THE BOOK--Playing The Percentages In Baseball

To be fair, if you study antitrust regulation, one of the problems with proving collusion is that the result of collusion looks the same as perfect competition. That is the prices of sellers (in this case salaries) will be identical to each other. The difference is at what level are the prices/salaries. It’s not entirely unreasonable for players to think that collusion is occurring if the salaries offered are identical even though it probably is occurring due to perfect competition (due to new “perfect” information).

Herein lies the problem with unions, or most institutions in general: hierarchy based on who got there first.

There should still be some variability in the offers, since the $/win number moves from year to year.

I have some curiosities.  Aren’t the value numbers published on Fangraphs (for the sake of exposition, I’m just going to use Fangraphs; I realize there are other sources) just calculated using previous “market” rates?  They’re not really a measure of value to teams, but, instead, are just a measure of how much teams have, on average, previously paid for a player of similar WAR.  Right?  If prices were previously artificially depressed through collusion, then Fangraphs value numbers would just be showing how much similar players were priced at in a collusive environment.  Right?

Teams could be using these numbers as a way to foster implicit collusion.  That is, they don’t have to get together and explicitly agree on prices and risk potential collusion punishment.  Now, there’s an independent website that tells them how much they have been paying for WAR and how to measure it.  They can just stick pretty close to that, or even decrease prices a bit.  Now, I’m not necessarily saying that’s what’s going on, but it would be a clear case of price-fixing if it were.  I could actually see Fangraphs being a pretty useful tool for fostering collusion. 

The run value measurement (e.g. WAR) of players has certainly increased in its efficiency, but how does that imply that players’ economic value to vastly different teams should be the same or, more correctly, that the prices teams offer to players should be the same?  I’m failing to get that linkage.

My training comes as an academic economist.  Unfortunately, most of the economic models I’m familiar with just don’t apply very well to baseball labor markets.  They are very peculiar markets.  It would seem to me that the most logical models would be the bargaining models or, more likely, the auction models.  Unfortunately, I don’t have too much confidence in the results coming out of that research at this time.  I find baseball labor markets to be particularly difficult markets to think about. 

I guess I don’t have any answers, just lots of questions.

I should add that I tend to doubt collusion is occurring in a widespread manner.  Most of the research I’ve seen indicates that, in oligopolistic markets, it is very difficult to make collusive agreements work if there are more than about 5 or 10 firms.  I guess in this case it would be an oligopsonistic market since the teams are actually buyers, not sellers, in the labor market, but I don’t see why that would change things.  You can see some evidence of collusion breaking down in the amateur draft, where conditions are otherwise perfect for it to succeed.  The teams get a list of prices that they are not supposed to exceed for crying out loud and, every year, there are several teams that do.

Even if MLBPA privately thinks there is no collusion, they have to react, if just to keep the possibility that this was a collusion open in case of real collusion down the road. Every time they don’t react to something that may look like collusion, they 1) reduce trust from the players; 2) enable MLB to incrementally change “accepted policies” (those MLBPA doesn’t object to) until something like collusion happens, and MLBPA looks ridiculous for complaining about that when they allowed all those previous things.
The most probable result will be something like “Well, there’s no evidence of collusion, but we are watching carefully.”

In this case, the MLBPA is acting like the “party of no”.

“how does that imply that players’ economic value to vastly different teams should be the same or, more correctly, that the prices teams offer to players should be the same?  I’m failing to get that linkage”

That position is highly overrated.  You’ll have to find me cases that a team, like the Yanks or Redsox or Phillies, that overpaid for talent relative to the average team, but fairly paid for a team in their sweetspot.

And conversely, that a team like the Royals or Pirates or Nationals underpaid.

And yes on the draft.  That’s a great example of teams not holding to the party line.

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And look at arbitration.. that’s a pretty efficient market, whereby both sides pretty much know what the other side is going to offer, outside of the most extreme data points (Lincecum, Howard).

Free agency should follow the same model.  And, it somewhat does.

"hey care about the veterans almost to the exclusion of the young players.”

