Do MLB free agents cost themselves money by waiting longer to sign?

As the MLB offseason has progressively become more of a freeze-out over each of the last three winters, one of the key features of the “cold stove” action has been the growing tendency of free agents to remain on the market until late in the offseason — in some cases, all the way until spring training. It’s unclear exactly why this is happening.

A report by The Athletic’s Robert Murray last spring (which was centered around sourced info from an agent, so take it for what it’s worth) indicated that it was simply a terrible market, with teams trying to destroy players’ leverage as much as possible, in some cases not even returning calls from agents. MLBPA director Tony Clark backed up that assertion, calling out teams for their sluggishness in signing players and accusing some clubs of tanking. The league quickly responded, however, and placed the blame on the players, suggesting that free agents needed to come to terms with the way the evolution of analytics and the new luxury-tax rules had impacted their value, while at the same time stating that some of the top free agents were “sitting unsigned even though they (had) substantial offers, some in nine figures,” an accusation that irked high-profile agent Scott Boras. As the old adage goes, the truth usually lies somewhere in the middle, so it’s likely that both the agents and the league were being truthful to an extent.

The odd thing about this offseason is that during the first six weeks or so, it truly felt like free agency was back after a miserable last winter. Though the market was a bit slow to get going, players were coming off the board at a rather significant rate during late November and early December, and guys were getting good deals — or at least as good as can be expected in this era, knowing what we know (and every front office knows) about aging curves and regression patterns.

Despite a rough 2018 season during which played just 52 games, Josh Donaldson signed a one-year, $23 million deal with the Braves in late November, exceeding most expert predictions. After having a career year at age 29, Patrick Corbin signed a six-year, $140 million deal with the Nationals in early December that would have been the second-largest of last offseason in terms of total value — and that deal was particularly shocking with as much as the devaluation of starting pitching had been discussed over the previous few months. Nathan Eovaldi — he of the multiple Tommy John surgeries, 4.16 career ERA, and 3.81 regular-season ERA in 2018 — was rewarded for his stellar postseason performance with a four-year, $68 million deal, one that felt like it was more likely to be given out in 1998 than 2018. After a career-worst 2018 campaign, starter Lance Lynn got three years and $30 million from the Rangers, and Andrew McCutchen — now a corner outfielder and several years removed from his MVP-caliber prime — got three years and $50 million from the Phillies. Relievers Jeurys Familia and Joe Kelly received handsome three-year contracts during the Winter Meetings, and even veteran starters Matt Harvey and Trevor Cahill — who don’t profile as front-of-the-rotation options by any means — were guaranteed a combined $20 million on one-year deals from the Angels.

But at some point — it became noticeable rather soon after the Winter Meetings, but particularly since the new year began — things slowed down significantly. Yasmani Grandal, widely regarded as the top catcher on the market and expected to get a lucrative long-term deal, settled for a one-year, $18.25 million deal with the Brewers earlier this month (though he did receive four multi-year offers, according to Murray). Brian Dozier, who has hit at least 21 homers in five straight seasons and is just two years removed from a 42-homer campaign, had to settle for a one-year, $9 million deal. Relievers Brad Brach (one year, $4.35 million) and Adam Ottavino (three years, $27 million) received less than many expected them to after they stayed on the market until mid-January. Most significantly, though, a slew of talented free agents including Bryce Harper, Manny Machado, Dallas Keuchel, Craig Kimbrel, and many more remain on the market with just over two weeks before spring training camps open, and it’s anyone’s guess as to how much money they’ll be able to earn this late in the offseason.

With this odd pattern in mind, I had a question: Do players tend to make less money the longer they stay on the free-agent market, and are their potential earnings being negatively impacted by their hesitancy to sign?

On one hand, this feels like a “no kidding, of course” type of answer. Worse players stay on the market longer because fewer teams want them, and teams often only begin to grant them offers after better players come off the market and they’re forced to settle for less. (As an example, Harper’s hesitancy to pick a team has been cited as a reason why lesser outfielders such as Adam Jones, Denard Span, Carlos Gomez, and Carlos Gonzalez remain unsigned.) Logically, since they’re not great players, they’re not making as much money as the better players who are in demand from the minute the offseason begins. In addition, it’s common knowledge that players lose leverage for each day they remain on the market, because they want stability and are desperate to resolve the situation and figure out where they’re going to be playing (especially since many of the guys who are old enough to reach free agency have families and need to buy a house, find schools for their kids, and other things of that nature). As we get into February and March, they’ve lost enough leverage that they’re basically faced with accepting one of the offers on the table or missing spring training games and perhaps having their regular-season performance impacted.

