ECONOMY TAKING ITS TOLL ON FREE AGENT MARKET

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Circuit City announced they are pulling the plug. More than 35,000 employees will be out of work. It’s the latest slap in the face to a fragile U.S. economy.

And what’s this have to do with the baseball Hot Stove? A lot.

There is a seismic shift taking place in the baseball industry. Budgets are constricting, teams are thinking twice about free agents, and the free agents: they are defiant, turning down offers and holding out. The player-agent strategy is: Be patient and a more lucrative offer will come … eventually.

It’s a tactic that worked perfectly for Kyle Lohse in 2008, who held out and until Spring Training, then signed a one-year, $4.5 million deal with St. Louis. That strategy worked last year, it’s not working today. As a matter of fact it’s already backfired on at least three occasions this winter.

Free agent pitcher Jon Garland may have made the greatest miscalculation of all. Garland turned down salary arbitration from the Angels in December. He would have received only a one-year deal worth more than the $12 million he made in 2008. This weekend, six weeks later, Garland turned down a one-year, $4 million offer from the Arizona Diamondbacks.

‘This is a type of year that we haven’t seen,” agent Gregg Clifton told MLB.com. “It’s one of those situations where players have to assess and be very conscious of the marketplace and the uniqueness of each market.”

Then there’s the curious case of Andy Pettitte who, at age 36, was offered a one-year, $10 million deal with the Yankees. Pettitte waved off the offer.

And then there’s Manny Ramirez, who was offered a two-year, $45 million contract by the Los Angeles Dodgers in November. At the time, Manny and Boras declined thinking, surely another team can – and will – offer a longer deal and a larger payout. They’re still waiting …

The Mets extended a three-year, $30 million offer to free agent Oliver Perez last week while Perez’ agent Scott Boras is looking for a five-year, $60 million deal. Again, they’re still waiting …

The $423 million signing explosion by the Yankees – C.C. Sabathia, A.J. Burnett and Mark Texieria – has accounted for almost one-half of the $1 billion invested in free agents this Winter.

Pitchers and catchers begin reporting in 25 days and, as of Monday, January 19, half of the 2009 free agent class still remains unsigned, twice as many as in 2008 at this time.

The list includes its fair share of spare parts and utility players, but it doesn’t stop there. With just over three weeks until Spring Training, Manny Ramirez, Adam Dunn, Bobby Abreu, Ben Sheets, Oliver Perez, Orlando Cabrera, Andy Pettitte, Orlando Hudson, Garret Anderson, Joe Crede, Tom Glavine, Ken Griffey Jr., Frank Thomas, Kenny Rogers, Jason Varitek and Pudge Rodriguez are still free agents.

Major League Baseball is unchartered waters.

“I used to console myself that baseball was really essentially recession proof, but you can see that this is something different from what we’ve ever gone through,” MLB commissioner Bud Selig told the media Thursday. “What that means, I don’t know. I don’t think there’s anybody that knows. We’re living in unprecedented times. There’s uncertainty everywhere in life today.”

It’s not for lack of interest in the game. Baseball is coming off record-setting year, recording $6.5 billion in revenues. The average major league salary was $3 million. Annual attendance topped 78.6 million.

This is beyond the game. It’s economics and it may result in a massive shift in the market between now and Spring Training. Don’t be surprised if you see All-Stars signing one-year deals, establish more value and re-enter the market after 2009, hoping the economy will improve or, aging veterans, accepting a minor league contract.

“Our job as agents is to evaluate, advise and counsel them on what’s in their best interest,” added Clifton. “It’s difficult to have to sit down with a player and tell them what they don’t necessarily want to hear.”

Free agent signings:

  • January 19, 2007: 66 of 210 (31.4%) total free agents remain unsigned
  • January 19, 2008: 81 of 190 (42.6%) total free agents still unsigned
  • January 19, 2009: 110 of 214 (51.4%) total free agents still unsigned
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About the author

John Strubel

Hi. My name is John Strubel. Thanks for visiting my website. I write primarily about my passion: baseball. In addition, I occasionally publish posts and podcasts related to sports media, journalism and technology impacting the industry. You can also connect with me on social media @johnstrubel.

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