In 1989’s Back to the Future 2, the Chicago Cubs win the 2015 World Series. It’s something of a joke: the woes of the Chicago Cubs are well-known, and haven’t changed in the quarter century since Marty McFly and Doc Brown’s adventure. The Cubs haven’t won a World Series in over a century, are seventy years removed from their last appearance in a Series, and are generally synonymous with failure.
Yet the actual 2015 season opened with a great deal of promise for the north-siders: ownership opened the pocketbook to sign pitching ace Jon Lester, it hired the well-regarded Joe Maddon to manage the club, it gave the longtime home grounds Wrigley Field a much-needed facelift, and developed, through drafts and trades, a stable of promising young players to build around.
The most promising player is a batter named Kris Bryant. All Bryant does is hit: he’s rocketed through the Cubs’ minor league system and hit a whopping 43 home runs in the minors last season. Bryant followed that up by hitting 9 homers in just 14 spring games earlier this year–more than any other player on any team. It’s not unreasonable to argue that when the Cubs opened against the powerhouse St. Louis Cardinals, Bryant was the best hitter on either team.
Except Bryant’s not a Cub. Or at least not a Chicago Cub, anyway. Precisely because Bryant projects to be such a dominant hitter, he’s starting his season with the AAA Iowa Cubs. Perversely, Bryant is so good that the Cubs are leaving him in the minor leagues, and preventing him from drawing a big-league paycheck.
This seems counterintuitive. If a team is trying to compete, wouldn’t it deploy its best players? Yet from the Cubs’ standpoint, the move is understandable. More than that, it’s the most rational thing they can do. Thanks to a loophole in the current agreement between Major League Baseball ownership and the MLB Players Association (MLBPA), the Cubs can extract an extra year of cheap labor from Bryant if they leave him in the minors for a couple of weeks at the start of the season.
By no means are the Cubs the first club to do this; the practice is endemic in baseball and only the latest in salary-depressing tactics on the part of MLB ownership. But Bryant is, perhaps, the most prominent symbol of this labor abuse, and given the rumblings of grievances being filed, perhaps the tipping point of the next major labor disagreement to threaten the sport.
The Long Journey to Free Agency
How did we get to this point? From the beginning of the 20th century (when the American and National leagues formalized an agreement to keep players from contract-jumping between leagues) until the mid-70s, players were bound by a reserve clause, where teams could unilaterally extend the contracts of their players indefinitely. No doubt many players found such an arrangement inequitable, but the fear of being blackballed from organized baseball chilled any desire for a serious challenge of the clause, especially since at the time the players’ union was too weak to help out.
In 1969, a serious challenge finally emerged, borne in no small part out of the racial strife that marked that decade. The Philadelphia Phillies had a tremendously talented player, Dick Allen, who had the misfortune of Playing While Black in a city with serious racial divisions. More unfortunate for Allen was that he clashed with fan favorite Frank Thomas (not the same person as the White Sox star of the 1990s). Thomas made some racially-motivated taunts toward Allen, and Allen fought back. In the aftermath of the altercation, Thomas was released, and fans blamed Allen for the loss of a favored son — aided by the fact the Phillies threatened Allen with a fine if he went public with the reason for the altercation. Nevermind the fact that Allen was putting up offensive numbers better than anyone else in the game. He was public enemy number one in Philadelphia.
Meanwhile, halfway across the country, St. Louis Cardinals centerfielder Curt Flood, also a black player, decided he’d had enough of the current salary system. He had been one of the better players on a series of very good Cardinals teams, and began agitating for a higher salary.
