Free Agency, by Class

Here in late November, MLB’s offseason has hit the ground running. The Braves have been fast movers, jumping to resign Nick Markakis, Darren O’Day, and mid-season acquisition Chris Martin while additionally reaching agreements with newcomers Will Smith and Travis D’Arnaud. The biggest splash to date though belongs to the White Sox, who have signaled an acceleration of their rebuild by signing Yasmani Grandal.

These moves represent just the inception of 2019/2020’s offseason activity. As always, free agency will be top of mind for teams, players, fans, and the MLBPA. This offseason is of special note too given the glacial pace of talks last winter.

Last offseason, of course, was dominated by huge names like Manny Machado and Bryce Harper. While those two players eventually got paid massive sums, of concern were the number of “mid-tier” free agents who signed late, short-term, and/or low value deals. The big names might have been impervious to tightening free agency markets, but the offseason had a markedly different feel for non-superstars .

Given these distinctions, this post will take a brief look at MLB through the lens of classes. In short, what do MLBs “classes” look like, and how have they changed over the past several years.

For data, salary information comes from Sportrac, which ranks players salaries. An important note is that data was taken as “Payroll Salaries” as opposed to base salaries. Payroll salaries appear to take into account pro-rated signing bonuses, performance bonuses, etc. Sportrac, in addition to featuring each players salary, offers a positional classification for each individual.

Player salary data has been broken down into upper, middle, and lower class tiers, the proportions of which reflect that of the United States’ general population. For that breakdown, I referenced the Pew Research Center, whose paper here indicates that, as of 2016, the top 19% of U.S. earners were considered to be upper class, the middle 52% were considered to be middle class, and the remaining 29% considered lower class.

Sportrac features ranked salary data for 1000 players and, as such, the top 190 players have been classified as upper class, the bottom 290 players as lower class, and those remaining are then considered to be part of the middle class. A great number of these players are pre-arbitration, and thus make the league minimum or just above it. 

As aforementioned, Sportrac also features positional data and although it does not account for multiple positions, it offers a general glimpse at these classes by position. Here are those players in 2019 broken down by the three classes.

Of all positions above, designated hitters appear most skewed across classes. Yet one can begin to make some inferences from this breakdown based on omitted variables. For one, there is the matter of age. The prototypical DH is a player who has established himself as a proficient hitter, but is also of little value in the field, a shortcoming that is a function of age. Nelson Cruz and Shin-Soo Choo are two players who fit this mold. Designated hitters, additionally, are fewer in number simply given their single-league status and thus the group as a whole is more susceptible to single contracts impacting this distribution.

Interestingly, the greatest representative of MLB’s middle class in 2019 were shortstops. One’s mind then wanders to construct a narrative around the “typical” shortstop: an arbitration eligible player who is old enough to be making above league minimum, but young enough to play such a demanding position, and additionally who has not yet secured his big payday.

Here is the same chart, but taking data from a half-decade earlier, in 2014.

Generally, it looks like these class groupings by position hold up across either season. Positions played by those who might broadly be older on average, i.e. corner positions and starting pitchers, are more likely to be part of the middle of upper classes. Those who play particularly physically demanding positions, like shortstop and catcher, are skewed toward the lower end of the earning spectrum. 

But what about salaries? Below are the mean salaries for each of the three classes for both 2014 and 2019.

The class made up of the bottom 290 earners is just a shade above the league minimum for either year in question. Given that Sportrac ranks 1,000 players, but there can be just 750 active players at any given time for the first five months of the season, a large percentage of this bottom tier make that minimum.

The medium tier is predominantly a mixture of pre-arb and arbitration-eligible players. Over the past 5 years, this groups mean pay has eclipsed 2 million, and has grown nearly 15% over that half decade. This group is also the largest, as it represents 520 players.

As one might expect, those top 190 earners make far more than the remaining 810 players combined. This group is larger than the top 125 earners whose average makes up the annual Qualifying Offer figure, and as a result the “upper class” cohort makes less on average.

Most significant though, among these figures, seems to be the growth rate of each class.

For those in the lowest group, earning have risen roughly 11%, or just over 2% annually, which is just outstripping 2% inflation. This pace is largely due to rises in league minimum pay, which most of this group is earning. Over the same period the “upper” class of players clearly has seen it’s average salary rise the most proportionally to the other groups. This comes despite the qualifying offer actually dipped slightly this season.

Stepping back, this is a whimsical sort of exercise. Of course all MLB players earn enough to be firmly ensconced in the nation-wide upper class, so creating classes proportional to that of non-professional athletes is a strange enough procedure. But for many of these players, that salary is not guaranteed, or long lasting.

Therefore, it is of some concern to see the disproportionally lesser gains for those players making the least. Yes, those elite free agents will continue to benefit hugely from free agency, but a lot of free agents will settle for deals that slot them somewhere into that middle bracket where, on average, growth isn’t quite keeping up. For this reason among others, the 2019/2020 offseason will be of heightened importance.