Real or not? Reasons for the sloooow hot stove season

Jake Arrieta is a top free agent still wondering when his payday will come this winter. Nam Y. Huh/AP Photo

Editor's note: This story originally ran on Jan. 8, 2018.

Nobody is signing, and we’re all wondering why. It’s time to start working out, throwing some long toss and hitting the cages, and many of the top free agents are still seeking homes for 2018. In a special edition of Real or Not, let’s examine the reasons why.

This free-agent class is bad

I think everybody except Scott Boras believes this. With such an uninspiring group, teams simply aren’t showing any desperation to sign these guys. Rather than be stuck with the “winner’s curse” and overpay for a risky investment, they’ll wait for the demands to come down. But is it really a bad class? It is! I looked at Keith Law’s top 15 free agents from his annual rankings, comparing the two-year combined WAR totals for this year to the previous two free-agents classes, as well as to next year’s potential class.

2015-16 top 15 free agents: 113.5 WAR

2016-17 top 15 free agents: 81.7 WAR

2017-18 top 15 free agents: 67.1 WAR

2018-19 potential top 15: 116.8 WAR (over 2016-17 seasons)

Here’s the chart of the four groups, and while it doesn’t factor in the overall depth, it gives a good barometer of the best players available:

Scott Boras controls many of the top free agents

Boras is notorious for having his clients wait as long as possible to sign. In the past, Max Scherzer and Prince Fielder didn’t sign until late January. Obviously, both sides are playing a little poker, and Boras has certainly proved to be a master in getting his players maximum dollar. In Fielder’s case, there didn’t even appear to be a strong second bidder and he got a one-dimensional player paid $214 million. Boras often plays to the owner and bypasses the front office, or waits for the anxiety level of an interested team to increase.

Indeed, five of Keith’s top 13 free agents are Boras clients -- Jake Arrieta, J.D. Martinez, Eric Hosmer, Carlos Gomez and Mike Moustakas. None have signed. In Arrieta’s case, for example, Boras may wait for Yu Darvish to sign, or even Alex Cobb or Lance Lynn. Once there are fewer starting pitchers available, maybe a team looking for a pitcher -- like the Cubs or Rangers -- will have more interest in his guy.

The new CBA limits spending

The collective bargaining agreement doesn’t limit spending, but it sure as heck discourages it. It’s all about avoiding what is technically called the competitive balance tax, more commonly referred to as the luxury tax. Teams that go over a predetermined payroll threshold are taxed on the dollars spent above that threshold. Here are those upcoming levels:

2018: $197 million

2019: $206 million

2020: $208 million

2021: $210 million

A club that exceeds the threshold pays a 20 percent tax on all overages. The penalties become more severe each consecutive season a team goes over. For a third-time overage, the penalty goes up to a 50 percent tax (with further penalties of 12 percent if the threshold is exceeded by $20 to $40 million, and a 42.5 percent tax if the payroll is more than $40 million above the threshold). Teams that are $40 million over also see their highest draft pick moved back 10 spots.

Here’s the important thing to know: If a team goes under the threshold, your tax resets to 20 percent. So front offices -- well, they get their budgets from ownership -- are using that threshold as a de facto salary cap.

The usual big spenders aren’t in position to spend big

By "usual big spenders," we mean the Dodgers and Yankees. Both clubs are set on remaining below the threshold for 2018. The Dodgers spent $244 million in player salaries in 2017 and were hit with a luxury tax for the fifth straight season. After they paid a $31.8 million penalty in 2016, USA Today reported that their 2017 bill came in at $36.2 million. Could they afford Darvish or Martinez to make the best team in the National League even better? Sure, but their current estimated payroll is $188 million and they’re going to keep it there.

The Yankees, meanwhile, have paid a tax in 15 consecutive seasons, including $15.7 million for 2017. By remaining under the $197 million threshold, the Yankees reset their tax base, giving them more flexibility next offseason. Because ...

Next year’s free-agent class is amazing

See that list above? Yeah, you can be sure the Dodgers and Yankees will be spending some money next year. There’s even more depth beyond those first 15 players. Resetting your tax base for one year will save millions in tax. Consider the Dodgers. If they have another $244 million payroll in 2019, they’d pay:

• A 20 percent tax on $38 million overage ($7.6 million).

• A 12 percent surcharge for going $20 to $40 million over ($4.56 million).

