J.D. Martinez’s Case for Collusion Against MLB Owners

This MLB offseason has been far from normal. Pitchers and catchers reported to spring training this past week, but there are still multiple all-star players remaining on the free agent market. The market inactivity has many people whispering collusion.

MLB Player’s union chief Tony Clark released a statement on how teams are violating the “integrity of the game” because they all seem to be “tanking.”

“A record number of free agents remain unemployed in an industry where revenues and franchise values are at all-time highs,” Clark continued. “Spring training has always been associated with hope for a new season. This year a significant number of teams are engaged in a race to the bottom. This conduct is a fundamental breach of the trust between a team and its fans and threatens the very integrity of the game.”

Is this collusion? Or are there other reasons for the lack of market activity?

Luxury Tax

The word around the league is teams are trying to reset their rosters underneath the $197 million salary cap tax threshold.

The Los Angeles Dodgers have led the league in luxury tax fines for 4 seasons in a row, while the New York Yankees have been above the luxury tax for 15 straight seasons. The MLB luxury tax has escalators this year that charge an additional 12% for anything between $20 and $40 million over the cap and 45% on any amounts over $40 million for repeat offenders. Next year, repeat offenders’ 1st round draft picks will fall back 10 spots. As if it was expensive enough for teams to have a salary cap above the luxury tax, these new incentives give teams even more motivation to lower their payroll and reset the penalties against them.

Collusion

However, there are also whispers that teams are talking to each other about the value they are placing on free agents.

J.D. Martinez has hit more than 100 home runs over the past three seasons, which seems like perfect timing with the MLB becoming a power-hitting league again, yet he is still a free agent. It is well known that the Red Sox have offered a 5-year deal in the $100-125 million range. His agent, Scott Boras, has reportedly told teams that he wants a 7-year deal worth $200 million.

The Red Sox are refusing to bid against themselves for Martinez’s services, but does this mean that they are colluding with other teams on how much to pay free agents?

SI.com did the math on what Martinez is “really worth” based off on the analytics that many teams use, and they calculated a value of 5 years and $120.7 million, which is right around the estimated value of the contract that the Red Sox have offered. In order to prove collusion J.D. Martinez and other free agents, will have to show that teams and GMs are communicating with each other about how they are valuing free agents.

Collusion is a secret agreement between two or more parties to deceive with the purpose of obtaining something they otherwise would not be able to.

In 1985, 1986, and 1987, the MLB Players Union filed grievances with the MLB alleging they colluded to keep salaries down. An arbitrator found that there was information sharing between teams, and the teams had to pay a $434 million plus interest fine to the players for their actions.

In the case of this MLB offseason, collusion would be defined as an agreement between the MLB teams to not bid against each other in order to not inflate player salaries above the calculated value, thus being able to receive a player like Martinez for an amount that keeps your payroll below the luxury tax threshold.

CAA baseball agent released a statement saying that this market “feels coordinated, rightly or wrongly,” and “bottom line, the players are upset. No, they are outraged….They are uniting in a way not seen since 1994.” In August of 1994 was the MLB strike leading to the cancellation of the World Series.

Even if players are upset, there is no evidence showing collusion by any teams in the MLB, especially not the whole league. Instead, this offseason seems like the perfect storm of factors contributing to the slow signing period.

Perfect Storm

Next year, multiple future Hall-of-Fame MLB players are hitting the free agent market and the contracts for these players are going to be the largest ever; any teams planning on bidding on their services would be smart to dip below the luxury tax for this upcoming season.

Also, teams that are not going to compete this year (or next) have no reason to spend money on big name free agents this year. Teams that know they can not beat the Astros right now are better off receiving high draft picks and rebuilding, just as the Astros did over the past five seasons.

Finally, teams may now be wary of giving 31-year-old players a 7-year deal because of the bad track record these contracts have had. These large, long-term contracts by teams often do not return on their value, with players like Alex Rodriguez, Prince Fielder, Carl Crawford, Pablo Sandoval, and Joe Mauer

It appears this MLB offseason is just a market correction, after many years of exorbitant failed contracts. I do know that in 2021 when the Collective Bargaining Agreement expires, players are going to have to do something to ensure that the tanking stops and they create a league-wide demand for their services.

 

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