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Are MLB teams scared of the draft pick compensation?

A lot of big MLB free agents remain unsigned, and maybe the value of the signing team’s draft pick be to blame.

Tampa Bay Rays v Baltimore Orioles Photo by Patrick Smith/Getty Images

The entire winter, the talk has been about the stagnant free agent market. Indeed, I feel that I’ve started off every other one of my Twinkie Town posts this offseason by acknowledging that there are plenty of free agents available. In particular, the ones most relevant to the Twins are starting pitchers Jake Arrieta, Lance Lynn, and Alex Cobb, though it’s already been stated that the Twins don’t have much interest in Cobb. There hasn’t really been any talk about Arrieta coming to Minnesota, while we just learned they offered Lynn a two-year, $20 million contract, but were rebuffed.

Even with the trade acquisition of Jake Odorizzi, it should be clear on paper that the Cleveland Indians are still the team to beat in the AL Central. In order to topple them, the Twins will need another starting pitcher, along with some bad luck to strike the inhabitants of Progressive Field (and none of us actually want that). However, it doesn’t seem that a quality starting pitcher will call Target Field home unless he’s willing to lower his asking price.

While there has been talk of collusion between the MLB teams leading to the glacial pace of the Hot Stove, I was thinking earlier this past week about why teams would avoid signing free agents and then the light bulb turned on. For as long as I can remember, even going back to the days of the Type A and B free agent designations, teams have shied away from acquiring certain free agents if they determined that their draft pick in question would be worth more than the veteran.

This mindset has continued as draft pick compensation has evolved and with evidence that MLB players peak before their 30s, teams have been further disincentivized to shell out tens of millions of dollars for a player that might only contribute 1 or 2 WAR when they can take a minor leaguer and procure similar value for far less. When Arrieta (already declining), Lynn (poor peripheral stats), and Cobb (poor peripheral stats and scouting reports on his once-famed change-up) all have their warts and would cause a team to lose a top draft pick upon signing, those teams have decided they’d rather roll the dice on a future prospect. There’s the potential that the player never produces any value, but no value with little money spent is better than lighting a pile of money on fire and getting saddled with a reincarnation of Phil Hughes. Or, as the Twins demonstrated, the teams are willing to hand out a short-term contract so it’s far easier to cut bait if any of those three indeed turn into Hughes.

It’s unfortunate for the players but I think it also speaks volumes that they and/or their agents miscalculated the market. I’m not sure of the best fix for them, but it might come from acknowledging the players that have typically been ignored in labor discussions: the young players. If major league teams find it more cost effective to utilize the pre-arbitration and arbitration players rather than signing expensive free agents, the players’ union should fight for better salaries for the younger players. This way, teams would no longer be picking the $2 million fourth-year player over the $10 million ten-year veteran if their salaries were instead similar. But, the players’ union has typically given all the benefits to the veterans, so it would require a radical change in direction if they attempted to argue for this solution.

Ultimately the remaining top free agents should end up signing somewhere, but it might take a desperate team willing to acquiesce to their demands or for the players to finally lower their asking price. What isn’t likely to change is how teams are valuing their draft picks and prospects unless the players are able to successfully negotiate changes into the next collective bargaining agreement.