On the other hand, some agents have made a game out of waiting as long as they can for an optimal offer. Boras, the most infamous yet arguably the most successful agent in the sport, has made the most extensive use of this strategy, with Wei-Yin Chen, Chris Davis, Matt Holliday, and Max Scherzer among his notable clients who secured massive deals after remaining on the market into mid-to-late January. We saw him utilize that same strategy as recently as last year with clients such as Jake Arrieta, Greg Holland, Eric Hosmer, J.D. Martinez, and Mike Moustakas, though all of those guys except Hosmer did worse than they were expected to on the open market. It seemed as if he might be altering his strategy when client Jose Altuve signed a five-year extension with the Astros in mid-March — a rather unprecedented move for a player advised by Boras. But he’s gone back to his same bag of tricks this winter, with Harper, Marwin Gonzalez, and Dallas Keuchel all remaining on the market with just a few weeks remaining until spring training begins. If the guy widely regarded to be the game’s top agent — the man who so frequently represents the top players on the market — is going to keep his premium clients from signing until late in the offseason, it seems logical that they should be able to earn more by waiting, rather than getting punished for doing so.

In an attempt to answer this question, I studied every offseason free-agent signing dating back to November 2015 (the first month of the last “normal” offseason as far as free-agent spending goes), splitting each offseason into two phases. I decided to end Phase 1 on the Sunday following the Winter Meetings (building in the weekend for any deals that may have gotten to the five-yard line at the front-office summit but needed another few days to be finalized). Even in an age where front offices can get virtually everything done remotely that they’d also be able to accomplish during an in-person meeting, it feels as if the Meetings still represent the climax of the offseason, so that date was a logical separation point. Over each of the previous three offseasons, as well as the one in progress, I examined the average total value and average annual value of the signings over Phase 1 and Phase 2, with minor-league contracts, qualifying offer acceptances, international free-agent signings, contracts with a total value under $1 million, and deals after April 1 excluded, as they would unnecessarily distort or water down the data we’re trying to compare here. In addition, to get more insight into how the best free agents are being affected — and to lessen the effect of fringe players on cheap, one-year deals watering down the Phase 2 numbers — I sought out MLB Trade Rumors’ predictions for their Top 50 ranked free agents (2015-16, 2016-17, 2017-18, 2018-19), comparing the total money and AAV those players actually received to MLBTR’s predictions, then using that data to determine how much value the average Top 50 free agent gained or lost based on how long they remained on the market. Obviously, MLBTR’s rankings and predictions aren’t flawless, but they’re generally more accurate than not, and they provide a good indication of what the public perception was of a free agent’s value on the open market.

Without further ado, here are the results of that study:

A few observations from this data:

