MLB TEAMS SAVING NOW TO PAY LATER
The tantalizing free-agent class of 2018-19 influencing the market
As Major League Baseball’s 30 teams prepare to head to Florida and Arizona this week for spring training, it brings to a close one of the sleepiest offseasons in recent years, one that saw just one nine-figure free-agent signing (Yoenis Cespedes to the New York Mets), one blockbuster trade (Chris Sale going from the Chicago White Sox to the Boston Red Sox) and many traditionally big spenders (Yankees, Dodgers, Cubs, Mets) standing pat or getting leaner.
But in a strange twist, even as the 2017 season approaches, the industry is transfixed on the epochal free-agent class that is two winters away, a massive wave of talent that is acting as a black hole governing the sport’s transactional physics, its sheer gravitational pull affecting just about every team’s decisions 21 months beforehand. And its presence out in the distance helps explain the relative inaction this winter.
Assuming the players don’t resign with their current teams, that 2018-19 free-agent class will include Washington Nationals outfielder Bryce Harper, for whom numbers such as US$400 million have already been floated, and Baltimore Orioles third baseman Manny Machado, whom some consider just as valuable, if not more so.
It also would include hitters Josh Donaldson and Andrew McCutchen, starting pitchers Matt Harvey and Dallas Keuchel, and relievers Zach Britton and Andrew Miller. And should they exercise opt-out clauses, ace lefties Clayton Kershaw and David Price also could hit the market that winter.
It is considered the best freeagent class since at least 200001, when Alex Rodriguez, Manny Ramirez, Mike Mussina and Mike Hampton all hit the market at the same time, and all of whom, to one degree or another and for better or worse, altered the trajectories of the teams that signed them.
“Every team has three- and fiveyear outlooks that involve upcoming free-agent classes,” Chicago Cubs general manager Jed Hoyer said. “But it’s been a while since a class like that one has come along.”
The calculations regarding that free-agent class affect not only teams such as Washington and Baltimore that stand to lose their franchise cornerstones — and whose championship windows may be closing accordingly — but the other teams contemplating bidding on one or more of those players and whose payroll decisions for 2017 may be influenced at least in part by what the 2019 season could hold.
When the White Sox traded away their ace, Sale, and their leadoff man, Adam Eaton, to Boston and Washington, respectively, during the winter meetings, receiving seven prospects in return and shedding more than US$30 million in guaranteed future salaries, they acknowledged their designs on the 2018-2019 free-agent class.
“Two years from now, there could be a lot of high-impact talent potentially available,” White Sox general manager Rick Hahn said. “To plan with specific targets in mind right now is probably a little foolhardy, but we’ve all noticed the potential depth of that class, and we’re going to be ready.”
Going to be ready? They’re already ready. The White Sox have just US$4.25 million committed to 2019 payroll, all of it in the form of buyouts of team options to a trio of veterans.
The White Sox aren’t alone in shedding future payroll commitments and clearing room for a spending spree after the 2018 season.
The Phillies have just US$5.35 million committed to 2019 payroll, and the Cubs have just US$72 million. Neither signed a free agent to a multi-year deal this winter. The Mets have US$53 million committed in 2019 and essentially sat out this winter’s free agent market after re-signing Cespedes. The Dodgers, after doing little more than re-signing their own free agents this winter, have US$107.5 million committed to 2019 — but if Kershaw opts out, that number drops to US$72.9 million. (All payroll figures are from baseball-reference.com.)
While some of the industry’s new-found austerity can be explained by the new, more onerous luxury-tax penalties in the latest collective bargaining agreement — with taxes of up to 95 per cent for repeat excessive spenders — it’s no coincidence that baseball’s bigmoney teams are reducing future payroll commitments in time for the 2018-19 off-season.
Look no further than the New York Yankees. Even though they likely will field another US$200million-plus team in 2017, they have shown remarkable commitment to youth and development in recent years and have just US$74.2 million on the books in 2019 payroll, by which time they will be out from under the contracts of Alex Rodriguez, C.C. Sabathia and Chase Headley, among others.
While the Yankees say their strategy is about developing young players and not about clearing space for massive spending on free agents — “We’d rather produce those types of players ourselves than have to go out and bring them in through free agency,” general manager Brian Cashman said — their stated goal of getting under the US$197-million luxury tax threshold by 2018 has one significant benefit: It would reset their tax rate from the 50 per cent they paid in 2016 to as low as 20 per cent.
And that would happen just in time for the free-agent class of 2018-19 to arrive. It’s little wonder it is considered more or less a given within the industry that the Yankees will sign either Harper or Machado that winter should one or both be available.
It’s rare, if not unprecedented, for a future free-agent class to hold such sway over baseball’s economy so far in advance, but never before have two players like Harper and Machado arrived at free agency at the same time. While that freeagent class is deep in talent and could get even deeper should Kershaw or Price opt out of their deals, Harper and Machado are different animals.
Both will be just 26 years old at the end of the 2018 season compared to 30 for Kershaw, 33 for Price and 32 for Donaldson, to name three others. Recall Rodriguez’s first foray in free agency in 2000-01 at age 25, when the Texas Rangers signed him for 10 years and US$252 million. MLB’s total revenues were less than US$5 billion then but could be US$12 billion or more by 2019.
“Those players who are 26-, 27-, 28-year-old free agents are very, very highly coveted,” agent Scott Boras, whose clients include Harper, said earlier this off-season. “A lot of clubs have now marshalled their positioning to that age group.”
A baseball season is mere months away, and in places such as Boston, Los Angeles and the north side of Chicago, there is an appropriate level of excitement for what 2017 could bring, with little need or inclination to worry about what lies beyond.
But for the folks who run those teams — and all the other teams — there is always one eye trained on the future, and simply because of what is coming 21 months from now, that has never been more true.
Two years from now, there could be a lot of highimpact talent potentially available … we’ve all noticed the potential depth.