| By Jason A. Churchill |  | By 10-31-2010 |
I often converse with a Kansas City Royals fan who believes Joe Posnanski knows everything. Posnanski is among the very best sports writers in the country, though I do not believe even he thinks he knows everything. It's part of why he's so respected around the country.
In any given discussion, this Royals fan and I will get to a point where we aren't sure of the answer to a question the other poses, and the next line is always, "just ask Posnanski." It's sort of a running joke, because much of the sports media is stuck in the old days when it comes to player evaluation and performance analysis. But Posnanski is not one of those. Back to that later.
The Elias Sports Bureau has been a terrific statistical source of information for Major League Baseball for more than 100 years. It's an official statistician of MLB to this day, and has been in some capacity since 1919, and today it's most well-known contribution is its annual Player Rankings.
The rankings are based on Elias' own formula and are used to regulate free agency by placing each player into one of three categories – A, B or C. The formula uses the most recent two seasons to get its results. What we get in the end is the Player Rankings that determine a player's free agent value, which sounds both reasonable and ridiculous at the same time.
It used to be a source for clubs to place value on players, but it's turned into a joke and it needs to be dissolved. The rankings tell clubs which players are Type A or B free agents, which compensate the club losing the player via free agency. A Type-A free agent, provided he was offered salary arbitration by their "former" club, is awarded the signing club's first-round pick, unless it's protected. A protected pick is one the club earned by finishing the previous season with one of the 15 worst win-loss percentages in baseball.
In a scenario in which a team with a protected pick signs a Type-A free agent, that club’s second-round pick is awarded to the player's former club, which is also awarded a supplemental draft choice after the first round and before the second. Type B free agents do not require the signing club to surrender a draft pick, but the supplemental-round selection is awarded.
All sounds fair, right? After all, the idea is parity and balance, and the clubs that lose key free agents because they can't afford to spend the money to keep them get valuable draft choices, and the teams that finish in the bottom half of the league in win-loss percentage do not have to give up first-round picks to sign those impact players.
But, among many minor flaws, there are two major flaws in the rankings and its formula -- they completely ignore defense for position players, and use only traditional statistics for all players.
In this day and age, when every organization in the league is using some sort of statistical analysis and defensive metric to place value on players, the analysis used to officially place value on those same players dismisses those key factors by default.
Furthermore, the system itself -- because it awards valuable draft picks as compensation -- hurts the players. Juan Cruz is one example from recent memory, Orlando Hudson is another. But it's a major component of the evaluation process for every club when assessing every single Type-A free agent on the market.
I have heard front office executives say things like "why give up the pick for (Player X) when we can get (Player Y) for a little less money and not have to give up a draft pick."
Is this really helping the have-not organizations? It does drive down the players' price, but if the big-market clubs wanted that player, they could always outbid the Twins and Royals of the world, regardless of what the market bares.
But the bigger issue is the rankings themselves. It's simply time to either update them with drastic and forward-thinking measures, or send them packing for good. And since the draft-pick portion of the equation is simply not working, the entire free-agent compensation process is outdated and needs to be removed from the game of baseball.
There are far too many instances where clubs that spend money regularly gain the advantage of not having to surrender their draft pick because they had a terrible season the year before and finished in the bottom half of baseball. This year, the New York Mets are the perfect example.
The current system was not designed to help the Mets. They spend money every year and have the revenue sources to do so year-in and year-out. But they were awful this season and will be able to sign a Type-A free agent, such as Rafael Soriano or Manny Ramirez, without surrendering a first-round pick, while the San Diego Padres, who generate a fraction of the revenues as do the Mets, will not enjoy the same luxury, simply because they played above their heads rather than bottoming out like those in Queens.
One assistant GM mentioned in conversation this summer that the surrendering of draft picks doesn't scare the Yankees and some other big-market clubs because they have the money to cover up holes created by going without high draft choices, especially since the draft has its own problems with slot recommendations and other financial concerns -- something we'll cover at ESPN this coming February or March -- that often pushes top talents down far enough for the Yankees, Red Sox and Tigers to draft and sign, anyway.
It's time to get rid of the Elias Player Rankings when it comes to MLB free agency. It only benefits the owners -- by effectively sinking the value of many Type-A free agents because a draft pick sacrifice is part of the overall cost to sign them -- and isn't an accurate system with which to begin. It even corners clubs that do want to offer arbitration to those Type-A free agents, because that player is likely to make well beyond his market value on a one-year deal if he accepts arbitration, a likelihood that increases because of the penalty thrust upon other clubs for signing them.
Perhaps another formula can be created, but draft picks probably shouldn't be a part of the process. Maybe there's another way to make it easier for teams to keep their own players. The NBA did so with the Larry Bird rule, which gave teams more leeway under the salary cap to sign their own free agents.
It doesn't prevent free agents from leaving smaller markets, but it has made it possible for superstars to stay with their first teams for a long period of time. Tim Duncan has remained in San Antonio for 13-plus years now, for example.
