Free Agent Compensation Changes

Giving voice to Type A Major League Baseball free agents who find themselves barely reaching the classification level, David Bowie once wrote:

Every time I thought I’d got it made
It seemed the taste was not so sweet
So I turned myself to face me
But I’ve never caught a glimpse

It’s fitting that these lyrics are found in a song titled Changes, because recent rumblings indicate that the system that threatened to force second baseman Kelly Johnson to accept a one year contract through arbitration with the Toronto Blue Jays, while lesser colleagues like Aaron Hill and even Mark Ellis sign multiple year contracts on the open market, will be eradicated in the very near future.

The New York Post’s Joel Sherman spoke with two sources briefed on the collective bargaining negotiations who informed him of a “strong possibility that Type B compensation will be eliminated this offseason.” They also suggested that:

There might be some tinkering done to help create a market for players at the bottom of the Type A designation. What could be done, for example, is that the signing team does not lose a draft pick, but the club that loses the player is awarded at least a sandwich pick.

I share Andrew Stoeten’s sentiments, who, writing over at DJF, suggests:

These potential changes, of course, would all sit perfectly well with me if they didn’t impact the free agent signing period that’s already underway, or if teams who operated in 2011 with a view to gaming the system for picks weren’t about to have the rug pulled out from them. Problem is, I don’t suspect MLB has much sympathy for clubs who’ve been taking advantage of a system they presumably believe was setup in good faith. I get that, it’s just… go ahead and make changes to the compensation system; give guys like Johnson or Jason Frasor the opportunity to get a fair market contract for themselves, and eliminate high-end draft pick compensation for backup catchers and dime-a-dozen reliever– that’s all perfectly fine. Just do it starting next year when teams actually have a chance to prepare for it. How is anything else possibly fair?

And that’s not just because the elimination of Type B free agents and changes to the compensation for bottom rung Type A free agents will likely hurt my favourite team, the Toronto Blue Jays, more than any other team. It’s because there’s a severe lack of fairness and equality in having teams operate and make transactions based on one set of rules, only to change those rules when teams have made transactions for which fruition is based on the previous rules.

Yes, teams have found ways to “game the system,” but punishing arbitrage by preemptively changing the rules is completely disrespectful and even scornful to innovation. Baseball’s off season is unlike any other sport’s in that it is 1) interesting; and 2) isn’t over in a day or two. Rumours, speculation and actual transactions occur throughout the off season and a large part of the intrigue for fans is innovative thinking. For many of us, the general managers and scouting directors on our favourite teams are every bit as important and celebrated as the star player.

However, there is little doubt in my mind that when a middle reliever, even a very good one, costs a team the same amount of compensation as the best player in baseball, something with the system needs a-fixin’. Earlier today, Noah Isaacs of FanGraphs examined what type of changes would occur if the Elias rankings were based on fWAR and not a seemingly arbitrary formula based on antiquated statistics like batting average, runs batted in, fielding percentage and winning percentage.

Despite vastly different approaches to considering the value of players, the results are surprisingly not that much different.

If you exclude RPs, then 92% of Elias type A players would be WAR type A players.

While the Elias system does overlook some very good players in its ranking, its largest sin, as expected, is found in overvaluing relievers. Of the 51 relief pitchers who have attained Type A status, fWAR finds that only one of them was among the top 20% of players during the given time period that Elias used to gather their ranking.

Tom Tango explains these surprisingly results:

It’s literally impossible to create a stat where Pujols is not near the top, as long as you are being anything close to reasonable.  But, it’s extreme cases, guys who walk a ton, or steal a ton, or are fantastic fielders, or hit a ton of HR, disproportionate from the rest of their outcome lines, that are the issue.  Since we don’t get that many kind of extreme players, we end up with significant overlap between Elias rankings and WAR-based rankings.

Tango also suggests an idea that I like very much: let the market itself dictate compensation. If a team deems a player worthy of a contract that places his salary in the 80th percentile, his former team is due compensation. This way, you curve the gaming of the system, make arbitration offers more honest and have a compensation system in place that doesn’t dissuade organizations from paying what they believe a free agent’s true worth to be.

But again, no matter what the agreement between the players and owners ends up being, for the sake of the clubs who made transactions throughout the season based on the rules in place, amendments shouldn’t be enacted until after the current off season has played out. The current collective bargaining agreement officially ends on December 11, 2011, or smack dab in the middle of the off season. Everything that teams did up until that point to improve their team shouldn’t be thrown by the wayside.