Virginia Boies
As the rumor mill continues to buzz around Major League Baseball’s off-season deals, one name persistently comes up: Bryce Harper. Even before the Washington Nationals’ 2018 season ended, Harper’s name splashed headlines that speculated on where he would be playing next and for how much. But now it is February and Harper remains unsigned. Whether the absence of a deal so far is due to clubs’ desire to appear uninterested, complications with a potential salary bubble, informal collusion among the clubs, or Harper’s indecision is any outsider’s guess. Harper’s cryptic tweet on February 3, 2019 that simply said “Loading…” restarted the sports media speculation that a deal is imminent. With spring training just around the corner, exasperated baseball fans will likely have a Harper decision soon.
There’s good reason for the crazed speculation: Harper’s future contract could be one of the largest in MLB history. Back in November, he reportedly rejected a 10-year, $300 million contract offered by the Nationals, which would’ve been the second largest contract only to Giancarlo Stanton’s 13-year, $325 million deal from 2014 with the Marlins. As the season’s start inches closer and closer, sports journalists conjecture that Harper may opt for a short-term contract that will allow him to boost his value in anticipation of an even larger long-term deal after 2020. But whatever form Harper’s contract eventually takes, it will likely feature one of the highest annual payments in all of professional sports.
Harper isn’t unique in this regard, though; many of the largest contracts in U.S. sports go to superstar professional baseball players. Topping the list are Stanton, Alex Rodriguez (10 years, $275m), Miguel Cabrera (10 years, $292m), Robinson Cano, and Albert Pujols (each 10 years, $240m). MLB contracts top the list of largest deals in sports for a few reasons. First, there is no salary cap or maximum contract limitations in the MLB. Unlike the NFL and the NBA, MLB teams can offer whatever they like to their star players. This is at least partly due to the strength of the Major League Baseball Players Association (MLBPA), which routinely negotiates strong Collective Bargaining Agreements (CBAs). While there is no salary cap, there is one limitation: teams are subject to a luxury tax, which require teams to pay a percentage of every dollar that exceeds the threshold set by the Office of the Commissioner. While this “competitive balance tax” is meant to level out the playing field, it has not completely discouraged teams from exceeding the threshold. The New York Yankees, for example, have paid the penalty for fourteen straight years, and although they finally fell below the threshold in 2018, they’re already expected to return to paying the luxury tax this year.
MLB contracts, unlike many of their counterparts in the NFL, are also guaranteed. Players receive the full amount of the money promised in the contracts, even if they do not play a single inning for the team (see e.g., Josh Johnson and his one-year, $8 million deal with the Padres). While the guaranteed money gives top baseball players security, when it is combined with the lack of a salary cap, baseball clubs can be creative in how they structure their contracts. Take for example Bobby Bonilla, who is more famous for his deferred-money deal that pays him $1.193 million every July 1 until 2035 than for anything he has done on the field.
But not all baseball players are so lucky. The large contracts for veteran players can also be attributed to the much smaller contracts for the rookies. Most rookies make close to the league minimum, which opens up more money for the star players. Players cannot start entering contract negotiations until three years into their careers. However, once those players can begin negotiations, their value may be easier to quantify than that of their peers in other leagues. With comprehensive statistics, most notably wins above replacement (WAR), baseball players’ performances can be boiled down to a few numbers. While it is not always that simple, it is remarkably different than evaluating a wide receiver, for example, who may have a unique connection with a particular quarterback.
While we continue to wait to hear from Harper and his legendary sports agent Scott Boras, sports insiders have speculated that the wait is not a good sign for the future of baseball contracts. Dan Lozano, Manny Machado’s agent, recently reproached the media’s speculation on the value of Machado’s future contract. He claims that such unsubstantiated reporting ultimately harms the players because it allows the clubs to negotiate through the media, which he believes violates the CBA. MLB Chief Legal Officer Daniel Halem composed a letter to the MLBPA Senior Advisor Rick Shapiro that outlined inappropriate use of media, including leaking information about player contracts before they have been confirmed by the Office of the Commissioner and the Players Association. (This letter was included in the CBA as Attachment 49.) Such use of the media may artificially inflate or weaken a player’s true value, constituting informal collusion that can allow teams to wait to make moves until a player’s value has depressed.
It seems that MLB teams have the money to pay Harper a league-record contract. Despite baseball’s decline in popularity as America’s favorite pastime, the MLB and its clubs continue to strike large network deals due to the length of the season (162 games) and the numerous regional markets. The money from the deals can then go into a number of different areas, including player contracts. With the introduction of live streaming sporting events, these deals and the rights fees that accompany them may continue to rise. But given the way the aforementioned players on megadeals have aged, perhaps the long wait is really due to a salary bubble beginning to pop. Albert Pujols, for instance, finished the 2017 season with negative WAR–that is, a minor league player would’ve performed better than him in the same situation, and certainly would have cost far less than Pujols’ $24 million annual cap hit.
Of course, it is difficult to know when we are currently in a bubble, and often we don’t know until that bubble bursts. Maybe Harper’s delay is due to the teams knowing something we don’t, or Harper is holding out for just the right deal. Even when Harper’s contract is finally reported, it still may not shed any light on the cause of the delay. Whether historically groundbreaking or not, exasperated baseball fans just want this waiting game to be over and to finally know where Bryce Harper will play this season and how much is he going to get paid for it.