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Baseball’s ‘hot stove’ spending has nearly disappeared

World Series - Boston Red Sox v Los Angeles Dodgers - Game Five

LOS ANGELES, CA - OCTOBER 28: Manny Machado #8 of the Los Angeles Dodgers reacts to his first inning strike out against the Boston Red Sox in Game Five of the 2018 World Series at Dodger Stadium on October 28, 2018 in Los Angeles, California. (Photo by Sean M. Haffey/Getty Images)

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Earlier this week, I wrote about an article on Forbes by Maury Brown, who pointed out that spending on player payroll is down “dramatically.” The decline in spending from 2017 to ’18 was the second-largest year-over-year decline since 2004. Another article, published by FiveThirtyEight’s Travis Sawchik, pretty much echoes that sentiment while focusing on “hot stove” spending.

Sawchik found that in the first 50 days of the offseason, spending by all 30 MLB clubs totaled $1.229 billion in 2013, $1.173 billion in 204, $1.401 billion in 2015, $976.5 million in 2016, $469.8 million in 2017, and $442.5 million this offseason.

Sawchik also notes in the article that only 5.2 percent of available free agents had signed contracts for guaranteed money in the 50 days following the conclusion of the World Series. That percentage was 5.5 last year in the same period of time, 9.2 percent in 2016 and ’15, 7.8 percent in 2014, and 10.9 percent in 2013.

As we have discussed here quite a bit, there are a handful of contributing factors:

  • Competitive balance tax (also known as the luxury tax): The Yankees and Dodgers in particular were recently very concerned with getting themselves under the luxury tax threshold, so they curtailed spending and pawned off heavy contracts on other teams.
  • Rebuilding and tanking teams: Many teams have come to the same conclusion (and its veracity is up in the air) that tanking for draft picks and/or rebuilding in order to eventually build a super-team is better than going into a season with a true-talent 85-win team. The free agent market used to have as many as 25 teams with legitimate chances to be successful in the upcoming season, but that number has dwindled in recent years.
  • Analytics: Before every team had an analytics department, teams were prone to handing out big contracts to players who were probably not going to live up for them. They were paying for past performance, hoping they would continue to get it going forward. Teams are much more risk-averse now, trying to min-max their payrolls.
  • Contract extensions for young players: Many teams have begun signing their superstar-esque players to contract extensions well before they become eligible for free agency. Free agent markets are now mostly full of older players on the downside of their peak. That 26-year-olds Bryce Harper and Manny Machado are both young, superstar free agents is a more recent rarity.
  • Service time manipulation: Teams have always manipulated their players’ service time, but it has been especially blatant in more recent years with teams’ top prospects. Kris Bryant and Maikel Franco have filed grievances against the Cubs and Phillies, respectively, for this. The Braves also notably held down a clearly-ready Ronald Acuña Jr. for the first three weeks of the 2018 season just so they would get an extra year of control over him. As a result, these types of players are and will be reaching free agency one year later than usual.

Until something changes -- which will likely be when the new collective bargaining agreement is agreed to in 2021 -- we likely have to accept that baseball’s hot stove ain’t so hot anymore.

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