The solution? Cardinals management traded him to Philadelphia for Dick Allen. Yet Flood, having seen what Allen was subjected to in Philadelphia, wanted no part of such a move, and demanded the MLB Commissioner declare him a free agent. The commissioner, Bowie Kuhn, refused. And so Flood filed a suit accusing Major League Baseball of violating anti-trust laws through its use of the reserve clause. The case eventually ended up in front of the Supreme Court, where it ruled that the MLB was protected by an anti-trust exemption, and so the reserve clause could stay. That Arthur Goldberg, a former justice of the Supreme Court who was arguing on behalf of Flood, gave an infamously lackluster oral argument likely didn’t help matters. It effectively ended Flood’s career: he sat out the 1970 season and the Phillies eventually traded him to the Washington Senators after the season. Flood never regained his form and retired shortly thereafter.
By this time, the players had finally pieced together an effective union, the MLBPA. As part of a new collective bargaining agreement negotiated in 1970, it was agreed that certain types of disputes between players and teams would be resolved by an arbitrator. That proved incredibly important.
In 1974, the MLBPA was ready to try fighting the reserve clause once again. Andy Messersmith was one of the best pitchers in baseball, a workhorse right-hander. After the season, the general manager of the Dodgers, Al Campanis, attempted to negotiate a new contract for Messersmith. But Campanis, who later demonstrated his ability to say terribly offensive things, said something to Messersmith — something Messersmith refuses to discuss to this day — that infuriated the pitcher. So angry was Messersmith that he refused to sign any contract with the Dodgers, and was willing to put his career on the line to challenge the reserve clause.
This time, thanks to the provisions of the new collective bargaining agreement, the dispute went before an arbitrator, Peter Seitz, who was called on to rule on the meaning of the reserve clause. As the legality of the clause had been decided by the Supreme Court already, the question was not whether or not there the reserve clause was valid, but rather what it meant. The clause read, in effect, that the team could unilaterally extend the contract of a player, using the same terms as the old contract for a period of one year. The dispute was whether, when the contract was extended, that reserve clause was extended with it. If it was, as the owners argued, then the team could use the clause in perpetuity, as it was, in effect, self-replicating.
Messersmith and the MLBPA, however, argued that a team could use the clause once, but the clause itself did not carry over to the new contract. Once it was used, the team would get one extra year under the terms of the contract, but then the contract would expire, and the player would be free to enter the market place and negotiate a new deal with whatever team he chose. This time, the players won. The reserve clause was ruled to give the owners only one extra year of control, meaning that Messersmith was a free agent.
The Rich Get Richer
With widespread free agency now imminent, the owners and the players negotiated how that free agency would work. The owners were distrustful of free agency, as they suspected — correctly as things would turn out — that even a regulated free market would lead to a substantial increase in player salaries. To that end, they negotiated a deal so that only a fraction of the players would be allowed to hit the open market. Under the free agency rules negotiated at the time — which for the most part remain in effect today — only a player that had played a certain number of seasons in the major leagues would be entitled to ply his wares to all comers. For everyone else, the owners would retain control.
It’s worth noting that this compromise was a better deal for the players, especially veteran players, than you might think. By limiting the number of players who hit free agency, the players essentially reduced the supply of elite talent hitting the market, thus boosting the salaries that would be earned by that talent. Sure, tons of younger players were no better off than they were before, but the veterans – the ones with the most sway in the union, would be making the big bucks. And – because minor leaguers are not allowed to join the MLBPA, they didn’t get a vote in the matter.
What’s happening now is the same thing as what was happening then: owners simply don’t like free agency. That much has become brutally clear over the past four decades as the owners have colluded to keep free agents from cashing in. The latest trends of manipulating service time and offering pre-arbitration contracts are just the newest and most sophisticated way that owners are trying to control the costs of free agency.
It’s not as though free agency is the only part of a player’s career where the owners try and suppress his wages, though. In Major League Baseball, that effort starts from the moment a player is drafted by a major league team. To be sure, Kris Bryant isn’t going to starve to death anytime soon – as a high-level draft pick, he received a substantial signing bonus when the Cubs drafted him in 2013. But how much more could Bryant have made if able to solicit bids from all 30 MLB teams instead of just the Cubs? How much more could he have gotten from the Cubs if there were no rules that limited the amount of money a team could spend on the contracts of their draft picks without losing future draft picks?
