Effects of the 2012 Collective Bargaining Agreement on the Major League Baseball Free Agent Market

Abstract

The introduction of the 2012 Major League Baseball (MLB) Collective Bargaining Agreement (CBA) made substantial changes to the first-year player draft and the free agent market. Using a sample of 1,249 2008-2015 free agents, this study investigates the extent to which contract outcomes of top tier players have been impacted by the replacement of the Elias Sports Bureau type designations with the qualifying offer system. This study finds evidence suggesting that qualifying offer type players are now receiving worse contract outcomes relative to other free agents in each given year. Additionally, counterintuitive evidence suggests that players that would have previously been designated as top free agents are also receiving worse contract outcomes relative to other players following the new CBA. The direction of these results is not sensitive to measure of contract outcome (guaranteed amount or average annual value), however the level of statistical significance is sensitive to such measures. Future research on this subject could benefit from additional years of analysis, as well as stronger prediction models.