MLB: How franchise tags can fix arbitration, save baseball

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In a move that would make too much sense to actually happen, using the franchise tag could help end the MLB lockout.

In case you missed it, MLB has come to a standstill.

Putting aside notions that more money would be a plus and that the other side is wrong, league and labor can’t seem to agree on much of anything these days. Sure, the MLBPA is scheduled to make a counteroffer to the most recent league proposal early this week. But precious little optimism exists that an end to the MLB lockout is on the horizon.

A key component of the dispute between players and ownership is service time. Presently MLB clubs control a player for six years before that player is eligible for free agency. For the first three of these years, a player makes the MLB minimum wage. After that comes three years of arbitration, where players argue that their contributions are worth X amount of dollars and the team is best served to argue that said player is actually worth considerably less. If the sides can’t agree (an understandably common occurrence), the arbitration panel steps in and decides who is right.

It’s a messy, imperfect system. And as noted, a system based on conflict between employee and employer. While the game’s elite certainly can and do pull down massive sums over the last of those arbitration years, such as Nolan Arenado in 2019 and and Mookie Betts in 2020, the reality for the majority of the league is very different. For them it really is six years before they get that a chance at that life changing, set your family up for life money.

Understandably, the players want that process to happen sooner. Less service time, faster free agency. Just as understandably, the owners are loathe to give up their window of guaranteed control over relatively cheap labor. After all, that MLB minimum salary does amount to just over 500,000 dollars- no small sum in itself, and especially not when you multiply it by a twenty-six man roster.

It goes without saying that in order to have any kind of understanding, sympathy, or simply a chance to objectively analyze this situation, the vast majority of readers will need to put some financial blinders on. MLB made over $10 billion in 2019. In that same year, the average household income was just over $67,000- which comes out to just 12% of that MLB minimum wage. Honestly, a pretty good case can be made this lockout ends if the league just offers that amount as the raise. On one hand, a billionaire can afford a lot more than 500 K. On the other, calling this a first world problem would be a massive understatement. Tonedeafness abounds on both sides.

Enter the franchise tag. Two of them, to be precise.

These tags would come into play during the last two years of that six years of control, taking the place of two years of arbitration. Technically, MLB teams would retain the option of having six years of control before free agency. But in all actuality, most players would either be extended, traded, or released into the free agent pool after just four years on the job.

Just what would this look like? So glad you asked…

(Photo by Tom Pennington/Getty Images) /

MLB Year 5: The WAR Based Franchise Tag

These days it’s hard to have a serious conversation about what an MLB player is worth without the talk turning to WAR, or Wins Above Replacement.

Tying arbitration more closely to this type of analysis has actually been discussed. Something that has seen pushback from the MLBPA, which prefers to keep salary negotiations focused on the disparity between payrolls and league revenues. But those discussions were focused on an individual player’s WAR solely determining their arbitration earnings.

This franchise tag, however, would be determined by what the average salary figure was of the five best players at the position league wide.

Now, the first four years of an MLB player’s career stay unchanged in this scenario. Three years of that minimum salary, one year of arbitration as it presently exists. Then things get interesting. Before continuing, let’s take a look at what that WAR based franchise tag salary would like. Again, the tag value is driven by taking the average of the salaries earned by the top 5 in terms of WAR at each position. These figures were arrived at using a mix of the most recent salary figures available on Baseball Reference and/or 2022 arbitration projections from MLB Trade Rumors. Not a perfect science, but it does present a rough idea of what this would look like in practice.

Position/Average Salary Of Top 5 At Position In WAR

Catcher $ 13,033,355
First Base $ 16,200,000
Second Base $ 12, 920,000
Third Base $ 13,275,000
Shortstop $14,642,000
Right Field $14,097,769
Centerfield $ 5,872,800
Left Field $ 8,751,400
Designated Hitter $15,231,400
Relief Pitcher $ 7,566,666
Starting Pitcher $ 18,916,666

So if you play your fifth year under the WAR franchise tag, the above is what you’re making, regardless of whatever your individual WAR actually was. For example, let’s look at the WAR rankings for third base from 2021, picking two players who are entering that fifth year of service time. Yoan Moncada was worth significantly more WAR-wise than Matt Chapman last year, but both would earn the same $13,275,000 if they played 2022 under the tag (Moncada’s 2020 extension is being ignored for the sake of easy math here). So too would Brian Anderson of the Marlins, or Jeimer Candelario of the Tigers. Four years of service time in the books is all it takes to qualify.