So that’s about $12.2 million in taxes compared to $36.2 million, a tidy savings of $24 million by going under the threshold for one season.

In other words: If you’re going to sign a free agent to go over the threshold, you want to make sure it’s the right guy, and the best guys in this year’s group all come with some risks and baggage.

For other teams, the thinking is a little different, but a similar mindset: Do you spend this year or wait for next year? If you need a third baseman, do you pay Moustakas or Todd Frazier now, or wait for Manny Machado and Josh Donaldson? Of course, there’s the risk you don’t get anybody, but there’s also the scenario that there are so many quality free agents next year that there will likely be some bargains as well.

Everybody is smarter now

Front offices are all analytical now, which I suggest also makes them more conservative. They want to make the smart move and not just throw gobs of money to solve a problem -- especially when history says a lot of those free-agent contracts don’t pan out. They’ve seen too many deals given to the likes of Ryan Howard and Carl Crawford and Albert Pujols and Matt Kemp and Josh Hamilton and Alex Gordon and Chris Davis and so on times a thousand. Besides a better understanding of player value, front offices are better at projecting future performance and understanding aging curves. Nobody wants to be the general manager who burdens the team payroll with a bad contract.

Not every team is playing to win

The win-or-rebuild cycle that teams now employ certainly affects the free-agent market. The Tigers have annually had one of the highest payrolls and have spent huge dollars in free agency in the past (Fielder, Jordan Zimmermann, Justin Upton), but are now dumping and rebuilding. The Phillies, another big-market team with high payrolls in the past, are still rebuilding. They once ranked second in team payroll, but were just 22nd in 2017. They’ve made one significant signing this offseason -- Carlos Santana -- but should be ready to make some major moves next year.

What’s interesting are the teams that aren’t spending (or haven’t spent yet). The Brewers had the lowest payroll in the majors in 2017 at $78.8 million, but have been over $100 million in the past. Even though they came close to winning a wild card, their big move has been signing Jhoulys Chacin to a two-year, $15.5 million contract. That’s a low-risk, smart signing but isn’t going to push the club much closer to the Cubs. The Blue Jays were at $166 million in payroll, but sit at $144 million. The Mets were at $169 million but are now at an estimated $125 million. It’s unsure whether those teams are trying to build the best teams possible for 2018 or saving money for 2019.

The trade market is the new free agency

Think of how teams use the trade market. The Astros acquired Justin Verlander not just for last year’s postseason run, but to anchor their rotation for the next two seasons. Instead of signing Neil Walker to a multiyear deal to play second base, the Angels traded for Ian Kinsler in the final year of his contract. Less long-term commitment equals less risk, even if it costs you prospects. Under GM Jerry Dipoto, the Mariners have been more inclined to trade for younger players or younger, established veterans -- Dee Gordon, Ryon Healy, Mitch Haniger and Jean Segura -- than sign veteran free agents.

Fewer players are hitting the market, diluting what could have been a great class

In this specific year, this is certainly the case. Potential free agents this year could have included Mike Trout, Jose Altuve, Paul Goldschmidt, Carlos Carrasco, Kyle Seager, Brandon Crawford, Brandon Belt, Matt Carpenter, Salvador Perez, Josh Harrison and Jason Kipnis. Instead, all signed long-term extensions with their clubs. Imagine a free-agent class with Trout, Altuve and Goldschmidt -- I don’t think the Yankees and Dodgers would be sweating the luxury tax.

Young players are really good!

Studies have shown that the percentage of WAR contributed by hitters over 30 peaked in 1998. Aging curves have generally returned to their pre-steroids era norms, meaning free agents in their 30s come with more risk than 20 years ago. In recent seasons, we’ve seen young players continue to make bigger impacts on the game. Young players are also cheap!

If you’re, say, the Rockies and you know you need an outfielder, do you give $30 million to a veteran player on a two-year contract, or simply give David Dahl or Raimel Tapia an opportunity? Do you sign a second-tier first baseman like Logan Morrison or Lucas Duda or play rookie Ryan McMahon? More teams, especially those in smaller or midsize markets, or rebuilding teams, are more willing to go with the young guys.

It all adds up to a slow-moving market. Which means Darvish, Hosmer, Martinez and Arrieta will probably all sign $150 million contracts this week -- or at least we can hope something big will finally happen ... right?