Baseball’s Basic Agreement Creates Artificial Discounts On Players’ Value

            I was reading last week about the collapse (again) of my Mets. It is an annual saga interrupted by moments of unimaginable joy (1969, 1986, 2015). And despite the inevitable October demise, I still find myself checking the box score every morning and chatting with my fellow Mets fans every evening about strategy, players, and the future.
            But as the fall playoffs approach, absent the team from Queens, there is a possibility that waiting for next year might take longer than usual.
            The “Basic Agreement” between Major League’s baseball owners and its Players Association is set to expire on December 1. Until a new agreement is reached between the owners and the union, there will not be any Major League baseball.
            The sticking point in these labor negotiations is over how much time a player must put in on a  major league roster before becoming eligible for free agency. There has been a major shift in player salaries over the last decade as teams have turned to computer analytics to better determine player value. Whereas during the first forty years of free agency a player’s value was determined based on past performance, these days a player’s value is determined based on projected future performance.
            Computer statistical analysis gives baseball’s owners and executives a crystal ball that allows them to project future value. And a majority of players are discovering that by the time they hit free agency six years into their careers, their best years are behind them.
            The labor negotiations are going to be structured on how soon players will be able to hit the free market, thus allowing competing teams to bid for their services. Under the current system, a player remains the property of his current team for his first six years of major league service, meaning that no matter how good he is, no other team can bid for his services.
            Because there is no competition for his services, his value is substantially lowered and he must wait for a big payday. This type of artificial cap on salary does not happen in most other industries.
            When I got out of law school, I was able to take a job wherever I wanted and go to the best bidder. And if I was not happy after six months, I could move to a different bidder. That is how the world of labor services work.
            It is basic economics. Employees hit the market, take their skills to the best bidder, and continue to work there until a better offer comes along. The idea that an employee is stuck working for the same employer for the first six years of his career is nonsensical in just about every industry, but is the standard in professional sports.
            And because so many of baseball’s biggest stars also happen to be its youngest players with the least amount of service time, baseball’s owners are getting a huge artificial discount on labor costs and they are able to exploit that artificially low cost to their benefit.
            The players union caught on to the change in the game wrought by analytics too late and has been left with a union of players that are not being adequately compensated compared to their value.
            And that is why, when the Basic Agreement ends in December, it may take some time before we see major leaguers back on the field in the spring. 

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