The Yankees’ young stars should campaign for a labor model change

The two sports teams I follow the closest are in pretty similar competitive windows, even though they got there in different ways. The Toronto Maple Leafs, long the Chicago Cubs of the NHL, are poised for a deep playoff run with one of the best young cores in team history, and enough control over that core to have a couple kicks at the can after this year. The New York Yankees are poised for a deep playoff run with one of the best young cores in team history, and enough control over that core to have a couple kicks at the can after this year.

Yet, over the past three months, the Leafs have spent $99.4 million on extensions to two of their young stars, and are publicly signaling that they’ll ink a third to an extension this summer. William Nylander got six years and $45,000,000 in December, Auston Matthews signed for five years and $54,000,000 this week, and Mitch Marner is expected to agree to a deal between four and five years and around $50,000,000. All three are currently in their third season of service, and Nylander is the oldest of them at 22.

Contract extensions for young players are far more common in the NHL than most sports. Players at the high and medium ends of the talent pool often sign fairly competitive extensions after their second season, or in the middle of their third. Just in the past couple years, players like Connor McDavid and Nikita Kucherov have agreed to extensions while in their early 20s, and extensions for young players have helped prop open the competitive windows of teams like the Pittsburgh Penguins and Winnipeg Jets.

Baseball, meanwhile, is fundamentally struggling to move more money to the most valuable players. I wrote yesterday about how even the Yankees, with one of the best young cores in all of baseball, fall into this bucket, and it’s the real red flag in the current labor market. The slow decline of free agent compensation isn’t a problem if the young, good players are paid fairly, but they’re not.

It’s this issue that should be driving the MLBPA to petition for a move to the NHL model, which heavily features restricted free agents. The RFA model is pretty simple, especially when compared against MLB. In the NHL, you draft a player and sign them to an entry level contract, which is almost always a three-year deal worth right around the league minimum. After that contract expires and a player has three years of NHL service time, they become a restricted free agent and can negotiate contracts with other teams. The controlling team can match any offer that another team makes, and as long as the player is an RFA, must accept a matched offer.

Let’s take this from an MLB example. Luis Severino just completed his third year of service, and is headed toward an arbitration hearing with the Yankees, where the two teams are fighting over $800,000. In the NHL model, Sevy would be an RFA and be free to negotiate with any team. The St Louis Cardinals, in the thick of one of the closest divisions in the league, could make him an offer, say, five years and $50 million, about twice as much on an AAV basis as he’s going to receive no matter how the arbitration hearing works out.

The Yankees would then have to balance the risk of losing Severino against the risk of signing him to a five-year deal, but no matter what happens, Sevy gets paid much earlier in his career – when he’s more productive! - than he would otherwise. This balancing of risk also incentivizes the Yankees to sign an extension with Severino earlier, so he never reaches RFA status…which is exactly what happens in the NHL.

The one real drawback to the RFA system is it does reduce spending available for older free agents, but we’re already seeing that, so the real changes to the market would net to more money for younger players, the central problem facing baseball. Again, to use the Yankees as an example, this season they would be under tremendous pressure to extend Aaron Judge and Gary Sanchez, who would be coming up on RFA eligibility, and would be at the risk of losing Severino, and would actually be forced to pony up financially if they want to keep their young core.

I don’t think the owners would move to such a radical model change without expecting serious concessions on labor’s part, including a hard cap. The more I think about it though, the more I think this is something the MLBPA should entertain. We’re already seeing the league treat the competitive balance tax threshold as a cap, so all the union would be doing in real terms is moving monies to the players most deserving.

To reinforce that point, I thought I’d take a look at how close NHL and MLB teams get to reaching their respective “caps.” In MLB it’s legal to go over the CBT, whereas in the NHL a team can literally not play in such circumstances. Still, here’s how much each league leaves on the table in terms of spending, expressed as a percentage:

MLB teams average 29.25% of “empty” cap space, with a median of 28.06%. In the NHL, the average and median are 19.49% and 13.49% respectively. NHL teams actually spend closer to the cap than MLB teams, because no cap exists without a floor, and the RFA structure forces teams to pay up or lose their talent.

The MLBPA has fought against a cap system for a long time, but baseball teams are effectively using the CBT as a hard cap anyway. It’s becoming increasingly clear that a hard cap would be the lesser of evils for the union, and if they could negotiate a system similar to the NHL’s RFA system, complete with a salary floor, you’d solve the problem of compensating young players who are currently underpaid relative to performance.

Players on the Yankees have more to gain than most in the league, due to their age and ability. Their stature as members of the most famous and visible franchise in the game should also mean their voice within the union carries a bit more than an average player. With the most to gain and the platform to push for it, Judge, Sevy, Gary and the rest should be all-in on a labor model change.