I’ve been a member of two different teachers’ unions, and seeing it first hand, my question is why *any* union wouldn’t wind up caring mostly about the older players.  Those are the players who hold positions in the union, they’ve been paying dues the longest, they wrote the *previous* contract --

I’m not saying this is how it should be, and I’m pretty sure that in the case of teaching it’s a bad thing as far as instruction goes, but there and in the case of the MLBPA—why would we expect it to ever be otherwise, given who runs these unions?

Without knowing the details of the offers it is difficult to assess the claim. It may be that there were a group of players getting very similar offers well below the “correct” amount suggested by their statistical value. It could be that the offers were similar in ways other than the average value, for example, contract length, options, etc, which are not subject to the same problem of all teams having the same information. I have no idea if there was collusion, but unless you have more information than was in that article, I don’t think you can claim that it is solely based on better publicly available information.

This assumption of “perfect information” is inherently flawed.  No matter what information is out there (WAR, VORP, etc), free agency is about paying for future production, not past production.  Even if you make the argument that all 30 teams agree on how to value production (which I don’t think you can), you also have to say that all teams agree on how to value projected performance going forward.  It seems to me that if what the union says is true (multiple nearly identical offers to many free agents), there are only two possibilities.  Either the teams agree on how to evaluate both past and future performance, or there is collusion.  It seems to me that its more likely that the teams collude than agree on evaluations.

Ryan’s point at #11 is dead on. In fact, I’ll take it even further, even if the teams agree on how to evaluate both past and future performance, they also have to agree on how to translate that performance into dollar values. The more you think about it, the more collusion seems likely.

I also don’t think you can simply disregard the fact that different players have different values to different teams, especially when you consider the economic impact of making the playoffs versus the marginal performance needed to put a team over the top.

Ryan: in the collusion cases in the 1980s, the teams that offered the best deals were the teams that “owned” the player’s last contract.  Since Bronfman made the Raines offer known (3yr / 4.8MM) and Dawson (2 / 2.2MM), then all the other teams made offers at well below those rates (for Raines it was close to 1.2MM per year).  Raines was ready to take those deals.  Dawson gave the famous blank contract to a GM who REALLY wanted to sign him, and could pretend that he had to.

The current collusion charges is that… well, there’s no guarantee that some team will come away with a player.  Say, I dunno, Placido Polanco.  How would the collusion work there?  Or Jason Bay?  They go to new teams, their old teams didn’t really try to sign them and the other 28 teams… well, then what?  There’s no known “top offer” that sets the boundary that everyone will fall behind on.  So there’s a backroom offer that Selig will tell everyone about?  And then everyone has to hold the line there?

As was pointed out, it barely works for the draft, and Selig is big on slotting there.

And how do you explain Brandon Lyon?  And Matt Holliday?

No.  The better explanation is that teams have accepted that valuation based on RBI is stupid.  Teams understand the valuation of fielding and DH. 

The Redsox might be the reason, as they are a team that can spend alot, but they end up spending smart AND winning. 

Teams used to give out contracts as if they have a gun held to their heads.  Now that they put down their own guns, the reason they give out sane offers is because they are conspiring to do so?

I’m not buying it.  This economic downturn has made everyone more sane.  You just haven’t constructed a scenario that you can walk me through where collusion can exist.

The translation of past performance to wins is the easiest step.

The conversion of wins to dollars is straightforward.

The past performance informing future performance is somewhat straightforward.  I mean, I’ve constructed some fairly elaborate models, and my rule of thumbs that I’ve posted here is so darn close to those models that, again, it’s a straightforward process.

I’ve looked at this for the past 4 offseasons, and if you look at all those threads, you will see that almost all free agent contracts are justifiable and predictable without collusion.

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If you want to make the case for collusion, don’t infer it.  Walk me through an example of how it would practically and actually work.

