If you wait too long to sign free agents, you may be waiting forever

Each major league front office came to this week's winter meetings armed with different needs and goals for the 2010 season. Predictably, the teams in the best position for playoff runs have been the most likely to acquire high-priced free agents. Thus far the big signings and re-signings have come from the Mariners (Chone Figgins), Angels (Bobby Abreu), Braves (Tim Hudson and Billy Wagner), Phillies (Placido Polanco), Cardinals (Brady Penny) and Red Sox (Marco Scutaro), all of whom finished above .500 in 2009 and all of whom figure to be playoff contenders next year.

Meanwhile, teams such as the Indians have resigned themselves to bargain hunting. Since Cleveland is coming off of a 97-loss season and doesn't figure to contend, GM Mark Shapiro isn't willing to break the bank for free agents when he doesn't feel that his current club is ready for prime time. Other teams are following this same line of thinking: Even with money to burn, Pirates GM Neal Huntingtonsays his club's "focus is going to be more on the borderline-type guys that may not get $3-4 million or may not even get a major league contract." Same with the Blue Jays, who until a poor showing last year had enjoyed three straight seasons above .500. New GM Alex Anthopoulos plans to be more active in trades than free agency and feels that it doesn't make sense to spend actively unless "you feel like you're one or two pieces away and you're going to supplement a strong core to put you over the top."

For GM's who figure that their teams will probably not contend, it seems like a smart strategy to not squander resources by signing free agents who won't help win a pennant. But is this really the right choice? In principle maybe, but reality is another story. For one, it's very difficult to predict whether a team will be in the playoff hunt down the stretch in 2010. Even the best forecasting systems are routinely off by eight or nine games. A team which projects to be a .500 ball club has about a 15% chance to win at least 90 games and contend for the playoffs with a little luck, so it's far from a lost cause to go into the season with a seemingly average team. Shapiro's Indians, for example, were widely picked to contend for the AL Central crown last year, and PECOTA predicted an 86-win season. They were nowhere close. Meanwhile, the Cardinals were forecast to be just a .500 team, and they ran away with the NL Central. Had the St. Louis brass decided to go into rebuilding mode in the previous off-season, they would have been sorely lacking the parts they needed when their team overachieved in 2009, and their division title might never have been achieved.

While waiting for a team's young nucleus to come together before adding free agents seems like a good strategy, teams that adhere to this can get stuck in a perpetual cycle of rebuilding. Huntington's Pirates have been in that rut for the past 17 years. It costs a lot of money to retain decent players with six or more years of MLB service. However, it's difficult to construct even a .500 team with only young players ineligible for free agency. Hence a team with a rebuilding mantra may be constantly letting free agents go and avoiding major signings because they are not one or two players away from playoff contention. The Catch-22 is that it's not cost-effective to sign free agents to play for a non-contending team, but it's nearly impossible to build a contending team without having at least a few higher-priced free agents.

To avoid this cycle a sub-.500 team has to spend at least enough to put a decent product on the field, even though it may not transform them into a contender immediately. The Tigers used this approach to great effect in building their 2006 World Series club. While their young nucleus was far from ready in 2004, they began making some mid- to high-priced signings which helped them climb back to respectability. Though the team wasn't close to contention in 2004 or 2005, they assembled the pieces, such as Ivan Rodriguez and Magglio Ordonez, and with the help of their young pitching and a bit of luck, turned the franchise from laughingstock to success. Had GM Dave Dombrowski waited until the young nucleus came together, he would not have had the other pieces to contend in 2006 and may have missed his window.

In contrast, teams such as the Pirates and Reds seem to be perpetually rebuilding. It's not that they haven't produced good young players -- Jason Bay and Adam Dunn, among others, have come from their systems -- but before management deemed the young nucleus ready, those players became eligible for free agency without the support they needed from additional players. Tampa Bay is another team that could have benefited from a few more acquisitions in its down years. In 2008 the Rays' young nucleus arrived early and produced a great season, but the team could have been that much better had it signed a few supporting pieces ahead of time. As it stands now, the clock is ticking on the Rays' young nucleus, before it becomes too expensive to keep together.

This year the Brewers have the right idea with their signing of Randy Wolf. While they won just 80 games last year, they need to act now, while they still have valuable players such as Prince Fielder and Ryan Braun under team control. To wait for more young players to develop before delving into the free-market would be to squander the advantages they have gained by developing the great young talent that they already have. While you can debate the Wolf contract on its merits, the Brewers have the right idea by putting together a team which, though it may not be predicted to go to the World Series, at least gives them a chance to contend.

Frugality on the free-agent market may be penny-wise, but it can often be pound-foolish. In a perfect world it would be wonderful to time a roster so that the current team matures at the exact moment when the ideal free agents are out there and ready to be signed. A young nucleus which is capable of winning 80 games on its own could be fortified with four or five free agents who could collectively be signed for $50-$60 million per year. The players would perform to expectations and the team would become a moderately priced contender. In reality, though, that rarely happens. Players don't develop exactly as predicted, and injuries can wreak havoc with even the most smartly constructed rosters. Assuming that those coveted free agents are out there and willing to sign with your club at the moment of need is another major leap, especially since players are less willing to sign with a perpetually losing club. Plus, there's plain luck to contend with, as it's not uncommon for a good team on paper to finish with a mediocre record, or vice-versa.

Free agents making at least $5 million per year account for about one-third of all major league production and give their teams an average of about 10 marginal major league wins. Take these 10 wins away, and the average free-agent-less team will be a bottom-dwelling 71-game winner. Of course, with skill and luck it's possible to overcome that deficit and build a contending team without them -- but doing so is obviously much harder. That means that teams waiting for a contender built of young players to emerge before becoming a player in the free-agent market could be waiting for an awfully long time, and subjecting their fans to long spells of bad baseball.

The other problem with the wait-and-rebuild approach is its effect on attendance and fan morale during the down years. While everyone's ultimate goal is a championship, there is value in winning games even if a team isn't going to be a World Series contender. An analysis of attendance and winning percentages will show that each win boosts attendance by about 500 fans per game. Signing a few free agents to go from 70 to 80 wins might not produce a pennant, but it will help at the gate, paying off at least a portion of those players' salaries. As anyone who has followed a 70-win team can tell you, those extra 10 wins sure make it easier to continue following a bad ball club. By spending at least enough to put a competitive team on the field, a team can avoid seeing its fan base erode due to years of poor performance, as has happened in places such as Pittsburgh.

Fans may sit through a few bad years if a team can guarantee success later on, but as anyone knows, that success can't be guaranteed. If the prospects don't pan out the way a team plans, their fans may be in for a long spell of awful baseball. That's not to say that bad teams should be breaking the bank in the Matt Holliday sweepstakes, but a few smart free-agent signings can be a wise investment, even if it may not bring championship results. The value of putting together a respectably competitive club is something that should not be underestimated. And who knows, that respectable club may surprise you with a Cinderella pennant that transforms the franchise.