Compared to past offseasons, this offseason has moved exceptionally slowly. The offseason has given the Shohei Ohtani sweepstakes, the Giancarlo Stanton trade bonanza, the Colorado Rockies’ reliever splurge, the San Francisco Giants’ coup of two former faces of the franchise, and the Milwaukee Brewers’ declaration of intent. Those moves have excited everybody a bit, but there has been a lot of dead time in between, and a lot of talent still remains available. Eric Hosmer, JD Martinez, Yu Darvish, Logan Morrison, Jake Arrieta, Alex Cobb, Carlos Gomez and Mike Moustakas have not signed with any team, meaning eight of the 2017 top 20 WAR-earning free agents remain unsigned. Pitchers and catchers report in less than a week, yet teams could still potentially add two wins to their rosters by signing any of the free agents listed above. So many free agents still available?
Valuing every player the same
Every player on the roster of every team is an investment. No matter if the player came through the minors or signed via free agency, a team has to use its resources. Teams can either buy or trade for a player who has already developed or they can invest hours of coaching effort and game time to develop a player. Utilizing both of these is vital for a team to become a contender.
Even after developing the core of their team, the Houston Astros signed Josh Reddick and Charlie Morton and traded for Brian McCann and Justin Verlander. The Chicago Cubs spent big to sign Jon Lester, Jason Heyward, Ben Zobrist, and John Lackey, and they traded for Aroldis Chapman and Dexter Fowler. Teams have to excel both at signing players and developing players to win, because inevitably, not every player will develop as expected, and not every signing will perform as expected.
Each team is investing in players to generate wins. Teams that invest in players efficiently, either by developing their talents well or by spending the right amount for free agents, will have an easier time winning more games. Resources are scarce, and if a team has to use more resources to develop or buy a player, then it has fewer resources to invest in other players.
In a market, everybody values investments differently. Some people are willing to pay more for something because they have a higher valuation of it than other members. In the sale of stocks and bonds, people usually sell because they believe that the stock or bond will decrease in value, but the buyer thinks the stock or bond will perform well. This allows for the market to exist because there are people who want to sell the stock or bond, but at the same time, there are people who want to buy that very same stock or bond. Every member in the market has a different idea of the future performance of the stock or bond, so each member will buy and sell accordingly, and prices will adjust until both a buyer and seller agree to a price. The market for players works in the same way.
The players, the sellers, are selling themselves and their ability for the price they think they are worth. The players are confident in their ability, and they want to get paid for that abilities while they still have them. The teams, the buyers, are willing to pay a certain amount to have a player play for their team. Every team has a different idea and valuation of how each player will perform in the future, and based on those ideas and valuation, they will pay accordingly. And usually, the team that has the highest valuation and is willing to pay the most will win.
But what if each buyer has the same, or at least very similar, idea and valuation of the future value of each possible investment? Then the price will go down until it meets the buyer's valuation. This type of market has more than likely happened, where all teams value each player at a similar level, meaning the price of a player will continue to drop until the price matches the price a team is willing to pay.
With advanced sabermetrics, it has become increasingly easier to evaluate a player and determine that player’s future value. Player evaluation at the pro level has become so easy that even fans can accurately evaluate lots of players quickly without watching a single game. While teams employee entire analytics departments, websites such as FanGraphs, Baseball Prospectus, Baseball Savant, and Brooks Baseball give fans access to an unbelievable amount of statistics. Teams no longer have to rely on old and unreliable statistics, such as RBIs or pitcher wins, when valuing a player. They can use new, advanced statistics, such as spin rate, pitch movement, launch angle, and exit velocity, and those stats hardly even scratch the surface of the more advanced stats that now tell the story.
The numbers do not lie, and every team and fan has those numbers. Players can no longer get what they think they are worth because the teams collectively have a lower evaluation of the players. Because each team now have numbers that tell them not to throw so much money at them, no team is willing to meet the sometimes exuberant wage demands; instead, the teams have chosen to wait.
The value of a free agent
According to FanGraphs, the estimated value of one win from WAR in the free agent market was $10.5 million in 2017, meaning a team would have needed to pay approximately $20 million to sign an average starter for one year. Even for a team such as the Los Angeles Dodgers, which had around $265 million of payroll last season, that is an alarming figure. Applying this result, the Dodgers would have to spend around seven percent of their payroll on an average starter, which initially appears reasonable, but the Dodgers had 13 players with a WAR of at least 2.0. Hypothetically, if the Dodgers just paid the 2.0+ WAR players 20 million dollars, the team would have had a payroll of $260 million with just 13 players. And that is not considering that several players earned a WAR higher than 2.0, or that an MLB team has 12 more additional players. Even for the Dodgers, free agents are expensive.