Even if you look at something like the Phillies and Mariners: they each put the 2B/3B infielder they signed out of position!  And those two were the two best signings in the offseason.  The Mariners could have say signed Polanco at 10% higher, the Phillies could have signed Figgins at 10% higher, they keep them at their 2009 positions, they sign fair deals, and everyone is happy.  Wouldn’t collusion have been good there?  Wouldn’t it have made more sense?  But no, the Phillies sign Polanco at a great deal and they put him out of position.  The other 28 teams are going to agree to let Polanco go, even if they need a 2B, so that the Phillies can sign him for 3B?  Why the Phillies?

Each team gets to declare their “preferred” free agent?

Walk me through it, how this alleged collusion would actually work.

The idea of collusion is pretty idiotic. If teams were conspiring to keep a player’s offers below his true market value, the smart GM would offer more than the collusion price in order to sign the player away from his competitors. This process of one upping each other would continue until the true market value is reached.

@14
You are looking at collusion too singularly. Teams do not need to set price ceilings on individual players in order to collude. If it is proven that teams have collectively agreed to follow a pattern of behavior leading to cost cutting, they are guilty of collusion. For example, if a group of owners decided that they wouldn’t give more than 3 year contracts to players over 30, that would be an example of collusion.

I also disagree with your assertion that the conversion of “wins” to dollars is straightforward. For one thing, it assumes every team agrees on the evaluation process. Secondly, it ignores the increasing and declining marginal utility of a win, which would be different for each team.

@#15

But that defeats the purpose of collusion, which assumes the teams are more concerned about cost control than outbidding each other for players.

@17

And, in an unhampered market, I don’t believe collusion can exist. A GM will quickly take advantage of that discrepancy because it is in his interest to do so.

@18

But, by no stretch of the definition is MLB an “unhampered” market. Besides, GMs are not the ultimate deciders of such things. The owners would have to be involved in a collusion environment.

"you also have to say that all teams agree on how to value projected performance going forward.”

The projection systems usually agree on how a player will do going forward.  Especially for free agents - we’ve got 6 years of MLB data there so the question of how to best do an MLE or project college stats, the stuff that might make Oliver come up with a radically different answer than Chone, don’t matter.

Matt Holliday:
Oliver 311/390/523
BillJames 316/391/531
Chone 304/382/513
Marcel 312/392/529
Fans 314/391/526
Zips 308/387/528

I think it’s reasonable to assume that for guys with 6+ years of MLB data, teams have very similar evaluations of their future value.

"For example, if a group of owners decided that they wouldn’t give more than 3 year contracts to players over 30, that would be an example of collusion. “

I’m still asking for you to walk me through what could have happened here.  Figgins is over 30.

I want you guys to actually walk me through how collusion could have happened.

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And yeah, it’s the owners, not the GMs, that have to agree.  Just having the GMs won’t work, since the GMs care about themselves, and in no way would they conspire without the owners being involved. 

***

Imagine you are in court.  Present your case.

@19 That is certainly true. Although, another league could potentially steal those players away from the MLB if teams offered contracts below the market rate.

That situation is a bit far-fetched right now, but it’s certainly possible. The KHL, for example, has started to pursue NHL free agents.

Back to the MLB, even if we assume that there is no outside competition, I don’t see how collusion rates would be feasible. It would help the small market teams significantly more than the large market teams. Do you think the Yankees or Red Sox would stop themselves from breaking the agreement if it meant signing a piece that they felt they needed?

@21
I provided an example of how collusion “could have happened”. There are lots of theoretical possibilities because anything that subverts the collective bargaining agreement would qualify as collusion (e.g., owners agreeing to limit dollar value, contract terms, their payroll to revenue ratios, or even something as subtle as agreeing to not consider shopped around offers).

If the MLBPA suspects collusion, my guess is they have a sound basis. This has not been a union unable to prove its claims in front of a judge. There is no reason for us to imagine we are in court because if the MLBPA does in fact file a claim, that’s exactly where this issue will end up.

I am not suggesting collusion definitely occurred, but I do think it is foolish to dismiss it as being inherently unlikely.

