First Pitch: The Death of Free Agency

Yesterday the Tampa Bay Rays agreed to an extension with right-handed pitcher Chris Archer, getting control of two of his free agent years in the process. Archer becomes the 15th player during the 2014 calendar year to sign an extension that buys out control of at least one free agent year. The Pittsburgh Pirates made one of those deals, extending Starling Marte two weeks ago.

There have been a lot of extensions of this nature around baseball this off-season. In total there have been 19 extensions that bought out control of at least one year of free agency. In total, MLB teams have combined to guarantee $1.018 billion dollars since the start of the off-season on these extensions. That doesn’t include the potential amount of the option years, which are usually the most expensive part of the deal if they’re picked up.

This isn’t a new trend in baseball. Here are the extension counts, per year, that bought out at least one year of free agency.

2014: 15 (through 4/3)

2013: 19

2012: 35

2011: 29

2010: 29

2009: 16

2008: 36

The 2013 season was a down year. The 2014 season looks to be right on pace with other years if this trend continues, and the upcoming off-season should see the numbers rise.

The trend here is that MLB teams are locking up a lot of good, young players through their most valuable years. As a result, the free agent market has been depleted. Just take a look at the three guys the Pirates have locked up in recent years.

Andrew McCutchen – He would have been a free agent following the 2015 season had the Pirates not extended him. That would have made him a free agent entering his age 29 season. The Pirates bought out three years of control, which means his first free agent year will be his age 32 season. McCutchen will probably still get a huge deal when he’s a free agent. However, that deal will probably look bad toward the end of the contract as he gets older. With the extension, the Pirates got control of the three best free agent years you can get from McCutchen. There could still be some additional quality free agent years when he’s eligible, but that might not be worth the overall price that teams will have to pay.

Charlie Morton – He was set to be a free agent following the 2014 season. The Pirates signed him to an extension that bought out control of three of his free agent years. Instead of being a free agent at age 31, he will now be eligible for free agency at age 34. Like McCutchen, he could still get a multi-year deal. However, the Pirates got his most valuable years, without having to take on any of the years near his mid-30s (the age 33 season is an option year).

Starling Marte – This is another situation like McCutchen. The Pirates would have had Marte under team control through his age 29 season. They now have him under team control through his age 32 season. That makes him a free agent for his age 33 season, and gives the Pirates his best free agent years.

Beyond the Box Score did a study a few years ago, noting the aging curves for hitters. Most hitters peaked around ages 25-26, and really started to decline around age 32. They did point out that fast players have a higher peak and didn’t decline as quickly. A fast player like Andrew McCutchen or Starling Marte at ages 33-35 would be similar to other players at age 31. Likewise, FanGraphs did a study on pitcher aging curves, noting a significant decline around the age 32 season for most pitchers.

The Pirates originally would have had McCutchen through age 28, Morton through age 30, and Marte through age 29. Instead, they extended those three, getting team control of their most valuable free agent years. They also have options on the age 32-33 years for most of these guys, limiting the risk if those guys do see a decline.

This isn’t just the Pirates. This is every team around baseball. The result is that so many young players are giving up their best free agent years in extensions. As we saw with Robinson Cano, those players can still get paid, even after giving up their ages 29 and 30 free agent seasons under an extension. But Cano will eventually be an example of a horrible contract, as he probably isn’t immune to age-related decline.

These extensions have basically killed the value of free agency. If you want a good player, you’re going to have to pay big money for a lot of his least productive years, just to get the few productive years he has remaining. Sometimes, the best players don’t even reach free agency, as we’ve seen with the pre-free agency extensions given to Joey Votto and Clayton Kershaw. Even most of the mid-level free agents require that you sign a few of their least valuable years. There is still some value to be found in free agency, but the market has largely been depleted by all of the extensions we’ve been seeing in recent years.

All extension data courtesy MLBTR’s extension tracker.

Links and Notes

**The 2014 Prospect Guide is in stock on the products page of the site. The book features profiles, scouting reports, and grades on every player in the minor league system, including our top 50 prospects. The Prospect Guide has been mentioned as a resource several times on the Pirates’ broadcast, and has been purchased as a source of reference by opposing MLB front office members, opposing scouts, and media members. If it’s a good resource for them, it’s a good resource for you. You can order your Prospect Guide on the products page of the site.

**Here are our previews for the 2014 minor league season:

**Prospect Watch: Josh Bell Picks Up Two Hits and an RBI in Bradenton Debut

**Minor League Schedule: Nick Kingham Tries Again For Season Debut

**The 2014 Pittsburgh Pirates Organizational Probable Pitching Chart

  • mysonisnamedafterRoberto
    April 4, 2014 12:20 pm

    Dear Easter Bunny,

    ……Wait can I write a letter to the Easter Bunny?

    ……. and I think it is too early for my letter to Santa.

    Well since baseball better aligns with Easter, a letter the Easter Bunny has a better chance of getting want I want for the Pittsburgh Pirates and their Prospects.

    International Signing:

    *Rene Gayo and team sign 6 18 years old that play 6 different positions for under $50,000 each. They all turn into top 50 prospects, in baseball, within three years. After each produce over a 4 WARin their first full season, the Pirates sign them to multiple year deals after that cover their first two years of free agency.

