Baltimore Orioles’ Tanking Woes Are MLB’s ‘Incentive Problem’

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For longtime Baltimore Orioles fans, the glory days of Cal Ripken Jr., Jim Palmer and Eddie Murray feel like a distant memory—especially now.

After finishing at the bottom of the AL East for the fourth time in five years, the Orioles head into Major League Baseball’s first lockout in 26 years as a prime example of a crucial negotiating point between the league and the players’ association. Baltimore’s abysmal 2021 campaign included a 19-game losing streak that only seemed to strengthen the argument that management wasn’t trying to be competitive. Not even pretending to be.

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With the lowest payroll in baseball and one of the lowest attendance rates to match, the Orioles represent a league-wide issue that the players are looking to address during discussions for a new collective bargaining agreement (CBA). As they see it, they’re playing to win on the field every game; so too should the suits upstairs.

Joel Maxcy, department head of sport business at Drexel University’s LeBow College of Business, says it’s not surprising to see the lack of a “win-now attitude” from the Orioles and other small-market clubs—not when the current structure benefits them with guaranteed high draft picks and league revenue sharing.

“It’s an incentive problem,” said Maxcy, a self-described lifelong Orioles fan. “If teams don’t win, they draw [fewer] fans and earn less revenue, [but] then they get a share of the revenue pot. They not only save money on salaries and payroll expenditures, but they get rewarded in a sense.”

Since trading All-Star shortstop Manny Machado in 2018, the Orioles have seemingly stalled in rebuilding mode. General manager Mike Elias, a former Houston Astros executive who is credited with drafting Carlos Correa, is familiar with long reconstruction projects and seems comfortable taking a similar tear-down-to-build-up approach the Astros used on their way to winning the World Series, with the 17th highest payroll.

“It’s exciting for us to start to see some of that [farm system] talent emerge at the major-league level, and we’ve got a lot more coming in 2022 and beyond,” he told MLB Network in September. “So, we’re very well-positioned for the future in what is a very challenging division.”

But being at the mercy of a non-competitive strategy due to the will of the front office continues to frustrate players. With the average MLB player career at roughly six years, according to studies, players want to at least believe management is doing its best to deliver a chance to win every day, not just over the next five to 10 years.

As CBA negotiations intensify during the lockout, there will be plenty of suggestions for how to fix the problem, including changes to the amateur draft, cutting down service time needed for free agency and implementing a revenue-sharing model between players and franchises like other major leagues.

One common ideas has been implementing a salary floor, or a minimum threshold that teams must spend. Though it may not solve the tanking problem outright, the added incentive would naturally be a win for the union because it could stabilize the off-season free agent market. That would be ideal for the players in a time where analytic-driven clubs would rather sign inexperienced talent to club-friendly deals instead of breaking the bank for accomplished yet sometimes declining veterans. However, every floor comes with a ceiling to match, and a salary cap has been a longtime non-starter for the union.

Sports economist David Berri believes there isn’t a competitive-balance issue in MLB, but rather that clubs don’t want to spend on pricey star players. The Southern Utah professor says it’s hard to criticize the approach when contenders like the Tampa Bay Rays are managing to win without enormous payrolls.

Older players in recent years have realized they have a big problem on their hands, said Berri, who co-authored the study “Competitive Balance and Attendance: The Case of Major League Baseball.”

“Suddenly [players] become free agents, and half the teams won’t bid on them,” he said. “[Owners say], ‘Why should I pay you $30 million a year when I can go get this kid who’s almost as good as you and pay them $2 million a year? There’s just aren’t enough teams bidding on these players anymore, and that’s holding down their salaries.”

Not everyone, though, is struggling to find high bidders. The free agent market exploded ahead of the lockout on Thursday.

There were 45 November signings, totaling more than $1.6 billion in salary guarantees, according to Spotrac. Three-time Cy Young winner Max Scherzer’s historic three-year deal (worth $130 million) with the New York Mets highlighted the league’s spending spree. The 37-year-old’s $43 million salary for 2022 is projected to outweigh the entire Opening Day payroll of the Orioles and at least two other teams (Pittsburgh Pirates, Cleveland Guardians).

The Orioles may not feel incentivized to deviate from their plan, but other non-contenders, like the Texas Rangers and Miami Marlins, are opening their pocketbooks. It’s not shocking that players want all 30 clubs to match their competitiveness and to receive their just due once they finally hit the market, but the recent string of deals from losing clubs shows that the system may in fact be broken, but it’s working for some.

The players enter the lockout walking the tightrope, pondering how far they’re willing to go to get paid sooner and more, all while collectively pushing their employers to try harder to win now.