@19
I am pretty confident that the Yankees would not want to uphold a collusion agreement, but one can imagine a case where a team with a significant amount of new debt might want to scale back payroll for a year or two. In fact, I think the Red Sox would very much like to operate in an environment that allows them to spend more than most, but not up to their means (i.e., allows them to improve profit).

Having said that, it is important to remember that not every owner would need to be involved for there to be collusion. Even a small group’s actions could lead to a finding in favor of the MLBPA.

Collusion, being a subjective “in the eyes of the beholder” sort of issue, needs metrics both sides agree on in advance in order to arbitrate.  Does anyone know how the sides agreed to define it in the last bargaining agreement?

@24 That’s how the agreement falls apart. Every team must comply for it to work. If Team A is willing to offer more than the collusion rate, that team will benefit by getting the best players on the market. Those complying would face a choice of either matching that increase or picking from what’s left after Team A has filled out its roster. If the rest of the teams have any desire to win (and some owners probably wouldn’t care), they’ll have to match the increase.

So long as there is a rogue team that tries to exploit the discrepancy created, the process will continue until the true market rate is reached.

@25
It’s not really about metrics. The arbitrator is free to consider any relevant information. In the 1980s, the smoking gun was a memo by Lee MacPhail, then Director of the Player Relations Committee, urging owners to be more fiscally responsible. Does a similar memo exist? Who knows.

Also, the owners summary defense against the 1980s charges is interesting in that it resembles the general tenor of the argument here (a more rational free agent market). In its brief, the owners stated that the 1985 offseason wasn’t collusion, but “nothing more than the culmination of a predictable evolution to a more sober and rational free agent market.”

@26 I think I’d agree with you if the marginal incremental player value for the Rogues were constant as they added players, and if they were spending for the purpose of accruing value (rather than winning a finite number of games out of 162).

Roster space is limited, so any players the Rogues don’t hire will be back in the (posited) collusion-tainted market.  And marginal value is decreasing even if the Rogues are willing to pay ‘fair’ value for every position—the incremental value of your 115th projected win is way less than your 90th win—so the limited roster space is actually greater than the space on which the Rogues will actually be willing to drive the market.

In the abstract, is seems to me that something like the inverse of ‘it doesn’t work if not everyone is involved’ is true—it does work if even 2 teams are involved.  Even if Pittsburgh and the Marlins decide neither one will outbid the other above league minimum, then (30 - 28) * 25 players may be affected.

I could be wrong.

@#26

Again, every team doesn’t need to comply. The CBA defines collusion cases involving as little as two teams. You keep arguing under the assumption that winning is what drives every team, but that is by no means the case. If two or more teams collectively decide that keeping costs down is most important, then you have fertile ground for collusion.

@28

Yeah, it will be dependent on the team’s scale of values. At some point the subjective marginal utility of the win added is less than the amount that they’d have to pay for it.

Winning games is usually what drives profit. TV stations will give them money to broadcast their games and more people will buy tickets to see the team in person the better the team is. If the Marlins/Pirates agreed to such a pact and there were 50 players remaining to fill out their rosters, unless all of those 50 players were homogeneous, one team will offer more than the other to acquire the best of the remnant. One team would do that because they stand to profit by the slight increase in wins.

Things get murky if you try to account for revenue sharing and a minimum salary.

@29

Similar to my response to 28, the better the team is, the more money the team should make. The money receive via revenue sharing is the only reason I can come up with why teams wouldn’t seek to increase their number of wins.

Will, I’m not talking about theoretically would could happen in the future.

I’m asking theoretically, what might have happened from Oct, 2009 to Mar, 2010, where you can say “collusion?  maybe.”

What deal, or set of deals, can you, or MLBPA point to, that would whisper (or scream) collusion.

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And yeah, you might just need two teams for collusion, but that would be such a one-off localized deal that it would be impossible to show.  And, what deal this past off-season could you point that you could have had as few as two teams colluding, such that the other 28 teams wouldn’t swoop in to destroy those plans.

All I hear so far are academic exercises of thought that when faced with the actual evidence of the past offseason, you can’t find me one example of what might have been collusion.

