If we’re talking about the Chicago Cubs, specifically, a quiet offseason was entirely defensible, if not downright prudent.
After being among the biggest spending teams in both of the last two offseasons, the Cubs saw payroll escalate dramatically the past two seasons, and also saw almost every spot on their roster filled quite nicely heading into the offseason. With trades and economic signings, the Cubs filled what few holes they had, and were not especially involved in much of the higher end, or even medium end, of free agency.
If we’re talking about baseball as a whole, however, a quiet offseason – relative to the last few – was always likely, based on the weaker free agent class, but did it have to be this quiet? Did there have to be so many free agents still looking for jobs? So many others taking one-year or even minor league deals? Does the market, alone, explain this activity?
Well, yes and no, as I’m not implying anything illicit.
Instead, I’ll point you to an excellent meditation today from Buster Olney about the grave impact for the players that the new Collective Bargaining Agreement has already wrought. In short, many teams are effectively treating the new luxury tax limit as a hard cap, over which they will not take their payroll. Moreover, that activity figures to continue into next offseason, despite a much better free agent class.
The Cubs, you’ll note, went over the luxury tax limit for the first time last season, and, as we discussed at length, they and other large market teams have a strong incentive to get back under the limit thanks to the new CBA:
[I]n terms of the consequences fans are more likely to notice [beyond taxes imposed on the organization], the new Collective Bargaining Agreement has a number of penalties tied to being over the threshold. Those changes are being phased in for 2017, and take full effect in 2018 ….
Teams over the luxury tax threshold are treated differently when it comes to draft pick compensation for free agents. Under the new CBA, when signing a qualified free agent, a large market team like the Cubs would normally lose its second pick in the upcoming draft and $500,000 of international free agency bonus pool money. But if they were over the luxury tax limit that season? They they lose their second pick AND their fifth pick AND $1 million of IFA bonus pool money.
Furthermore, although a large market team like the Cubs would normally receive a compensatory draft pick after the second round for losing a qualified free agent, that drops to after the fourth round if the team is over the luxury tax threshold.
If that kicks in for 2017, it’s not hard to see a very immediate potential impact to the Cubs, as they have several players set for free agency after this season who could conceivably be qualifying offer candidates (Jake Arrieta and Wade Davis chief among them).
(One other wrinkle that does not appear to take full effect until 2018: if you are $40 million or more over the luxury tax threshold, your first round draft pick is moved back 10 spots (unless it’s in the six highest picks (in which case, God have mercy on your frighteningly inefficient soul).)
This is all to say that, in an ideal world, the Cubs would be able to get back under the luxury tax threshold in 2017 ….
As you can see, there are far more than mere financial incentives for a competitive organization like the Cubs to stay under the luxury tax limit. And when that’s happening to organizations that otherwise have the might to spend aggressively? You’re necessarily going to see depressed free agent spending.
Sure, the elite guys will still get paid (there were so few this offseason that it was hard to notice), but the more marginal free agents? Teams might have no problem throwing $3 or $4 million their way in terms of spending that money … but they really might not want to use up $3 to $4 million in “luxury tax cap space” on a depth piece they may or may not use.
Yes, the caliber of the free agent class will always have an impact, and it absolutely did this offseason. But I doubt it alone is to blame for this “whoa” revelation at the conclusion of Olney’s piece (emphasis added): “As of Feb. 1, 10 clubs had signed one free agent and eight clubs had signed two free agents. Without more action on the part of those teams, that left 112 free agents for the other 12 clubs. Think about that.”
Think about that, indeed. I’m not sure the Players Association did quite enough thinking about that when they permitted a much more imposing luxury tax cap into the new CBA.