We Don't Care About the CBA...and That's Great

You've probably heard that the owners and players' union have hammered out a new five-year collective bargaining agreement that guarantees labor peace will extend to 26 years since the 1994-95 lockout.

And your eyes probably glazed over at the terms players' union, collective bargaining agreement and labor peace. This is an excellent development in a sport that used to be consumed with those considerations.

A Little History
From the sport's early days to the 1970s, baseball was ruled by owner-overlords protected against anti-trust restrictions by Congress. Players were literally treated like chattel. When the players' union, led by the brilliant Marvin Miller, began asserting its rights in the late 1960s, the battles with owners were over the larger philosophical issue of whether employees had the right to negotiate the terms of their employment.

It took a series of labor battles, both at the bargaining table and in the courts, and an almost unbroken string of union victories, for the balance of power to shift. By the time of the destructive '94-'95 power struggle that cancelled the World Series and delayed the start of the following season, the millionaire players and their intransigent union chief, Donald Fehr, could no longer credibly argue that the fight was about securing rights.

Although the players mostly prevailed in 1995, many fans were disgusted with them. Members of the union increasingly felt the fight was simply over money. At the same time, the old-style autocrats were ceding their ownership to business people more amenable to the new reality of a freer labor market. In the wake of the embarrassing spectacle that pitted millionaires against billionaires and robbed Americans of their national pastime, both sides recognized the need to ditch the dogma and find reasonable compromises.

Today's Reality
Having passed through that painful chapter, players and owners have been thriving. The bones of contention between them are narrow fights over how to divide a rapidly-growing pot of revenues -- the kind that lend themselves to easier compromise.

So two decades later, of course we have labor peace. Why shouldn't we? Viewed through the prism of the 70s and 80s, this is an accomplishment. But viewed through common sense, it is simply tinkering. The 15-day DL is now the 10-day DL. Qualifying offers for free agents will be watered down. The minimum salary will rise. Wake us up when you get to the interesting parts.

I read an analysis that castigated the union for allowing the owners to "win" this round of bargaining. But that is an antiquated view of the negotiations. The players and the owners  understand that their interests generally dovetail and no longer view negotiations as a win-lose proposition. And as long as that's true, it's generally a win for the fans.

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.

Mike Trout's Getting Rooked (Or He's Not)

Shortly after Marvin Miller took command of the baseball players' union he discovered to his horror that the baseball card companies -- well, company: Topps -- were inducing rookies and minor leaguers to essentially give away the rights to their likeness by offering  a handful of coins and Major League blandishment. Miller proposed to Topps that they negotiate a deal that would more fairly compensate the players for the millions that Topps was reaping.

Topps told Miller they had no reason to negotiate with him. "We don't see your muscle," they told him.

So Miller visited every MLB camp the following spring and exhorted the players not to sign the deals no matter their affinity for baseball cards. In return, he promised the players he would get them a better deal.

When Topps ran into a series of brick walls, they called Miller. Seeing his "muscle," they worked out a new deal that doubled player royalties and earned their union hundreds of thousands of dollars.

Hundreds of thousands of dollars, specifically 510 of them, is the amount that Mike Trout will "earn" in 2013, thanks to a four percent raise from his employer. That is his reward for one of the most extraordinary seasons in baseball history. Trout will take home $20K above the minimum salary for second-year players.

Mike Trout's MVP-level season was worth roughly $60 million on open-market last year, based on his 12+ WARP and a market value of nearly $5 million per win. For that performance, he earned the MLB minimum of $480,000.

Trout is unlikely to come close to repeating that in his sophomore season, but even if he's half as valuable, he's still outperforming his salary by $29.5 million.

What Angel management understands is that he has no "muscle." The Collective Bargaining Agreement signed by the league and the union gives teams total control of players until they reach salary arbitration in year three. This is designed to compensate teams for the substantial investments they make in player development.

Angel owner Arte Moreno is hardly known for austerity. He's made Google-sized investments in Albert Pujols and Josh Hamilton, and has a Lehman Brothers deal with Vernon Wells. He could have thrown Trout an extra hundred grand -- couch cushion change for the franchise -- to reward him for propelling the team to contention and ingratiate the franchise to the player come free agent time. But he didn't have to. And so, Trout will earn all year what Alex Rodriguez will "earn" in three games -- three games, that is, that ARod won't play. 

But even a 21-year-old knows that "my time will come," and possibly soon. L.A. brass of Anaheim may already be working on a deal with Trout's representatives to buy out arbitration and a year or two of free agency. It may be wise to lowball his current compensation to create an incentive to sign a long-term deal. Arte Moreno didn't turn a half-million dollar ad agency into an $8 billion asset by making bad business decisions.

And when Trout gets his consolation prize -- whether he's 21 or 23 when it happens -- it will be in the Powerball range. In the meantime, he's the highest-paid 21-year-old this side of ... well, Bryce Harper, whose leverage is apparently greater. Harper earns $2 million this year, a mere $23 million below his value.