Awhile ago I get an email from a guy who sees something on the web and says “Did you get that from me?” to which I reply “No, I got it from the same source as you”.

Because teams come to the same valuation did not mean they got it from each other. There are front office people who read this blog every day. There are other who pay interns to read everything they can find and refer the best stuff to their bosses. So there are quite a few teams going to the same sources to learn about how we have studied player valuation. And as Rally showed above with Matt Holliday, almost any rigorous projection system is going to agree on players with enough time to become free agents. Then it comes down to quantifying defense and how many dollars to pay for each WAR.

At this point in time, I believe that we and many teams are all drinking from the same well, so why should it be surprising that most of use would assign quite similar value to players?

This is ESPN’s free agent tracker, ordered by how ESPN thought the deals would go down:

http://sports.espn.go.com/mlb/features/freeagents?type=ranked&season=2009

First off, there’s not that much consistency to begin with.  Figgins and Orlando Hudson for example were ranked close to each other, are both infielders and the same age, but signed very different deals.  How would collusion work there?  “Looks like the Mariners are not on board.  Let them sign Figgins, while the rest of us hold firm on Hudson and Felipe Lopez.”

“Great… Phillies signed Polanco, and Sox signed Scutaro. Listen, let’s agree not to sign Hudson and Lopez for more than one year.  And let’s cross our fingers that none of the other teams catch on.”

“Hey… I guess the Astros are not colluding with us.  Lyon for 3 years 15MM?”

If you want to argue collusion, then it would be those teams that only signed free agents late, or not at all, even though that had a positional need.  So, Florida didn’t spend on a free agent, the Indians, WhiteSox, Rays, Pirates, and Padres spent under 10MM, so they colluded with themselves to let all the other teams have the best free agents, while they help firm to not outbid each other, and just divvy up the remaining players?

You’d have a better chance of indicting a ham sandwich.

@31
How could I possibly give you a specific example when I am not privy to any potential evidence, nor have I taken the time to perform a thorough analysis. According to reports, the MLBPA has undertaken a thorough analysis, so if they proceed with a collusion claim, I would tend to think they have a good case.

If you insist on a possible case, how about the curiously similar contracts of Vlad Guerrero, Hideki Matsui and Nick Johnson. All three DHs were given very similar deals. Maybe that’s a sign of market efficiency, but then again, maybe not. Also, Damon is curious case. All of a sudden, the Yankees are worried about a budget? And how many times did it seem like teams had gotten wind of what others were offering. Teams’ willingness to be so open with their negotiations definitely raised my eyebrow.

Regardless of any examples I could cite, I still come back to the main point. The idea that the owners colluded is not inherently unlikely, as you suggest. In fact, I think it is more likely than not, and trust that the MLBPA would not file a grievance if it didn’t have the facts to support it.

#32
It sounds good, but I sincerely doubt that teams are turning WAR into dollars before offering a contract.

#33
Doesn’t that contradict your point? If Hudson and Figgins are so similar, and all teams are not similarly evaluating players, why would one get a large contract, while the other was left waiting so long?

If the MLBPA decides to file a claim, their facts will be presented and then you can refute them. I would point out, however, that in the 1980s, the MLB owners were as flippant as you seem to be. That wound up costing them hundreds of millions of dollars.

If you insist on a possible case, how about the curiously similar contracts of Vlad Guerrero, Hideki Matsui and Nick Johnson. All three DHs were given very similar deals. Maybe that’s a sign of market efficiency, but then again, maybe not.

Funny you should bring those guys up.  When I did my evaluations in the off-season, prior to those guys being anywhere close to being signed, I pretty much nailed their contract dollars and years.  It was a beautiful market efficiency that I was so very proud to see.

Even if it was too efficient, how would the collusion work?  The Angels tell the Yanks: hey, we want Matsui at 6MM.  The Rangers tell the Angels: hey, we want Vlad at 6MM.  And the Yanks tells the Nats: hey, we want Johnson at 6MM.  And then, the other 27 teams pass on these three guys, and voila, collusion?

