How the Current Compensation System Is Making Older Players Obsolete

Suppose you had a roster spot to fill on your team and you needed a fifth outfielder, utility infielder or platoon DH. You could grab some veteran off the waiver wire for the bargain-basement price of $2 million or promote a kid from Double-A. For the 85 at bats they'll get, the slightly higher quality of the veteran doesn't carry much significance, but at one-quarter the salary, the rookie's lower cost does.

So, absent any other offers, another 35-year-old retires from the game.

Most Valuable Players Are The Lowest Paid
Sports Illustrated's Jonah Keri released a list this month of the most valuable players in baseball,  taking into account their cost. As you might imagine, the list is light on players on the wrong side of 30, not because they're not great, but because they're expensive.

Clayton Kershaw, a generational pitching star, slots only 23rd on the list because he's already commanding $215 million over the next seven years.  Among those ahead of him are Sonny Gray, Gerrit Cole, Chris Archer and Noah Syndergard, all lesser hurlers making near the league minimum.

Thirty-two-year-old Miguel Cabrera, still the best hitter in the game, didn't make the top 50 or honorable mention. He can thank the quarter-of-a billion dollars due him as his baseball AARP discounts kick in for that.

Vastly Underpaying Great Young Talent
Baseball salaries are structured, at least until the next collective bargaining agreement is negotiated after this season (we hope), to compensate the owners for their investment in players in the early years and then compensate players at full market value thereafter. For their first three seasons of roster time, players earn a stipulated amount -- less than $600,000 -- whether they are the 25th man or Mike Trout.

In years four-through-six, arbitration allows players to capture a fractional share of their free-market value, until after their sixth season, when they are eligible for a free agency bonanza. At the current rate of roughly $8 million-per-win, an average starter entering free agency can expect to ink a multi-year deal worth around $16 million-a-year.

Expensive Experience Vs. Cheap Enthusiasm
Given that, who would you rather have manning a corner outfield slot, pre-arb Christian Yelich, a three-win performer under team control for four more years or four-win Jose Bautista, who earns $16 million this year and enters free agency next? Youth is served with extra garnish under the current compensation system.

This has been true for years, but never before have young players arrived so ready for the Big Leagues in such large numbers. Consider: Manny Machado, Kris Bryant, Francisco Lindor, Miguel Sano, Jose Fernandez, Sonny Gray, Xander Boegarts, Mookie Betts, Andrelton Simmons, Gerrit Cole, Anthony Rendon, Anthony Rizzo, Nolan Arrenado, Jake Odorizzi, Noah Syndergard, Zack Wheeler, Joc Pederson, Corey Seager, and of course, Bryce Harper and Mike Trout. All of them under 25 and cost-controlled. And I'm sure that list is incomplete.

Goodbye Graybeards
So, higher quality juveniles are crowding out the oldsters, not just theoretically but in practice. There were more than 30 position players age 36 or older with 100 or more plate appearances in 2012 and 2013, 22 in 2014 and only 18 in 2015, according to Dave Cameron at Hardball Times. This strongly suggests that teams are opting to fill their rosters with higher upside players at low cost than overpay for veterans in their declining years.

Now add a recent development -- the Qualifying Offer. The recent unpleasantness inflicted upon Ian Desmond following his foray into the free agent market is evidence of how artificially low costs for young players are squeezing the market for veterans. Desmond, coming off a bad year and turning 31 this season, eschewed a $15.8 million, one-year "qualifying offer" from the Nationals for a shot at a multi-year deal that would set him for life. Any team signing Desmond would have to relinquish its prized first-round draft pick to Washington. That left Desmond without suitors and lowered his value to the one year,  $8 million offer he signed with Texas.

The Consequences Going Forward
The Nationals would have liked to keep their second baseman, but they might like the draft pick even more. If that pick turns out well, they will have a young star for six years at below-market rates, allowing them the financial freedom to sign expensive free agents elsewhere on the diamond.

The players' union is not unaware of this development. Representing as it does existing members, not future ones, the union has already begun making noises about obliterating this system and about raising the minimum salary. We could be in for the first contentious labor negotiations since the abomination of 1994.