    The Draft:

    *One of the following prep players falls to the 24th pick:

    Carlos Rodon, Tyles Kolek, Brady Aiken, Luke Weaver, Grant Holmes, Nick Gordon, Sean Newcomb, Jacob Gatewood, Trea Turner, Jeff Hoffman, or Michael Conforto.

    Short season:

    *21. The amount of international players that make the jump to the U.S. and Tim has to
    praise them in his writing and try to find a picture of them.

    Low A:

    *The infield has the fewest errors in all the minors.

    *The Powers have 9 batters with an OPS of .800 or

    High A :

    *Bullpen success in Low A translates into High A ball starting pitching success.

    *Jose Osuna gets back on track.


    *Hanson and Kingham aren’t there in 3 months and somewhere in the Midwest near a famous racetrack.

    *Rojas and Garica both have breakout years and are added to the discussion of the Pirates’ Outfield talent.

    *Allie strikeouts less than 20% of the time and continues to hit BOMBS!!!!!


    *Cumpton, Irwin, Locke and Sadler all pitch out of their minds in Indy. All of them come up for a few starts and look amazing against the Cardinals, Dodgers, Braves,Yankees, Red Sox and Tigers. Then the Pirates can parlay some of them into a trade for one of the top 25 3B prospects: Miguel Sano, Kris Bryant, Maikel Franco, or Nick Castellanos.

    The majors:

    *All of the “no comments” around Taillon are nothing and he back throwing by May and in Pittsburgh by late July.

    *Polanco has a 3.5 WAR in Pittsburgh this year.

    And a little extra in the Easter Basket:

    *The H2O team (Huntington and Hurdle) are signed to extensions.

    *And lastly someone convinces Major League Baseball to change the current draft and international signing system.

    I think I need a really big basket!

    • Wow, getting a little greedy there, myson. The Bunny better remember my giant Reese’s egg after he gets you all that swag you asked for 🙂

  • I don’t think free agency will be dead anytime soon. Free agency works works for different groups of players. 1) You will always have players whose primary interest is money. I put just about anyone who hires Scott Boras as an agent into this category (e.g., Scherzer, Alvarez, Cole). There will always be some top end players who want a huge payday. 2) Some players simply want to change teams. 3) Free agency is also important for players who are good but not great. Free agency might give them a chance to move from a bench role/relief pitcher role into a regular or starter. 4) And then you have a whole bunch of players who are pretty interchangeable – bench players and middle relief. Management often doesn’t mind seeing these players go into free agency and they can pick and choose who they want for particular roles.

  • joshuabobby
    April 4, 2014 9:22 am

    There are some encouraging trends short term… teams locking up their own players, QO’s reducing the market for prime free agents, aging veterans pay coming down, etc. But as of right now, all that means is that teams are going to keep more money. Now I’m not one who is skeptical that owners will pocket money. But I do wonder what they will do with the excess cash if there aren’t free agents to spend money on. That money will go somewhere. Will it go completely internal to the point teams start locking up mid-level players? Will they look to spend it on international academies? That’s a trend I’m interested to see develop.

    • That’s already happening – according to a Travis Sawchick blog post (search for the 11/7/2013 Bucco Blog on TribLive if the html link doesn’t work) citing Sports Business Journal, the player share of MLB revenue has dropped from around 60% in 2004 to around 40% in 2013.

      • This might help explain the rapid rise in the value of teams.

        • yeah that does make a ton of sense. If that’s true, then teams will shift toward being cash generators instead of just being a good investment from an enterprise value perspective.

      • Just a guess, but I wouldn’t be surprised if there was a more or less corresponding increase in the cost of debt service, given where franchise purchase prices have gone.

        • joshuabobby
          April 4, 2014 1:59 pm

          do you mean an increase for potential investors? I would think it would be going down for current owners given the increase in valuations.

  • Hopefully this doesn’t happen but I could see union pushing for free agency to start sooner (4 or 5 years of service). Don’t know if that will be successful, but I the larger markets may want this too.

    Glad Bucs have locked up Marte and Morton, it would be risky but getting Cole signed could be a coup.

  • The trend is definitely there, and I am glad that the Pirates have joined the group signing key players well into their early 30’s. And guys like Boras are probably sending out flyers to their clients on a monthly basis explaining how a smaller future free agent market will mean more competition for their services if they do not opt to sign a long term contract. The Pirates have played it well, and it just amounts to a very good investment for the long haul.

  • Well….its a supply and demand world. If teams quit overpaying for players who are past their prime, the demands will come down. Right now we’ve seen that, in the cases of Morales and Drew……greed is not going over well. Decline the QO- okay, noone is going to sign you. So….in the future, take the QO or risk getting way less and a shorter contract. Players and agents WILL learn from this. When players start getting 1 and 2 year deals in their mid thirties because projections show they won’t be worth much…..then they will take less, and then, in the cycle of life, players will slow down on the extensions to make more earlier….there always needs to find a balance.

  • A win for well managed smaller market teams.