Again, you haven’t shown any mechanism in order to possibly have collusion.  You haven’t shown how it could work.  You don’t have to be privy to anything.  I’m asking you to create a defense in court that creates the scenario of what might have transpired between two or more teams.

***

Damon: he overvalued himself.  Who would the Yankees collude with… and not even end up getting him anyway?  The Tigers?  (As a way to get Granderson.) But for that to work, the other 28 teams would have to keep their hands off him.

***

The MLBPA is filing for the sake of filing.  They have nothing to lose.

@#36
I don’t doubt that you “nailed” their contract dollars and years, but I do find it more difficult to believe that three teams did.

Again, you keep getting caught up in the notion that collusion has to involve explicit dealings with specific players. That’s not the case at all. If it could be proven that MLB owners agreed to a slotting system for similar players, that would be a mechanism for collusion. Did that happen. I doubt it, but who knows if the MLBPA hasn’t uncovered something similar. Only time will tell.

Everything you are dismissing is exactly how MLBPA won millions of dollars. They didn’t prove that the Expos and Cubs discussed how much Andre Dawson should make...they showed that the owners, in collusion, decided to restrain the cost of free agents.

One reason this becomes difficult to figure out, from my perspective, is that there is absolutely, most definitely, collusion in MLB.  Some, potentially all, of it is seen as OK by the public and regulatory authorities in the name of competitive balance.  In the draft, even aside from the slotting system, players can only negotiate with one team up through their first six years of MLB service time.  Expansion is artificially limited.  Rosters are set at 25 and 40.  The only question is whether or not the collusion has spread into areas that are not deemed OK.  Normally, I would ask myself if I thought the industry was enjoying positive economic profit.  If they were, collusion would be likely.  If they weren’t, collusion would be unlikely.  However, since there are widespread acceptable forms of collusion present, the answer to that question is not as instructive as it might be in other settings, aside from the fact that MLB teams go to great lengths to obscure how much profit they actually make.

Everything you are dismissing is exactly how MLBPA won millions of dollars. They didn’t prove that the Expos and Cubs discussed how much Andre Dawson should make...they showed that the owners, in collusion, decided to restrain the cost of free agents.

No, that’s not how they did it.  All the free agents were given offers less than what their original team was offering.  And even when they accepted the lesser offers, those offers were pulled from the table (like Raines).  It took a blank contract in order to get a player to move to a new team.

There is no parallel here.

Anyway, we’re going in circles here, since I just repeated this, and you keep repeating your thing.  Let’s just say that we’re not going to agree to anything.

mfan: those things are not “collusion”.  To collude, you have to at the least contravene the rules.  Adhering to the CBA, the contract, cannot be collusive.  You’re stretching.

#39
I wasn’t really trying to draw a parallel to the specifics of each case, but instead point out that what started as a circumstantial case in the 1980s could begin the same way now. It was only after an extensive MLBPA investigation that the specifics were revealed (a search of the NY Times archive reveals how gradual the process was).

Having said that, yes, I think we definitely should agree to disagree.

Extensive? 

Expos: “Tim, we’re offering you 3 yr, 4.8MM.  Shop that around.”

Astros, Padres, Mariners: “hey, we’re offering you 1.2MM a year, 3 years.”

Tim (to at least one of them): “ok, I’ll take it.”

That team: “psyche!”

Extensive?

Every major free agent only resigned with the original team, except for the one guy who offered a blank contract.

The smoking gun in 2009?  The agent, to the judge: “Your honor, all the deals followed the WAR formula, and so all the players got similar offers from each team, and the market operates in an efficient manner.  The intelligence and dedication of the teams is outrageous your honor!”

Will/35 “I sincerely doubt that teams are turning WAR into dollars before offering a contract. “

I have been told by front office people I know that it is done, but only as one piece of the final evaluation.

