Thursday, January 14, 2010

The "Wait and See" Approach

Free agency in the game of baseball is tough to predict. With the ever changing economy, teams have been forced to scale back spending. Gone are the days where mid-level talent was greatly compensated, placing a new importance on building a franchise via the draft. Even so, large contracts continue to be given out, but when are these contracts being inked? It seems as the days go by during the offseason, the asking price/years fall substantially.

It really is no secret, it happens just about every year. With teams signing players to huge contract at the start of free agency, they are much less motivated to sign other players as the offseason continues. It comes down to simply supply and demand. If a team signs one of their needs, they are far less likely to sign another player who would've fit that mold. Subsequently, unsigned players have fewer teams to battle for their rights, driving the price way down. My question is why are general managers forcing signings early in the offseason, when comparable talent can be found much cheaper by waiting?

While team are less likely to "sell the farm" on free agency, big contracts are still being signed. John Lackey signed with the Red Sox for 5yrs/$82.5 million. Jason Bay recently signed with the Mets for 4yrs/$66 million and Matt Holliday inked a 7yr/$120 million deal with the Cardinals. The point of this post is not to examine if these were good signings or not, but to question what patience could've done for the teams.

Obviously, the shorter a contract is, the more it benefits an organization. In baseball, unlike other sports, teams have to be much more careful of how they spend their money. Baseball contracts are made up of guaranteed money, meaning even if the player is hurt, he is still entitled to receive payment. In short, spending money in free agency comes with a risk, a very big risk.

Looking at the above contracts, there are similar players available on the free agent market. Right now, the "best" starting pitcher left is Joel Pineiro. While Pineiro struggle to strike out hitters (4.4 K/9 in 2009), his control is incredible. He walked just 27 batters in 214 innings last season while pitching in St. Louis. Coming off last season, Pineiro was expecting a large payday. Reports early this offseason had him asking for a four year deal, worth around $60 million. But as the days come and go, so do the suitors, and subsequent money. As pitchers have fallen off the market and teams have filled needs, Pineiro's asking price has plummeted. There are reports right now he is discussing a 2yr/$15 million contract with the Dodgers. Oh and by the way, Pineiro is a type B free agent, meaning he wouldn't cost the team signing him a first round draft pick.

Meanwhile, the Mets and Cardinals already signed their big free agents, in Jason Bay and Matt Holliday. As the two big free agent outfielders fell, so did the prices on others, leaving great bargains to be had. Soon after, one year deals were signed by Vladimir Guerrero ($5 mil), Hideki Matsui ($6.5 mil) and Ryan Church ($1.5 mil). Sure these players are in the back end of their career's, but so will Bay and Holliday once their contracts are up (Bay 35, Holliday 36).

As the days pass, the more tense free agents are getting. As teams continue to fill out their rosters, players drop their asking prices, leaving for great bargains to be had. The question I continue to ask myself is why are teams immediately jumping into the free agent market, while competition and prices are high? Why not just take a wait and see approach to find good options at cheaper prices and shorter contracts? Sure you might lose out on the "top free agents," but the money teams could save can be used to find other upgrades. It seems to be every season teams find value bargains like Bobby Abreu, or Orlando Hudson. Sure there not the "top free agents," but you're also not paying "top free agent" money for their services.

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