• It’s quite obvious that players who sign early are earning more excess value than those who sign late, but there’s not an overarching reason why, other than leverage decreasing for players as the offseason progresses. Sure, front offices want to have their roster solidified as early as possible, but can that desire really play that much of a role if there’s a clear upgrade available on the free-agent market? Signing players earlier would certainly seem to be an advantage from a business perspective — for example, the marketing department of whichever team signs Harper would undoubtedly prefer to have him signed early and available to attend their fan fest, be photographed in team gear for promotional purposes, and other things of the nature — but today’s front offices are generally perceived to be so ruthless and data-driven that it’s difficult to imagine them factoring those things in when they’re putting a contract offer together. It may just be that some teams have a short list of free agents that they absolutely have to have and are willing to be more aggressive in order to outbid other teams and secure those players’ services as soon as possible.
• Though the data clearly indicates that players earn more on average the earlier they sign, the results actually aren’t as skewed as they used to be. Last offseason, players who signed during Phase 2 earned more total money on average than those who signed in Phase 1 — largely because the top five free agents on the market waited until after the New Year to sign — though the Phase 1 signees still earned more in terms of AAV. This winter, the numbers are close enough that based on how much money guys like Harper, Machado, Keuchel, and Kimbrel get over the rest of the offseason, it’s very possible it could be that way again — in fact, there’s a chance that free agents who sign late will earn more than the early movers in terms of both total value and AAV. While Top 50 free agents on average have gained value by signing early and lost value by signing late over every year of the study, there were a few very notable guys who were rewarded for taking their time last winter: Eric Hosmer ($12 million gained in total value), Lorenzo Cain ($10 million gained in total value), and Alex Cobb ($9 million gained in total value, $2.25 million gained in AAV).
• While it’s still incredibly risky to wait for the market to develop, it also seems to be less of a safe bet than it used to be to sign early. Clearly, teams aren’t handing out as much term or as much excess value during the early part of the offseason as they used to: While the average term of a Phase 1 deal in 2015-16 was 2.28 years, compared to 1.79 years in Phase 2, players generally are settling for short deals no matter what these days. Barring deals for some of the remaining free agents that are long enough to push this winter’s average Phase 2 term (currently 1.41 years), this will be the third straight offseason in which the average term for free agents in both Phase 1 and Phase 2 is under two years.
• A problem that seems like one likely to depress free-agent value is that in recent years, front offices have largely shut down for a Christmas/New Year holiday break — at least in terms of finalizing major-league deals. 21 players were signed from the Monday following the Winter Meetings through the end of the calendar year in 2015, but that number went down to 19 in 2016 before plummeting to nine in 2017, then bouncing back a bit to 13 in 2018. Even with the recovery this offseason, that’s still a net loss of eight signings during that time period compared to what we saw in ’15-’16. This feels like a relatively significant issue, especially if the end-of-the-year layoff is causing more sluggishness at the beginning of January as front offices and agencies reconvene.
• Beyond just a timing issue, players are being hurt by teams’ decision to sign fewer free agents altogether. The numbers might look a bit more encouraging if I had included international signings, qualifying-offer acceptances, and six-figure contracts, but under the parameters of the study, the total number of free agents signed during the offseason went down from 104 in 2015-16 to 100 in ’16-’17, 90 in ’17-’18, and 77 so far this winter. If we end up with 61 free agents signed during the second phase of the offseason — as has been the case for each of the past two winters — we’d finish the offseason with 94 major-league veterans signing deals for $1 million or more, which would at least interrupt the linear decrease that has been taking place for several years. But it’d still be 10 fewer signings than we had three offseasons ago, which is a pretty clear indication that it’s harder for veterans to find jobs now than it used to be.
• There’s an old baseball adage that spring training could last just a few days if it weren’t for pitchers needing a month’s worth of games to get ready. At least as far as free agency is concerned, it certainly seems that pitchers need that exhibition slate in order to be effective. Over the duration of this contract study, pitchers that have signed in mid-February or later have almost always experienced disastrous regular-season results. Now, this may just be the natural luck of the draw in free agency — after all, relatively few free agents go on to have tremendous success with their new clubs — but there’s an undeniable pattern of late-signing pitchers struggling. Yu Darvish, Alex Cobb, Jason Vargas, Andrew Cashner, Greg Holland, Lance Lynn, Jaime Garcia, and Chris Tillman were among the pitchers who scuffled immensely after signing in mid-February or later last year. Pitchers from other offseasons of the recent past who have endured the same significant struggles include Travis Wood, Joe Blanton, Fernando Salas, and Jered Weaver in 2017 and Yovani Gallardo and Alfredo Simon in 2016. Others such as Jake Arrieta, Tony Watson, Francisco Liriano, and Bud Norris got off to great starts before crumbling down the stretch — a trend that seems very attributable to them not building up enough endurance during spring training. Then again, Trevor Cahill and Anibal Sanchez were fantastic after coming into camp late (and in Sanchez’s case, switching teams during the spring), so it’s not as if it’s something that is impossible for pitchers to avoid. This ugly trend could be a potential problem for guys like Dallas Keuchel, Craig Kimbrel, Gio Gonzalez, and Ervin Santana who remain on the market — especially if they end up having to settle for short-term deals, as Lynn and Holland did last year, and are left to hit the free-agent market again in a season or two with their value reduced by a down year.

Ultimately, we know that waiting out the offseason has somewhat of a history of working — otherwise, that wouldn’t be Boras’ go-to strategy, or he wouldn’t be the most coveted agent in the sport. It’s worked recently for some premium free agents, and it’s likely to work again for guys like Harper and Machado. But for the vast majority of free agents, the data shows that it’s usually not a smart strategy. Obviously, free agents can’t sign until they have an offer, so this isn’t applicable to every player on the market. But for the guys who are receiving interest from teams early in the offseason, it certainly seems to be in their best interest to jump at an early offer rather than waiting around for a better one to emerge.