The Captain's Blog

Major League Baseball may be in the midst of a free agency paradigm shift, but Yasmani Grandal’s contract is not the tipping point.

After the 30-year old catcher signed a one-year deal, instead of the multi-year deal he expected, many have wondered whether this will be the last straw that breaks the back of baseball’s recent run of labor peace. Unfortunately, such hyperbole (see below for why Grandal’s contract is not, by itself, unreasonable) distracts from the broader issues that are not only impacting free agency, but also threatening the integrity of the game.

For the first time since 2010, player payrolls and total compensation, including benefits and postseason bonuses, did not grow. As a result, the player’s share of total revenue, as estimated by Forbes, is likely to dip below 50% for the first time since at least 2001 (note: the MLB and MLBPA come to different percentages based on their calculation of applicable revenue and compensation). That’s not a cause for panic, but if the pie continues to shift, there very well could be a labor reckoning down the road.

So, where exactly are the players losing ground? As the chart above shows, there has been a recent decline in the percentage of payroll attributable to the 10 highest spending teams. This decline has been mostly offset by modest increases in the middle and bottom tier, but perhaps not to the degree envisioned by the MLBPA when they agreed to the competitive balance tax (CBT). When the CBT was initially adopted, it was basically a Yankee tax, and the Bronx Bombers didn’t mind paying. Then, it was the Dodgers who happily flouted the upper limit. Now, the higher threshold is acting like a de facto salary cap for even these high spenders, and the rest of the league hasn’t been eager to pick up the slack. If this scenario persists, further payroll stagnation could as well.

In theory, even with the CBT acting as a cap, there should be plenty of capacity for increased spending. After all, the vast majority of the league is well below the rising threshold. However, what also seems to be limiting demand for players even more than the existence of the luxury tax is a crisis of competitiveness. 

With the importance of the regular season diluted by an expanded playoff format, an increasing percentage of revenues inelastic to performance and a growing base of ownership that seems to care more about profits than championships, the incentive to win games has seemingly never been less. With one-third of the league tanking, one-third merely content to vie for a playoff spot and one-third waiting until the trade deadline to make up its mind, it’s not hard to imagine why free agents are struggling to find suitors.

If the MLBPA goes into the next CBA seeking to tweak free agent rules or scale back the CBT, they’ll likely find a willing partner in management, and both sides will continue to reap financial rewards. However, if the union really wants to increase its percentage of the pie, it would let the owners have their CBT, but demand a series of financial inducements and punishments designed to restore competitiveness. Tackling that issue would also most improve the game, which, is a shame, because it’s also the one that could lead to a work stoppage.

Now, back to Grandal. Why didn’t the catcher, who has ranked among the best at his position in various value-based metrics over the past few years, attract more interest? Well, the quick answer is he did. Before settling on the Brewers’ one-year deal, Grandal turned down a 4-year deal from the Mets that was said to be worth about $60 million. According to Ken Rosenthal, Grandal wanted $5 million more.

Even if the Mets had acquiesced to Grandal’s demand, his contract would have still fallen short of the recent deals signed by Yadier Molina and Russell Martin. However, that doesn’t mean Grandal was the victim of an unfair labor environment. When you consider the degree to which his defensive value is predicated on pitching framing (and the lack of consensus regarding how to value that skill), the relative availability of quality catchers and lack of demand from big market teams (as opposed to Martin, who had three large markets in pursuit), as well as Grandal’s highly visible postseason struggles, the former Dodger seems like the ideal candidate for a pillow contract, especially one that makes him the fourth highest paid player at the position all time. So, if Grandal really is the poster boy for future labor discord, baseball fans have little to worry about.