Continuing Steep Downward Trend, Free Agents Did Far Worse Than Projected This Offseason

Before we get started, please allow me to introduce myself. My name is Moshe Wilensky and I just joined Cubs Insider as a weekly contributor, primarily focusing on financial issues affecting the Cubs and Major League Baseball.

For my first post, I would like to talk about this offseason’s free agent market. As you may have heard by now, it was extremely slow, with six of the consensus top 20 free agents unsigned at the start of spring training. Players and agents alike were vocal in their unhappiness with the system, going so far as to accuse teams of collusion.

Leaving hyperbole aside, do the final numbers justify the anger? Did free agents this offseason really do measurably worse than in previous years? In a word, yes.

In search of answers, I compared FanGraph’s crowd-sourced predictions (specifically the averages) with the actual contracts signed by the top 20 free agents in each of the past four years. The data shows that these respective groups of free agents did progressively worse against predictions each year, peaking with the poor results this past winter.

Central to my study were the average annual value (AAV) and the total dollar value ($Total) of the contracts in question. I denoted the differences between the actual contracts and the predictions with the Greek letter delta (Δ), i.e. Δ AAV = Actual AAV – Predicted AAV. I then averaged the Δ AAV’s and Δ $Totals for each year to create a snapshot of the annual free agent pool.

The averages do not include players in 2018 who have not yet signed or players who took qualifying offers (and thereby never entered the free agent market). The raw data can be found here.

In 2018, free agents underperformed predictions in both AAV and $Total by massive amounts and did so at markedly higher levels than in previous years. They even stacked up poorly against their counterparts from 2017, which was itself a fairly bad year for free agents. The 2018 and 2017 numbers, in turn, stand in stark contrast to 2015 and 2016, which were both good years for top 20 free agents.

It should be noted that the negative Δ $Total in 2016 is exclusively due to Dexter Fowler and Ian Desmond taking one-year “prove-it” deals. When removing those two, the remaining free agents had a Δ $Total of +$3.87 milion

Additionally, the 2018 numbers may be even worse than they appear at first glance because of the psychology behind crowdsourcing. The predictions more than likely factored in lower expectations based on underperformance in 2017, which means free agents in 2018 not only did badly, they may have underperformed against lowered expectations.

You may already be thinking it, so I should address the limitations of the crowdsourcing format. It is quite possible that such predictions are inherently inaccurate, and that one cannot draw accurate conclusions from the data I have used. This is a fair argument.

Even so, crowdsourced data allows one specific conclusion to be drawn more accurately than any other: Free agent dissatisfaction. Recall that my basic question was whether free agent unhappiness is justified. Happiness can be described as reality minus expectations, so when reality exceeds what a person expects to happen, they are happy.

Players and agents are subject to the same groupthink as the rest of us, so a typical free agent probably expects a contract similar to what crowdsourcing predicts. In 2015 and 2016, top 20 free agents got more than they expected. This led to happy free agents.

In 2017 and 2018, free agents significantly underperformed expectations. Players might forgive and forget one year, but the pattern was clear after consecutive disappointments. Not only were free agents not getting what they would consider “fair offers,” but contract numbers in 2018 cratered compared to 2017. It doesn’t matter why contracts were lower than the crowdsource predictions (collusion, tanking, the luxury tax, new valuation systems, and/or bad crowdsourcing). What matters is that reality failed to meet expectations. Hence the anger.

This point is important. Owners need to recognize that maintaining labor peace is not just a matter of money, but of perception. If owners want to continue the prosperity the last 22 years of labor peace have brought, they would do well to address this anger quickly.