Baseball, however, does not have a salary cap, so something entirely unique will have to be produced to make the impact the league wishes the free agent compensation system would. The same executive that spoke of the big-market clubs being able to cover up losing draft picks has an idea.
"Maybe teams that finish in the bottom 15 get the draft pick compensation, and the top 15 do not. Maybe only the playoff clubs do not get the comp picks. But the rankings aren’t reliable, you're right. So if that is changed, maybe something like this could work."
I'm not sure what the next move should be, other than shedding the current system. It sucks, doesn't help the small-market clubs, helps owners who need NO help making money, hurts players and flat out annoys me with its archaic basis.
Major League Baseball is smarter than that, its teams and their fans are smarter than that, and the media is catching up quickly -- just ask Joe Posnanski.
Type A and B Free Agents
elias\'-player-rankings-need-to-go
Comments
The following 20 comment(s) for this article are shown below:
| 1. By: maqman on 10-31-2010 11:56:03 This problem is becoming widely recognized but apparent solutions are not so forthcoming, as you point out. This will have to be worked out as part of the next Collective Bargaining Agreement. Most likely (hopefully) with some structured resolution of international free agent signing procedures and a hard-slotting valuation program. I'm afraid a salary cap has little hopwe of being achieved although I think it would be best for the game, along with increased revenue sharing. |
| 2. By: maqman on 10-31-2010 11:58:51 Sorry, "hopwe" is a Navajo word meaning "hope." Must have gotten some smoke-signal in my eyes. |
| 3. By: AOD09 on 10-31-2010 15:16:23 Those are three of the worst things that could happen to the game. A salary cap would only further transfer money from players to owners while still failing to create parity. Hard slotting in the draft will weaken draft classes as more high school kids will go to college instead of signing. I dont see what is wrong international free agent signing? It is actually the most even playing field for aquiring talent. |
| 4. By: FWBrodie on 10-31-2010 19:40:46 Maybe after they update the rankings system they can get to work on the awards systems. |
| 5. By: Edman on 10-31-2010 21:14:20 A salary cap or something similar, is the ONLY way to keep teams like the Yankees, Red Sox, Mets, etc. from having an unlimited ability to sign the best players. What you need is a system that limits the higher revenue teams, while forces the lower revenue teams so spend money appropriately. What that system is, I have no clue. But, when you can "absorb" more bad contracts than most teams spend on their total payroll, that's not good for the general health of baseball. |
| 6. By: Jason A. Churchill on 10-31-2010 21:30:09 Since there will not be a salary cap in our lifetime or our kids' lifetime, the best answer in front of us is a better way to protect the small-market clubs and and a more aggressive luxury tax. The revenue sharing program helps, and nobody with a clue will say otherwise. But it doesn't fix the issue because it doesn't hurt the Yankees, Red Sox, and a few other clubs, enough. It doesn't slow down their spending much, and while luxury tax penalty figures do NOT reflect what each team is paying into the revenue sharing program -- that is a misnomer that most don't understand -- it's clearly still too little. But the Elias Player Rankings should not be a part of the free agent process nor should the draft-pick compensation portion. It's not a solution to the entire problems, but just getting rod of it is better than remaining status quo. |
| 7. By: safecochatter on 10-31-2010 22:04:45 one thing for sure,you'll be hard pressed to get more luxury tax,as the yankee's and red sox of the world will just point out the 2010 world series. with the both teams having budgets under 100 mill. a ongoing poll at milb.com poses the question....which 2010 AFL standouts is most ready for the Majors? Ackley running away from the other candidates with a whopping 41%. |
| 8. By: Jason A. Churchill on 10-31-2010 22:16:23 All the more reason to penalize the Yankees for spending twice as much as the Rangers and Giants. |
| 9. By: Edman on 10-31-2010 23:45:16 What I think makes sense is a stiffer luxury tax system. One that punishes as teams more farther what could be considered a reasonable "mean" payroll. The other side of it is to assure that teams that are given the money windfalls, spend it on players and not paying off their debt. Teams that don't spend on players should also be fined, and maybe even the possibility of lost draft choices. It's a sticky issue, but teams like the Yankees should not have the ability to simply outspend everyone else, because they can. |
| 10. By: FelixElRey on 11-01-2010 11:38:49 Can someone please briefly explain the parameters of luxury tax and revenue sharing or post a link. I remember once hearing that the Marlins spent less on their payroll than they received from these sources, and that surprised me because I didn't realize that much money shifted around. Thanks |
| 11. By: Edman on 11-01-2010 13:53:23 Both the Marlins and Pirates used the luxury tax to pay off debt. In other words, they put money in the pockets of the ownership for past debt. The Royals have not been spending their money as intended to imcrease their payroll. The luxury tax was created to help the low revenue teams to be able to help small market teams be able to defer the cost of signing a free agent to help them compete against larger market teams. |
| 12. By: maqman on 11-01-2010 14:28:05 I believe the Luxury Tax only provides a small portion of the Shared Revenue, most of which comes from MLB income from national media, image rights, MLB-TV, Stub-Hub and other shared income streams. |
