Are Teams Colluding, or Just Better Using Information?

The MLBPA, it seems, loves to threaten collusion charges. We heard whispers of it after the 2007 season, when Barry Bonds didn’t get much of a look from the 29 teams that didn’t explicitly say he wasn’t welcome. During the 2008 off-season we saw a number of veterans take short-term contracts at what was considered reduced pay. Again, threats of collusion. After another off-season that was generally unfavorable to veterans we’re hearing yet again that the PA might file a grievance. As in years past, I doubt any such measure will go far.

The evidence of a possible impending grievance, per the Associated Press article, comes from player agents. They report having seen similar offers from different teams for their free-agent clients. It is understandable, then, that the Players’ Association would investigate. If owners were colluding, that is one symptom we might see. Yet, given the current environment, the claim should fall short.

There is one very good reason why agents would see similar offers from different teams for the same player: the Internet. Information is everywhere. Tom Tango took on the subject last night, using the availability of stat databases as an example. His argument certainly makes a degree of sense.

Ok, suppose that there’s a measure that everyone likes.  I dunno, let’s call it… WAR.  And let’s say that it’s constructed by researchers that both sides respect, say Tango, Rally, and Fangraphs.  And say that there’s a site that lists the dollar values, like a Beckett’s price guide or NYSE.  Then, teams give out offers that are consistent to what they read.  Well, this is a GOOD thing isn’t it?  There’s no collusion, there’s no acting in concert.  There’s an understanding that, hey, maybe Tango and Rally and Fangraphs know their [stuff].

This, however, represents just one aspect of the information revolution. Not only do teams have their internal data, but they have freely available data as well. This might cause them to act similarly when it comes to signing free agent players. But there are many other aspects at play here that would cause teams to similarly value certain players.

Just look at MLB Trade Rumors. Every day Tim Dierkes and his team aggregate more information than most people can process. This includes every rumor, from one-liners at the end of game stories to full-on reports. Some of it is noise, but some of it is legitimate information about a team’s thinking. This widespread access to information creates more efficient markets. It leads to fewer teams overpaying for talent, because they have a better idea of what other teams are thinking.

If teams were familiar with how others thought, though, wouldn’t they be able to make a superior offer to a free agent? For instance, if the Royals wanted Mark DeRosa and saw that the Giants were offering him two-years and $12 million, couldn’t they step in with a two-year, $13 million offer and have an advantage? Yes, they could. It seems, however, that the market was fragmented this winter. The big time players — John Lackey, Jason Bay, Matt Holliday — all got paid, and paid well. The similar offers likely came for the second- and third-tier players, who aren’t as important to a team. In this made-up example, perhaps the Royals didn’t feel a player like DeRosa was worth the extra million. They might be able to better use those funds to improve their team in another way.

With such easy access to so much information, it’s understandable that agents would see similar offers for their clients. Teams — most teams, at least — aren’t in the business of overpaying for talent. Nor should they. No team, not even the Yankees, has unlimited resources. The good teams deploy their funds in the best possible manner. If that means passing on a certain player because they’re not willing to overpay, so be it. Those resources can go to improve the team in another way. The superstars will continue to receive big contracts. But veterans like DeRosa might fall victim to the information revolution.



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Joe also writes about the Yankees at River Ave. Blues.


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MikeS
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MikeS

Why wouldn’t they file a callusion grievance or at least threaten to? It worked out well for them in the past and the downside is small.

Jimbo
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Jimbo

As someone wrote yesterday “millionaires fighting billionaires…gotta love it.”

Perhaps the downside is small, but I’m part of it. My son is about to turn 4. As he gets older and I desire to pass on my appreciation of the sport I already know we’ll be doing that via minor league games.

I don’t judge owners for running their business a certain way. I don’t begrudge players for wanting to get paid. In the same way I hope the professional teams in my area don’t hold it against me when I opt for a cheaper alternative.

MikeS
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MikeS

You are so right. I was just looking at it from the MLBPA perspective. Unfortunately, I think MLB doesn’t care much what you or I think. They see big TV revenues and corporate sponsorships. At times it seems that they feel they don’t need fans since they get more money from other sources. Sometimes I wonder if they realize that both ultimately stem from fan interest. If nobody goes to the stadium, nobody buys billboards. If nobody watches on TV, the ratings go down, the networks can’t sell commercials and the huge rights packages get much less huge.

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