Baseball’s lockout will be futile until owners realize their whole economic structure is broken | David Murphy

You can learn everything you need to know about baseball’s ongoing lockout and its self-inflicted rot by looking at its rookie classes. Look at them closely, because they are the key. They might not tell you much about the short-term prospects of a Major League Baseball season, but they will tell you all you need to know about the narrow-minded thinking that has led to its long-term death spiral. The disheartening thing about baseball’s ongoing lockout isn’t that the games might be canceled. It’s that the sport’s structural problems are almost certain to remain.

If you want to understand the lockout and the source of the acrimony between players and owners, you need to look at the economic structure that created it. Look at the 17 players who received votes in last season’s rookie of the year voting. Look at their ages. Look at the number of years their organizations kept them off their big-league rosters. Look at how much time elapsed between their first professional contract and their first major-league appearance. Most importantly, look at how old they will be when baseball first allows them to negotiate a market-rate salary.

The average age of MLB’s 17 best rookies in 2021 was 24 years old. The average number of years that elapsed between their first contract and their first full major league season was five. The average age that each of them will be when they reach free agency for the first time is north of 30. The average amount that each of them is projected to earn from the ages of 21 to 29 under the current collective bargaining agreement? Well south of $50 million.

Anybody who is thinking within the context of professional sports’ economic scale should understand what those numbers mean. They should look at the NBA and see that the average age of the league’s most recent rookie of the year finalists was 20, that their first years of free agency will come at the average age at 25. They will find a similar story in the NFL. The average age of the four most recent rookie of the year finalists was 22. The average age of their first year of free agency is between 26 and 27. The NHL’s scale is different, but no less instructive. The average age of the last year’s top 10 rookie of the year finalists was 22. The top 25 most lucrative contracts in the sport were all signed by players younger than 30. The average age of the top 11 was 25.

That’s a lot of numbers, so let’s circle back to the ones that matter most. By the time your average MLB star reaches free agency for the first time, he is 30 years old and has spent 9-plus years earning a salary that is below market rate. In five or six of those years, his salary is well below market rate. Like, laughably below.

Take Corey Seager, who won the National League Rookie of the Year Award way back in 2016 and reached free agency for the first time this offseason. Next year — whenever it happens — Seager will more than double the $14 million he earned in his last season before free agency. In fact, he will earn more in the first year of the 10-year, $325 million contract he signed with the Texas Rangers than he had in the first 10 years of his professional career combined. Think about that. Think about the fact that Seager was initially drafted back in 2012, that he spent three years mired in minor league outposts like Ogden and Rancho Cucamonga only to become one of the majors’ best-hitting middle infielders immediately upon his arrival, that he finished third in MVP voting in his first full season, that by the time he was six years out of high school he had career earnings of less than $5 million.

While you think about all of that, remember that Seager is one of the lucky ones.

It doesn’t take Ludwig von Mises to understand what all of this means. First and foremost, it means that baseball’s current economic structure creates almost no incentive for owners to offer a player a contract extension that is anything close to his market worth. Baseball is alone among professional sports in the fact that it indentures players to their initial team for at least the first six years of their career and for a potential of 10-plus. These also happen to be the 6-10 years in which a player is at his physiological peak. For all but three or four of those years, a star player is paid a fraction of what he is worth on the open market. For the remaining years, his negotiating leverage is all but squelched by an arbitration system that, in the case of a player like Seager, awards him a salary that is well south of 50% of what he would be able to demand on the open market.

From there, the second-order effects roll like a snowball into an avalanche. Owners enter the free-agent market flush with cash, only to find a market where the vast majority of players are in physical decline. In the most ideal circumstances, they hand out 10-year contracts to players like Seager who are a decent bet to give them peak production for at least half of that time. More often than not, though, they flush that cash down the drain. Meanwhile, the sport’s competitive balance plays out like a poker game where nobody at the table is forced to discard. Every now and then, a team like the Dodgers forms a perfect storm: They draft and develop talent, hold onto it until it nears its expiration, and use their big-market revenue to battle the other oligarchs to a free-agent draw.

It is an absurd system. It would take thousands of words and an equal amount of citations to explain it in detail, but the proof is in the pudding. Even before the pandemic, attendance had declined for five straight seasons. The on-field product is as boring as it has always been. Half of the teams have little reason for hope. Not even the draft, where the vast majority of players will never be seen. Those players have little incentive to consider anything more than the present. At some point, the owners must stop worrying about the size of their share and instead start thinking about the size of the pie.