One needs look no further than the Houston Astros’ treatment of the top pick in last year’s draft, Brady Aiken, to see how such a system can be abused. When a team drafts a player, that team gets exclusive signing rights to that player. That meant the Astros could lowball Aiken, since he either had to sign their well-below-market offer, or else wait an entire year before re-entering the draft next season and hope that nothing happened in the interim that would hurt his prospects. Aiken bet on himself and refused to sign with the Astros, hoping that a less spendthrift team would draft him in 2015. (Sadly, he blew out his arm and will be on the shelf for a year due to that injury, potentially costing himself millions.) The Astros meanwhile, receive a “compensation” pick in the first round of this season’s draft to for being “unable” to sign Aiken.
A Disappointing Promised Land: The Limitations of Free Agency
Once a player enters the major league pipeline, things don’t get a lot better for him. In a player’s first three years of service in the major leagues, the player gets whatever salary the team wants him to have, within the limits of the league minimum. In a player’s fourth through sixth years of service, he is referred to as “arbitration-eligible,” and finally has the right to negotiate a better salary, but only to a degree.
The practice works something like this: the player and team negotiate the salary the player will be paid the next season. Should both parties fail to reach an agreement, each submits their desired salary to an arbitrator, who rules on the final salary. This final salary will be one of the two submitted numbers rather than a compromise number because the arbitration process is winner-take-all, which is why relatively few cases ever appear in front of an arbitrator. As a general guideline, a player makes 40%, 60%, and 80% of what he’d make on the open market — using the salaries of similar-producing players as comparables — in years four through six respectively.
A player can’t reach free agency without six years of mostly underpaid service. And service time doesn’t round upward particularly well either. In 2015, for example, if a player is in the minors for just 12 days, but plays the rest of the season at the MLB level, he won’t accrue a full year of service and thus effectively requires a seventh underpaid year before he reaches free agency. In other words, baseball front offices can game the system, buying a full year of cheap labor at the cost of fewer than two weeks’ worth of games.
It is only after these six or seven years where players earn pennies on the dollar for their services can they seek full compensation. Which is already something of a raw deal: relatively few players have a career lasting more than seven years, and the longevity curve is heavily influenced by a handful of veterans blessed with incredible longevity. In other words, a player who beats the odds and escapes from the minor leagues — an escape with long odds of its own — still has to beat the odds and survive long enough to reach the promised land of free agency.
But hey, after seven years of being paid well below the market rate, a player is finally, finally, finally able to hit free agency and get the money he has deserved for so long, right?
Sadly, even free agents have obstacles to cashing in. One major problem is statistics. In recent years, a great deal of research has gone into the production of baseball players as they age. The conclusion, in broad strokes: by the time a player reaches his 30th birthday, he’s already past his prime and starting to decline. Simultaneously, an increasing number of general managers are promoted from the front-office rather than from the ranks of ex-players, and these front-office types tend to be more receptive to data. This analytical approach deflates the value of the free agent crop. A GM who has spent ten years in an office observing time and time again how players in their 30s decline is much less apt to give a monster contract than an ex-player who perhaps has a much greater deal of empathy for players on their downslope. Given that most players don’t reach the majors until their early to mid-20s, by the time they can even reach free agency their highest-value years are already behind them. It’s why so few high-value free agent signings work out – even if a player manages to outrun Father Time in their early 30s, few if any can keep it up as they approach their 40s.
Knowing this, savvy general managers have come up with an even better solution to depress salaries: they sign extensions with high-performing young players before they reach free agency, giving the player financial security (at a low cost to the ball club) in exchange for buying out the first year or two of a player’s free agency years. From the player’s standpoint, the marginal utility of making league minimum — or being out of baseball entirely due to injury or ineffectiveness — versus selling out their prime earning years at a fraction of their actual worth is a pretty attractive proposition. After all, few baseball players have any non-baseball career prospects: there are barely enough players in the entire league to field a team with even a bachelor’s degree. From the club’s standpoint, they get cheap control over the player for all the years before the player reaches his decline phase. Perhaps such an arrangement could be characterized as win-win, but ownership is clearly winning far more than the player. Tampa Bay Rays star third baseman Evan Longoria — who also missed the first two weeks of his rookie season — is signed to an incredibly team-friendly contract, trading the security of guaranteed money for his free agency years. Meanwhile, the Boston Red Sox signed a free agent third baseman with inferior career numbers to a higher-valued contract just this past offseason.
