Big free agent contracts won’t break baseball, the game has already been broken

Steve Cohen is only doing what other big market owners have done before.

Free agent spending has been historically high this year. Steve Cohen has been front and center pushing the Mets’ payroll to an eye-watering half a billion dollars after luxury taxes (assuming their deal with Carlos Correa doesn’t also fall through!). This might make it seem like small market teams such as the Royals have no chance. But here’s the deal, it changes nothing.

When we throw terms like small market around, it helps to frame that. According to Forbes’ Business of Baseball list, if you break the teams into thirds by revenue it looks like this:

Small Market: Oakland, Toronto, Miami, Baltimore, Tampa Bay, Chicago White Sox, Pittsburgh, Kansas City Cincinnati, Arizona

Mid Market: Cleveland, Detroit, Minnesota, Milwaukee, San Diego, St. Louis, New York Mets, Seattle, Washington

Large market: Philadelphia, Los Angeles Angels, San Francisco, Texas, Houston, Chicago Cubs, Atlanta, Boston, New York Yankees, Los Angeles Dodgers

The first look was based on total revenue streams. Now let’s look at Sports Media Watch, who ranks the markets directly by number of households:

Small Market: Milwaukee, Cincinnati, Kansas City, San Diego, Baltimore, Pittsburgh, St. Louis, Cleveland, Miami, Colorado

Mid Market: Minnesota, Detroit, Toronto, Tampa Bay, Seattle, Arizona, Oakland, San Francisco, Boston, Washington

Large Market: Houston, Atlanta, Texas, Philadelphia, Chicago White Sox, Chicago Cubs, Los Angeles Angels, Los Angeles Dodgers, New York Mets, New York Yankees

You will see some differences from the first rankings, and some teams look very different by this pure market size metric. It shows that some teams are not maximizing their income streams relative to the households in their area, or have to share their market with a bigger dog. Tampa Bay and Oakland are the most obvious and easy to explain. It also shows some teams punching way above their weight in revenue, like San Diego and St. Louis. Toronto is not in the list from Sports Media Watch, but based on their census data, their metro area is about the same size as Detroit.

Any way you slice it, the Royals are at the very bottom of the money tree. They have never pretended otherwise, and it makes some sense why they have (a) never spent huge on a player and (b) want to build a new stadium and entertainment district downtown. They remain one of only four teams (including the Pirates, Athletics, and White Sox) to never sign a player to a $100+ million contract. If you go all the way back to the Kevin Brown contract in 1998, there have been 125 contracts of $100 million or more signed. By the Forbes breakdown above, 65 have been by large market teams, 47 by middle, and 13 by small market teams.

Honestly, Cohen can’t break baseball for small-market teams. It’s already broken. By percentage of $100+ million contracts, the large market teams make up 52% of the distribution. If you do the percentage by dollar value it is way more than that because elite free agents almost exclusively go to large market teams. San Diego is the only team that is not in a large market that is trying to change that. The mid and small-market teams mostly get these larger contracts when extending their own players with only sporadic exceptions.

Baseball is set up very differently than the NFL or the NBA, and having no salary cap really skews the distribution of player signings in free agency. The hard salary caps change the nature of team building, for both good and bad, but if you wanted the Royals and Yankees to be on somewhat equal footing for salaries they would do a lot better job. As it is, the large market teams will always be able to corner the market on the biggest free agents. Shohei Ohtani will be on the market next year, and the list of teams with a realistic chance of getting him is quite small. The Royals are not on that list.

There are two ways you can be a small or mid-market team and still be competitive for top free agents. One is to have an extremely wealthy owner who cares more about winning than turning a profit, see San Diego. Peter Seidler is not Steve Cohen wealthy, but he is worth $3 billion and seems to be content to spend aggressively even in a small market, though he is only in a small market by media rankings. Their revenues are a bit higher and push them to the middle. The other path is to become the St. Louis Cardinals. A model organization with a track record of consistent success, the Cardinals can swim in the deep end of the pool occasionally despite being in a media market not much bigger than Kansas City. They also don’t have to compete with any NBA or NFL teams for their city’s affection or dollars, though the Blues are important to them. Even then, the Cardinals don’t spend anything like the big boys, it is just a big contract here and there.

All of this is not to say the sky is falling. There are some silver linings to the current spending. Albert Pujols, Stephen Strasburg, Anthony Rendon, Christian Yelich, and Fernando Tatis Jr, to name a few, have all recently shown that these large contracts come with a lot of risk attached. Anyone who thinks the Yankees are still going to be having a lot less fun with Judge on the team in years 6, 7, 8, and 9 of that contract is significantly more optimistic than me. There is a chance that several of these teams knock themselves out of contention at some point in the near future for a few years due to dead weight on their roster.

The other thing Cohen might do is push all of the large contracts upward, and since only the large market teams sign them, it might create a scenario where the second and third-tier free agents become much more attainable as the salary bloat of the big contracts saps the ability for the big teams to nab as many of them. Personally, I would not want over half of the contracts that have been signed this off-season. We have seen Dave Dombrowski load up on big contracts to create a competitive team for a while, then leave with a team that is gutted and staring at a long rebuild. Philly might end up being the most recent example before too long.

Do I hope that Jeff Bezos buys the Royals on a lark and builds a super team while hemorrhaging money? Yeah, that would be super fun as a change of pace. It would not be as fun as 2015, due to the mercenary nature of it, but it would be entertaining for a bit. For now, expensive free agents and their cost on the market have no bearing on the Royals or their fans, except for maybe a little jealousy from afar. That could be fixed someday, but I’m not going to be holding my breath.