Of course, the player’s team has to be willing to offer that tag. Four options would be on the table for every league GM: tag, extend, trade, release. If released, that player gets to enter free agency after just four years in the bigs. If tagged, then an even bigger payday could await in that sixth and final year of club control…

MLB Year 6: The Salary Based Franchise Tag

This time around, salary trumps talent when it comes to determining what an MLB player would make under the franchise tag.

Closely mirroring the NFL approach, a team choosing to block a player from free agency for just one year would have to pay that player the average of the top five salaries in the league. And sure, just like in the NFL, some language would have to be included that says a player can’t make less under the tag (NFL players get a 20% raise if being tagged results in somehow making less than they did last year). This time pulling from Spotrac and Baseball Reference, the following roughly approximates what a player would earn in 2022 under the sixth year tag:

Catcher $ 15,655,000
First Base $ 22,013,334
Second Base $ 21,570,000
Third Base $ 28,914,285
Shortstop $ 25,120,000
Right Field $ 23,674,359
Centerfield $ 18,316,666
Left Field $ 24,623,333
Designated Hitter $19,670,000
Relief Pitcher $14,866,666
Starting Pitcher $37,133,333

Obviously, this is a more expensive proposition for MLB clubs to grapple with. Every position sees a significant raise, with salary at least doubling in five cases. The required starting pitcher salary is particularly staggering. While one can probably squint and make a case for about ten players being worth it at all of the other positions, you’d be hard pressed to find even five starting pitchers you’d feel comfortable paying nearly $40 million for. Really, all around the horn here, the majority of front offices would balk at that sixth year sticker price.

Fortunately, that’s exactly the point…

Why This Works For MLB and MLBPA Alike

From the point of view of the MLBPA and union president Tony Clark, the advantages are obvious. This system would accelerate the path to free agency for the majority of their members. Well, either the path to free agency, or the significant raise in salary that this is really all about.

Because most players aren’t worth either of these two franchise tag values, teams would be heavily incentivized to either release the player into free agency or to offer early extensions. Deals like the one just offered to pitcher Sandy Alcantara, buying out multiple years of control, would become more commonplace. As would the type of deals the White Sox made with Eloy Jimenez and Luis Robert, offering them tens of millions while they still enjoyed rookie status. Teams would have to bet more heavily on promise and potential, and ante up significantly more than the current system requires them to.

For MLB owners and commissioner Rob Manfred, this system still protects them from their reported nightmare scenario of losing a superstar in a bidding war after just a few years in the majors. If a player really has emerged as the next Vladimir Guerrero Jr. or Fernando Tatis Jr., then the team that drafted them can still control them for a full six years. They can also choose to do so while minimizing the financial risk presented by injury or off the field stupidity. It’s the $200 million contract that tends to be reserved for the Dodgers and Yankees of the world; far more teams can handle a one-time $20 million payment to prime Mike Trout 2.0.

With most players knowing they aren’t worth the annual value of either tag, a case could be made they’d be more likely to avoid free agency entirely, and accept a contract offer. Naturally, that offer might not come from the team they finished the previous season with. While any team hoping to contend would be tempted to pay that one year prime superstar price listed above, the middle class caliber of players on lower payroll teams might often find themselves on the move to teams with deeper pockets. Still, more players are getting paid more money sooner. That’s a win.

Now, you might have noticed there is a significant loophole here. While this system might be all well and good for the next three to five seasons, overtime those salary numbers can easily be made to drop. Which is absolutely true, and would absolutely happen. It’s also a problem easily addressed by keeping two points in mind.

For one, this sounds like a problem for Future Rob and Future Tony. Three to five years kind of sounds like the length of a new CBA to me, and at least one baseball blogger would be more than happy not to worry about the economics of MLB for the next little bit. This isn’t geopolitics- temporary peace will be just fine.

But if worry you must, consider that another hot button concern- in some ways the biggest concern- of the MLBPA is service time manipulation. MLB teams keeping their stars in the minors as long as possible, depressing service time because it’s in their financial interest. This double franchise tag system, however…kind of ensures that doing that to younger players isn’t in their best interest at all.

Because the only way to drop those high salary figures attached to the franchise tags is to to promote sooner. Those WAR based tag numbers are a mix of steep veteran salaries and rookie bargains. Take first base, where the $26 million the Cardinals are paying Paul Goldschmidt gets watered down by the league minimum being earned by Guerrero Jr. and the first year arbitration earnings of Matt Olson. Promoting younger players will ultimately be cheaper than not- something front offices have already figured out. And while that is another complaint of the MLBPA, this system still results in less waiting on riches for more players.

Next. How Pay Raise Can Pressure MLBPA. dark

Both sides win. Now if only I had the commissioner’s email address…

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