General managers are only getting more clever as time goes on. Consider the case of Jon Singleton, a well-regarded prospect for the Houston Astros whose time in the minor leagues just so happened to end at almost exactly the same time he signed a long-term deal with the Astros. Just a few months prior, George Springer, an even better Astros prospect, was held off the team’s major league roster after rejecting a similar deal.
Yet even with draft abuse, service time abuse, and using exclusive rights to leverage years of free agent salaries from players, the current agreement isn’t finished depressing salaries. When a player reaches free agency, a team has the option to offer that player a “qualifying offer” – a one-year deal at the average annual value of the 125 highest-paid players. This past offseason, that average was just over $15.3 million. If the player accepts the offer, he plays one more season for his current team at that salary. But players hardly ever accept the offer. Given how difficult it is to reach free agency, the players that do get there generally can make far more than the average of the top 125.
Why do teams make the offer, then? Because if a player declines, whatever team ultimately signs that player has to give up a draft pick, while the team losing the player gains one. That draft pick is incredibly valuable, as it offers an additional chance for a team to force yet another high-value talent to run the absurd gauntlet from the minor leagues to free agency. As a result, teams are loathe to sign players who turn down qualifying offers, and this additional penalty drives salaries down. In fact, at its most extreme, a qualifying offer can keep a player out of gainful employment: two seasons ago, Stephen Drew turned down a qualifying offer by the Red Sox to test the open market, only to find that while plenty of teams were willing to pay for his services, finding a buyer who was also willing to give up a draft pick was virtually impossible. As a result, Drew — a more-talented shortstop than many who received significant playing time in 2014 —found himself unemployed for most of the season.
The fact that long-term free agent contracts too often blow up in the faces of teams likely only exacerbates the hatred that owners have for the process. Consider Alex Rodriguez, the much-maligned Yankees infielder who took steroids, admitted it, got suspended for a full season, and is still drawing a salary of roughly $25 million a year until 2017 – when he’s 41. There was much talk of the Yankees somehow voiding Rodriguez’s contract, most likely under a dubious morals clause, but nothing came of it, likely because legally speaking it was a non-starter.
More recently, outfielder Josh Hamilton, who has a long history of drug abuse (the recreational kind; not the kind that allegedly turns ballplayers into Superman) signed a long-term deal with the Angels. This past offseason, Hamilton admitted to a relapse, and entered a rehabilitation program. That Hamilton admitted the abuse is key because it allows his drug addiction to be treated like any other injury. Hamilton will draw a MLB paycheck the same way he would had he shredded his knee.
Yet Angels ownership, who were clearly aware of Hamilton’s troubles when they signed him, did not support their employee. Instead, upon finding out he would not be suspended, the front office threw him under the bus. Given that Hamilton is slated to make $87 million until 2017 even while his offensive production has declined each of the past two seasons, it’s not difficult to see why ownership reacted as it did: they have a serious case of buyer’s remorse, and saw a potential opportunity to escape a contract they regretted.
Worth the Wait?
That brings us back to Kris Bryant: a man who but for the vagaries of service time, would be in the major leagues today, working towards that promised land of free agency. It seems manifestly unfair that Kris Bryant is in effect being punished for being too good, but what can be done?
