Dave Stewart and Tony La Russa old-school GMs are now a thing of the past.  The Shelby Miller heist the Braves pulled off is a clear example of why teams have shied away from old school mentalities.  Teams have built sprawling organizations with analytical thinkers, software engineers, and complex database that is feeding the top decision makers similar information throughout the big leagues.

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Teams are always seeking ways to maximize their investments in players and throughout the organization.  Teams are realizing that

aging curves

are steeper now because of increased specialization throughout the game.  Furthermore, teams want to see their own guys that they have drafted and developed.  Why pay  $5M for a utility player when teams have tons of similar guys in AAA that will make the league minimum?  In that scenario, teams save $4.5M just on that roster spot.  Teams have 25 roster spots and make decisions like this to maximize cost efficiency at each position.  As players get more expensive, that gap only grows in how much teams can save by using those with less service time and lower salaries.  For example, the Nationals paid Bryce Harper more than $20M this past season,

outproduced Harper for the league minimum.  This is part of the reason the Nats and other teams seem to be hesitant to pay Harper.  Sure not every team has a Juan Soto, but the argument can be made that a player or combination of players that provide similar value is good enough.

Similarly, players signing early career extensions have an impact on the free agent market valuations.  Teams do the same sorts of calculations.  These deals also usually have team friendly options for teams to exercise.  If a team can pay prospects for a 3 WAR player who is paid like a 1 WAR player, they can trade prospects to keep financial flexibility instead of paying full market value.

The Players Association is in a difficult spot going into negotiations over the next CBA.  They will be pushing for a higher percentage of revenue and fixes to free agency to prevent the cold stove market we have seen the past two offseasons, despite the star power in each class.  Players are understandably upset, as they should be.  This is a multi-billion-dollar enterprise that is suddenly crying cash poor despite booming revenues from TV deals, appreciating franchises, and the BAMtech deal. 

Is there collusion going on between teams? Probably not, it is a matter of teams valuing players the same way along with structural issues in how baseball players are controlled. However, it does raise some very interesting questions during Hot Stove season.