Unsigned Free Agents and Baseball's Collective Action Problem

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Unsigned Free Agents and Baseball’s Collective Action Problem

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At the very earliest signs of a second consecutive troubled free agent market, a lotta folks asked me if top free agents Bryce Harper and Manny Machado would be better off taking a really pricey one-year deal and returning to the market next year, rather than signing a mere six or seven-year deal.

At the time, I would chuckle a bit as I responded that those guys could still get the six or seven-year deal and ALSO get an opt-out after the first year, if they wanted. That way, they get the one-year deal if that’s what they prefer, but they also get the security of a longer-term deal if things really go to crap for them in 2019.

For the most part, I still believe that – i.e., that they could insist on a one-year opt-out, paired with a longer-term deal – though I’m no longer quite as sure that the longer-term portion of such a deal would reach six or seven years. Which is nuts, but that’s where we are.

Nevertheless, the “ooh, maybe they should just take a pricey one-year deal” chatter has reached the national level, with writers taking on that very question for each player at nearly the same time, and it’s got me wondering about some bigger picture issues:

I think the articles are actually worthwhile reads to get a little more perspective on the changing climate for player contracts, even if I don’t agree that either of these guys signing a one-year deal is a good sign for the health of the sport.

Something about the Rays-Harper article, in particular, has left me feeling unsettled.

More or less the only consideration put forth on behalf of the notoriously parsimonious Rays is whether one year of Harper at $35 to $40 million is a worthwhile business investment. How much would his presence add in ticket revenue? Possible playoff revenue? You could also get into goodies bought at the games. You could even stretch into the impact on TV ratings and the future revenue derived therefrom. It’s an interesting exercise in isolation.

Given how the Rays operate, we know this is precisely the kind of calculus they would entertain in parsing out a Bryce Harper pursuit. How much revenue would his addition generate for us in 2019?

But, whether it’s correct or not for that individual team, doesn’t it feel like … the wrong discussion? Or at least, only one part of the discussion?

I mean, I understand that these operations are business, sure, but a fundamental tenet of making ALL 30 businesses a success within the COMPETITIVE league that props up the business model is that you are trying to win games. So, then, isn’t there some harder-to-quantify value (yes, even financial in nature) of having all the teams trying to win games? Shouldn’t some of that value be reflected in the calculus about adding and subtracting players?

In other words, the players have value to the league that extends beyond the value generated to their individual team. Seems like that gap used to be well covered in the aggregate because the teams were all trying to win – you only see that player generating extra value all over the league if there is real competition going on, generating more attendance, better ratings, etc. Teams all wanted to win, so they “over” spent on free agents, which caused more and better competition, which generated more overall revenue.

I guess what I’m worried about if we start going down this road of making purely internalized business calculations about player value is that we’re going to see the league inadvertently shrinking the overall pie of baseball attention (and, in turn, dollars).

I’m talking about a Collective Action Problem: “A collective action problem is a situation in which all individuals would be better off cooperating but fail to do so because of conflicting interests between individuals that discourage joint action.”

Sound familiar?

What incentive do the Orioles have to spend an extra $10 million on a player when they will never see that $10 million returned in revenue (let alone more than that to drive a profit) in a non-competitive year? None! So they don’t.

But the problem is that $10 million spent by the Orioles *might* generate $10 million in revenue for all teams collectively. So if they don’t spend it, and the league doesn’t capture that value, then all teams collectively are harmed, including the Orioles.

Spread that across all teams and what do you get? You get lots of noncompetitive teams failing to spend lots of dollars and you risk lots of long-term harm to the entire league. If all teams were trying harder to compete every year, however, you might find the overall product much more compelling to fans, and therefore much more lucrative to the league as a whole.

(Photo by Rob Carr/Getty Images)

Of course, the fact that the best players don’t realistically have an alternative league to turn to for top dollars makes this conversation much more complicated. The league could argue back at me that, regardless of how much they spend on players, there is a lower bound below which they won’t sink, and since a guy like Bryce Harper is going to sign with SOME team eventually, then whatever, it’s all fine and the value of having him in the league will still be captured on the whole.

And that’s probably right, as tacitly collusive as it would sound.

That works for the biggest dogs, I suppose, but does it really address the problem of having so many teams failing to even try to compete in a given year? Failing to do their part to help grow the overall pie? Maybe that’s a separate point entirely, but my gut keeps telling me it’s all related (even if I can’t quite get there in articulating the connection yet).

I sense that I’m still not quite articulating this as well as I’d want to, but I feel like I’m starting to feel like it gets down into a core problem lying underneath the strained relations between not only teams and players, but also larger-market and smaller-market teams. If teams don’t collectively spend in a way that captures the total value of all players, then not only are the players not getting their fair share, but league competitiveness is harmed in a very fundamental way – and with it, potentially the long-term value, revenue, and future of the sport.

(Thanks to Michael and to some other kind chaps for letting me bounce this stuff off of them to help me try to put together something coherent. Blame them if it isn’t.)


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Author: Brett Taylor

Brett Taylor is the Editor and Lead Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.