Technically speaking, the Cubs’ manipulations of the service time system aren’t entirely legal, at least in theory. The current Collective Bargaining Agreement between owners and players demands that both sides act in good faith and with fair dealing. Parking someone in the minor leagues for no reason other than to divert money from them into your team’s vaults is hardly “fair dealing.” Of course, proving that a team is acting in bad faith is much easier said than done. After all, you aren’t apt to hear Cubs president Theo Epstein or general manager Jed Hoyer say, “We’re leaving Kris Bryant in the minors for a couple weeks because, all things considered, we’d really rather the team not have to pay him a fair salary for as long as possible.”
Instead, the Bryant move — and others of their ilk — are couched in baseball development terms: a player needs to “get more seasoning,” “hone their craft,” “learn what it means to be a professional,” and other weasel words. Clubs have even said, without a trace of irony, they’re doing it in a player’s best interest. Per Epstein on Bryant, “If you call someone up prematurely and they struggle, sometimes it turns out fine and you can send them back and they come back and it’s no harm, no foul. Other times you can derail a player’s career. We’re just trying to get this one right.”
Which would be a perfectly sound explanation if not for the fact that we’ve seen this song and dance before, with former MVP Ryan Braun, former rookie of the year Wil Myers, and Longoria. And for the fact that in a couple of weeks, Bryant will suddenly have demonstrated everything he needs to demonstrate at the minor league level and be wearing a Chicago uniform.
This time feels different. Kris Bryant didn’t just have a great spring, he had the best spring out of any baseball player on the planet. And it’s not as though the Cubs don’t need a third baseman like Bryant, having traded away last year’s starting third baseman and entrusted the position — for the moment at least — to a guy who hit all of .169 last year. (For those non-baseball fans among you, that figure rests somewhere between “disastrous” and “calamitous.”) There is a brazenness to the Cubs’ actions that is impossible to ignore, to the point that there’s serious talk of the players’ union filing a grievance to restore Bryant’s service time. Such a suit would not only impact Bryant, but also put a serious strain on the relationship between MLB and the MLBPA, which could prove costly with the current CBA set to expire at the end of 2016.
The theoretical grievance filed by the MLBPA would claim that the Cubs sending Kris Bryant to the minors and thus holding down his service time is a violation of the good faith and fair dealing provisions in the current CBA.
The problem with that strategy is that it asks an arbitrator to make a very difficult decision. It is undeniable that Bryant is one of the most impressive prospects of the last few years, and he certainly had an outstanding spring, Yet Theo Epstein, who went to law school himself, knows enough to never let on that the Cubs’ handling of Bryant was because of anything other than baseball reasons.
As a result, for an arbitrator to rule that the Cubs were acting in bad faith, that arbitrator would have to rule that Theo Epstein was either lying or being deceptive when discussing Kris Bryant and his readiness for the majors. Yet calling the Cubs’ front office a bunch of liars would be the easy part. Beyond that, the arbitrator would also be, in effect, overruling the Cubs’ baseball judgment in declaring that Kris Bryant should be in the major leagues. That ruling would set an ominous precedent: that an arbitrator can dictate the baseball operations of a team. Given how much uncertainty that would create in the running of teams, it seems very unlikely that, barring extraordinary circumstances, which — Kris Bryant’s incredible slugging aside — are not present in this case, an arbitrator would want to make such a ruling. Kris Bryant will stay in the minor leagues until the Cubs can extort an extra year of service from him. It’s just how it is.
The reality is that from the time that professional baseball began, management has exploited labor, just as it has in virtually every other industry in America. The system has evolved, but it has not changed. From the moment a player is drafted, through his years in the minors, to the day he retires, his earning potential is held down at every step along the way by the owners and their representatives in the front offices. The only thing that makes the Kris Bryant affair unusual is the eager willingness of the Cubs’ front office to sacrifice wins for the sake of controlling costs.
It offends us to see a baseball team so brazenly put business ahead of on-field competitiveness. It should not surprise us, however. Baseball is, has been, and will continue to be a business, and the primary goal of a business is profit. And if that profit comes at the price of the Cubs losing more games, and Kris Bryant’s ability to make a fair living? That’s just how the game is played.