The Link Between Contract Extensions and Service Time Manipulation
This past offseason was in some ways unlike any offseason we’ve ever seen. The lack of big free agent money being spent wasn’t too shocking given the recent trend in the sport. Superstars Manny Machado and Bryce Harper had to wait far longer than they hoped they would to sign their mega deals and it’s April 21st and high caliber players like Dallas Keuchel and Craig Kimbrel, who could certainly help any contender, remain unsigned.
But these kinds of things aren’t all that new to us. Just last offseason MLB free agents were dealing with the same issues. The contracts they were receiving, too cheap and too short, were not the ones they’d hoped for when they finally hit the open market. Teams have become more rational than ever and are paying players based on what they will be worth rather than what they once were worth. The players are taking the hit here and there’s almost nothing they can do about it. Never before have we seen guys like Kimbrel and Keuchel remain unsigned this far into a season and hopefully we never have to see it again.
There was a lot of chatter on the internet and TV over the winter claiming that MLB free agency is broken. It is, and many believe it will inevitably lead to an ugly negotiation for the next collective bargaining agreement (CBA) in 2021 and likely to a lockout as well.
The biggest problem with the current CBA is that players are stuck playing for pennies on the dollar during their prime years. The typical contract structure once a player reaches the bigs is as follows: three years under team control where the player makes around 500k and then three more years of arbitration where players are still under full team control and underpaid, albeit not nearly as grossly as they are while making a measly half mil.
Free agency used to be the light at the end of the tunnel for MLB players stuck in this flawed system, but now with free agency bringing disappointment and frustration two offseasons in a row, that light doesn’t shine nearly as bright for a majority of the league. Stars like Machado and Harper still ended up with more money than any of us could ever dream of making in a million lifetimes but I would argue they are still under paid.
The ones who really suffer are the Keuchel’s, Kimbrel’s, Yasmi Grandal’s, and Mike Moustakas’ of the world. Guys who are above average/all-star caliber players that just five years ago would have surely fetched lucrative multi-year contracts and now are settling for less impressive one-year deals or end up stuck holding out relatively deep into the season.
The state of free agency and the overwhelming dissatisfaction on the side of the players is what I believe caused the incredible wave of contract extensions this spring. You can read more here about the wave of contract extensions I’m referring to. Proven veterans hitting the primes of their careers and super prospects like Ronald Acuña and Eloy Jimenez are trading in their chance for a mega deal like Harper’s or Machado’s for the security of a guaranteed, relatively high paying and long-term deal.
The reason teams are able to consistently get guys like Alex Bregman, Aaron Nola, and especially Acuña and Jimenez to sign on the (relatively) cheap is because these deals essentially eliminate the years of team control I mentioned above. Instead of making a measly 500k or struggling through the contentious arbitration process, which also heavily hinges players value to their performance, creating greater stress in those years, these players get guaranteed money that’s more than they otherwise would have received.
Sounds great, right? Not so fast. The players make the biggest concession in this, sacrificing years of free agency, which once again, you guessed it, locks them in to be paid far less than what their true value is. It really all comes back to the six years of control every team gets once their player gets to the bigs. One way or another, guys are going to be underpaid, but now they are choosing to sell off some of their free agency years for financial stability because free agency isn’t the big sack of money promised land it once was.
This all ties into service time manipulation as well. By delaying the arrival of minor leaguers to the big league roster, teams can gain an extra year of cheap control of their players, like the Cubs did in 2015 with Kris Bryant and as the Blue Jays continue to do with Vlad Guerrero Jr. The club often claims that these kind of guys “aren’t ready yet” and still have some fine tuning to do in the minors. Meanwhile everyone with two eyes and one brain can see that they’re probably the most talented players in the entire organization and deserve to be on the major league roster.
For teams that aren’t yet ready to compete, think 2019 Toronto Blue Jays, it makes a lot more sense to have a full year of Vlad Jr. in 2026 than in 2019 because the rest of the roster is likely to be much better than the current semi dumpster fire they trot out there on a day to day basis.
This year, however, we saw the Mets and Padres buck the trend. Pete Alonso, Chris Paddack, and Fernando Tatis Jr. all started the season on major league rosters. All three highly touted prospects have lived up to expectations and then some in the first few weeks of the season. Some may argue these teams brought these guys up for opening day to start the year with the best team on the field possible. And it might make sense as both the Mets and Padres are considered fringe contenders whose playoff spots could be determined by a game or two when it’s all said and done.
I won’t give the teams the benefit of the doubt on this one. The Cubs faced the same decision back in 2015 and were fine with keeping Bryant in the minors for an extra couple of weeks. They exceeded expectations that season and ended up making the playoffs; unpunished for missing out on any added value Bryant would have brought while in the minors. I don’t think the Mets or the Padres will be either. It’s hard to say now but by the time they’ve played their 162 my guess is that the early impact of Alonso, Tatis Jr, and Paddack does not make or break either of these teams’ seasons.
The reason I believe these teams called up their talented prospects earlier than necessary is because they didn’t see the service time thresholds ever becoming an issue. They saw the wave of contract extensions that took place this offseason, especially the ones to the prospects mentioned above and Braves second baseman Ozzie Albies. They decided then and there that rather than max out the team control years of these players they were going to focus on extending these players to similar deals. Pay a little extra and get a few more years from guys that seem to be more than capable of being cornerstones of these franchises for years to come.
If you can wrap any of them up as the Braves and White Sox did, that extra year of team control is meaningless. But still, why give it up when there really is nothing forcing these clubs to do so? Maybe when it comes time to sit down and negotiate these extensions, being able to look your player in the eye and tell him that you have his and the team’s best interests in mind at all time, and don’t want to see him screwed over by a shitty CBA, will get a guy on the fence to commit to your team for years to come. And in that case, it will be all worth it and then some.
MLB front offices are getting smarter every day. They’re constantly looking for ways to get a leg up on the competition. In the post Moneyball world it seems like every edge is analytical and statistically driven, and for the most part they are.
A couple years ago I saw a Theo Epstein interview on some morning program on the MLB Network and one his quotes really stuck with me. I’m paraphrasing here but it was along the lines of “Everyone has an advanced analytical department nowadays. We’re all using the same data and valuation tools. The way we think we can find an edge going forward is by getting less analytical and finding guys with intangibles. Guys who are great in the clubhouse and generate wins in ways other than physically performing on the baseball field.” The Padres and the Mets may have just one-upped Theo and found a way to do that in the front office.
A couple years ago I saw a Theo Epstein interview on some morning program on the MLB Network and one his quotes really stuck with me. I’m paraphrasing here but it was along the lines of “Everyone has an advanced analytical department nowadays. We’re all using the same data and valuation tools. The way we think we can find an edge going forward is by getting less analytical and finding guys with intangibles. Guys who are great in the clubhouse and generate wins in ways other than physically performing on the baseball field.” The Padres and the Mets may have just one-upped Theo and found a way to do that in the front office.
-John Madsen