But team controlled players with less than six years of MLB service time remain relatively cheap, plus signing them up for long-term tends to be easier. Of the top 30 WAR earning position players in 2017, only four signed deals as free agents to join their current club. Sixteen remain under team control, while eight agreed to a long-term contract before they had accumulated six years of service, and two have agreed to a short-term contract that does not run past the remainder of their service time.
For pitchers, only five of the top 30 2017 WAR earning pitchers signed with their current teams as free agents, while 11 remain under team control and 13 signed long-term contracts while under team control. Only two players from both lists, Zack Cozart and Yu Darvish, became free agents in 2018. The best players are either under team control or they have signed a long-term extension because most teams want to keep their best players. The players that teams usually let walk are not usually the ones they want to keep. When Charlie Morton, Justin Turner, and Daniel Murphy joined their respective teams, they had not performed like top 30 WAR earning players. But since joining their teams as free agents, they have earned the highest WARs of their careers. The teams that let those three players walk did not think they would turn into some of the best players in the league. If they were the best players, they would have made an effort to resign them, because teams rarely let their best talent enter the open market.
The chances of contending
Free agents are usually exceptionally expensive, even for the richest club in baseball, and usually, at best, good players. But that is not to say that a team should not buy free agents. Signing free agents makes sense when a team has to win now, and it does not have time to wait for a prospect's development. If a team only has a replacement level leftfielder, but that team is a contender, signing an average starter to play leftfield will improve the team by two wins. For a contending team, two more wins can be the difference between making and missing the playoffs. That replacement level leftfielder might cost a team around $20 million dollars per season, but for contending teams, winning those two games matter more.
But with a playoff system where only five teams from each league play, and two of those teams play in a one-game playoff, investing becomes incredibly risky, especially with the growing lack of parity in the MLB. Last season, three teams won at least 100 games in the regular season. Considering that the MLB has not even had two teams win 100 games since 2004, last season was remarkable. And this trend looks to continue. Depth charts projections at FanGraphs expect that only the AL East and the NL Central will have divisional races that are closer than five games, while the rest will have at least a ten game difference.
Depth charts projections at Baseball Prospectus forecast even less parity at the top, predicting only the NL Central will have a close division race. Unless something completely unexpected happens, the Boston Red Sox, New York Yankees, Cleveland Indians, Houston Astros, Washington Nationals, Chicago Cubs, and Los Angeles Dodgers should all comfortably stroll into the playoffs, leaving the remaining teams to fight for only one spot in the AL and two in the NL. Since the other teams are playing for essentially a spot in a play-in game, and investing all that time and money for the hope of winning one game appears as a massive gamble, teams become significantly less aggressive.
Furthermore, the success of the last three World Series champions has demonstrated that in order to be good, a team has to first be really bad in order to accumulate and develop young talent. The Astros, Cubs, and Kansas City Royals all focused on developing the young prospects they acquired for cheap, and other teams are trying to replicate that strategy. The Miami Marlins, Tampa Bay Rays, Pittsburgh Pirates, and possibly the Royals have all committed to rebuilds this offseason, while the San Diego Padres, Atlanta Braves, Philadelphia Phillies, Oakland Athletics and Detroit Tigers are all in full rebuilding mode. Since making a deep playoff run is far from guaranteed, teams are choosing to rebuild instead, making them less inclined to pursue massive free agents.
The lack of quality
The 2017 free agent class lacks any true franchise changing superstars. Of the top free agents of Eric Hosmer, Lorenzo Cain, and JD Martinez, and Yu Darvish, only Martinez and Cain have had one 5+ win season. But next year is filled with talent. Bryce Harper, Manny Machado, Josh Donaldson, and Charlie Blackmon have each had at least one 6+ win season in the past three years, and each of them will become a free agent after the 2018 season. After them, Nolan Arenado becomes a free agent at the end of the 2019 season. Over the next two years, a catalog of incredibly talented players will hit the market, and in preparation for this talent pool, big market teams are trying to stay below the luxury tax limit of $195 million this season. If a team has a payroll above that limit, it will have to pay a tax on all the overages. Currently, only the Red Sox and the Giants exceed the limit, but teams could be looking to go cheap this season to spend big in the next season.