I suspect it’s probably more smoke than fire, but I wouldn’t dismiss the possibility of collusion just because there’s no obvious pattern.  The owners are smart enough to realize that something as obvious as the collusion in the 80’s would be detected quickly, and I’d be very surprised to see something so direct.

Rather, if there was collusion today, I’d expect something more subtle, and difficult to prove. 

As an example, the owners could collectively decide to put a cap on their spending per projected win, according to something like WAR.  It could be subtle, because it would look the same as a bunch of owners independently coming to the same conclusion based on the information available.  Something like that wouldn’t eliminate big contracts, nor would there be any specific case where collusion is obvious, but by controlling the cost per win it would reduce the rate of inflation over time, saving the owners money in the long run.  Something like that would look very similar to the market simply getting smarter, where in reality it would be a deliberate manipulation of the market, similar to a WAR-based slotting system.  It’s a simple mechanism that relies on neutral, third-party variables without setting of any red flags.  As an added bonus, if a handful of teams are not in on it, they’d sign some players to above-"market" contracts, but those signing would be the outliers to muddy up the data, and the market would correct itself with the otherwise agreed upon price of wins.

Is it happening?  I doubt it.  But if it was, the owners would want to do it in a way that they wouldn’t be easily caught.

I had written a reply, but it seems to have disappeared and WilsonC covered what I was going to say.

We currently evaluate contracts based on how many wins the player projects to, and the price of a win.

My understanding is that the price of a win is determined by looking at how much is being paid for each win on the free agent market.

My understanding is also that we don’t have enough objective financial information to get close to making that determination based on revenues.

We recently saw the cost per win drop along with the rest of the economy. But can we really objectively say that it is because of the economy, and not because of collusion?

Couldn’t the owners make the statement that they weren’t going to pay as much for wins, and then just let the GMs know that the financial situation is worse, and they need to re-evaluate the cost of a win, without the GM knowing what’s going on?

I don’t think there was collusion, but I don’t think it’s as cut and dry as everyone is making it out to be either…

In the industry I worked, 3 companies controlled the market (90%), the CEO’s met informally once a year ( heard this from the company President) and discussed areas of concerns and areas for cooperation.  Most important was wage inflation (eg. not overpaying to steal ther companies employees) and price controls (no price wars please), and some tactics used to lure customers away that impact costs (entertainment, travel, kickbacks-rebates, etc). 

Everything settled with a hand shake, nothing in writing.  The only penalty for not going along is a capitalists worst nightmare, cut-throat competition. They hate it.  FTC was created to prevent companies cutting prices, a result of fierce competition at the time.  This interfered with profits and there were too many companies for collusion to be effective, so the government was enlisted to help.

Baeball is of course a legal monopoly. But there are 30 teams who do compete, and a good point was made that achieving a consensus needed for collusion is difficult with 30 competitors.  Ideally, you want no more than 10, the lower the better.

Baseball has an additional feature that alters the equation though.  It’s called revenue sharing.  It’s a great tool to use to get teams who might not go along.  “Don’t overpay for FA or we may not be able to continue with revenue sharing at this level”.  Revenue sharing does not happen in any other Industry that I am aware of.

It appears to me the emphasis on defense using uncertain defensive metrics is resulting in older players losing jobs or getting greatly reduced salaries compared to previous years.  But how effective is great defense in terms of winning.  The Mariners won 84 games with the best defense in baseball because they could not score runs.

Do teams really believe this or is it just a good excuse for letting sluggers go and replacing them with cheaper players who play better defense (the supply is great) even if they dont hit much with power (a lower supply).

Discredit the commodity in shortest supply, and you reduce it’s price.  With many teams hiring those from the SABER community, they can make a good case against collusion, even if collusion is happening.  The model they say they are using for paying a FA may not be the same model they use in building a team with non-FA but who are under the teams control.

If the model has changed, this should translate into teams drafting players in the high rounds who are better defensive players as opposed to those who project to be sluggers with fewer tools on defense.  Maybe it’s happening, I don’t know.

pft: a run is a run.

Do you work in the chocolate industry?  I read about their shenanigans.