| 13. By: Jason A. Churchill on 11-01-2010 14:33:54 FelixElRey, The luxury tax works as follows. A team that goes over the luxury tax threshold pays 17.5% in monetary penalties for the first "offense" and then it goes up to 30 percent the second time in a five-year period, and to 40 percent every time after that. The threshold is 170 million for 2010 and 178 for 2011. One of the other misnomers here is that the money paid goes to the small-market teams. It does not. That is not part of the revenue-sharing program. So the fact that the Yankees have paid 164 million in luxury taxes since its inception doesn't even begin to describe how much money they "share." The money collected from the luxury taxes is doled out into several directions. The growth fund gets at least 25%, and up to 30%, 25% is used to finance baseball programs in countries without prep leagues and 50% goes toward player benefits. The only clubs to ever pay the luxury tax are the Yankees, Red Sox, Angels and Tigers. The Yankees are the only club that will pay the tax this season, as the Red Sox spent just 168 million and change on payroll in 2010. |
| 14. By: slamcactus on 11-01-2010 14:36:54 A better formula is an absolute necessity. I do think draft pick involvement makes sense, though. One thing I'd like to see is compensation only being awarded to teams who are faced with losing players they drafted (as opposed to players they trade for and sign as FAs). That rewards player development and gives more teams an incentive to carry their players through the season rather than ship them out in mid-season trades. I think extra draft picks make a whole lot of sense for a player like Carl Crawford, and a whole lot less so for a player like Orlando Cabrera circa 2005 (where a rich acquiring team picks him up at the deadline and then turns him into 6 years of Jacoby Ellsbury and Jed Lowrie). |
| 15. By: Jason A. Churchill on 11-01-2010 14:56:04 I don't disagree, slam, I just don't think the draft pick should automatically come FROM the club signing the player. What if it's the Nationals or the Royals signing him? |
| 16. By: slamcactus on 11-01-2010 15:23:21 I completely agree with that. It's messed up to punish mediocre teams more than good teams for signing free agents. So: new formula, restrict it to home-grown talent, and the order of the compensation picks should linee up with the quality of the player lost (using said new formula, which presumably is closer to actual value than Elias's BS rankings). Fixed? |
| 17. By: Jason A. Churchill on 11-01-2010 20:54:42 You'll get arguments on what is homegrown and what is not. What if you acquire a player that was waived or via trade when he's in low-A at 20 years old, spends 4 years in your org... etc? |
| 18. By: micahjr on 11-02-2010 00:27:12 Why not just expand the compensatory rounds? You could have type A free agents net an extra pick between the first and second rounds, as well as a compensatory pick between the 2nd and 3rd rounds. Type B would remain what it is now, a compensatory pick between 1 and 2, but it would be after the type A compensatory picks. I wouldn't have anyone lose picks. I also agree with slamcactus to some degree about the "homegrown" aspect, but would not go so far. You could modify the free agent typing to define the Types as requiring consecutive years in the same organization. For instance Raul Ibanez would have been Type A for us when we lost him because he was with our organization for the 3 years that designated his Type A status. Some other considerations: restrict the compensation to the bottom half of the league; formula change, of course; league needs a salary floor; maybe take first round draft picks for high expenditures at the very edges of the luxury, and drop the salary required for luxury tax. I'd love to hear some critiques. I think this has the potential to be a really fruitful discussion. |
| 19. By: slamcactus on 11-02-2010 12:08:52 Two possible definitions of home grown. 1) broke into the majors with the system and remained for entirety of club-controlled years. That would reward drafting, good IFA signings, and trades for prospects. 2) A minimum of three years with the team. That would reward teams for trading for young club-controlled players while avoiding rewarding contending teams with picks for their rent-a-players acquired at midseason in their final year before free agency. Also, given that Elias rankings operate on a multi-year approximation of value, it may make sense to have the amount of time with the team line up with the period over which the player rankings are calculated. I'm indifferent as to which option to choose. Either is better than the system we have. |
| 20. By: joeyp on 11-05-2010 16:51:01 the answer is simple, contraction is and has been the answer, Who says small market teams deserve a team in the first place? if a team cant afford to compete close them up. or do as they do in Soccer, have a tiered system where teams who cant compete get removed from the first divission. Has the city of pittsburgh any more tight to a team than Las Vegas? Wht is Vegas an AAA city and Pittsburgh a Major League city? The mistake being made by MLB is catering to those cities that are only bringing down the overall product. If teams were in fear of being contracted or demoted to AAA status you would see a better product and give incentive to owners who routinely pocket their profits For years Carl Pohlad of the Twins had been by far the richest owner in the Sport yet he routinely showed a profit and wouldnt invest in his product and collected revenue sharing dollars, yet over the same time period George Steinbrenner took a Yankee franchise that CBS Television had run into the ground so bad that it was worth only $8 million and built it into a billion dollar asset. So why cater to those who only drag down the product ? The answer is you dont. The answer is you make ownership of a major League franchise a priveledge. Thats the only true answer to the sports problem |
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