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Would a “tank tax” be a good idea?

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World Series - Houston Astros v Los Angeles Dodgers - Game Seven Photo by Kevork Djansezian/Getty Images

J.J. Cooper of Baseball America wrote an article the other day proposing to solve the supposed problem of MLB’s slow free agent market with a “tank tax.” His idea is very simple: The current draft system remains, but “any team that fails to win 70 games in back-to-back seasons faces a 10-spot draft penalty.” And the penalty would escalate to 15 draft spots for three sub-70-win seasons and 20 for four.

This is an absolutely awful idea.

Cooper starts off with an accurate enough statement:

When the 2018 season begins, roughly one-third of major league teams will be in the early or middle stages of rebuilds.

But he skews the debate by asserting repeatedly that some teams aren’t trying to win, not to mention by using the term “tank tax.” What he hopes to accomplish is to ensure that “teams would have reason to add a free agent or two to try to ensure that they get to 70 wins.” The number of wrong assumptions in this argument is imposing. First, teams that do tear-downs are trying to win. They’re facing significant drops in revenue — Houston’s attendance dropped from over three million in 2006-07 to 1.6 million in 2012-13, and was still only 2.4 million in 2017 — in order to win the World Series. Shouldn’t that be the goal, rather than trying to “get to 70 wins?” Did the Cubs and Astros get it all wrong? They both won a title and both look to be World Series contenders for many years, and that’s a bad thing? Those two teams have proven that a tear-down is a viable and, if done well, highly successful strategy. Outlawing successful strategies is a way to discourage, not encourage, competition.

Cooper even points to the Giants and Tigers — the teams with the two worst records in MLB in 2017 -- as teams that would be forced to “try” to win in 2018. These are terrible examples. The Giants had one of the game’s highest payroll last year and will again this year. They didn’t “tank” in 2017; they expected to be a contender. They had a lot of things go wrong, which could happen again this year, say, injuries to Madison Bumgarner and Buster Posey. If it did, Cooper would penalize their already bad farm system. The Tigers simply were run dry by years of putting all their resources into getting a title for their now-deceased owner. They’re just about a lock to win fewer than 70 games again, but it’s through trying too hard to win for years. Cooper would penalize them just the same.

I’m also skeptical the “tank tax” would have its intended result in any case. Teams cut back on payroll for a variety of reasons, some admirable from a fan’s point of view and some not. Given that all but a handful of teams have payrolls in nine figures, though, I find it hard to believe the loss of 10-20 draft spots would alter most, if any, owners’ decisions on how to handle their budgets. Would the risk of a later first round pick have motivated Bruce Sherman to forego the Marlins’ extreme payroll-slashing, which probably ensures at least 2-3 seasons below 70 wins? Really??

MLBTR neatly, and probably inadvertently, summarized what this argument is all about in an article yesterday on the slow market:

In addition to limiting the market for the top-tier talents, the absence of 10 or more teams on the free-agent market dramatically erodes the market for mid-range free agents who, in prior winters, would’ve happily taken two- and three-year deals from teams that may not be clear division-championship-level contenders.

In other words, teams that have no chance of winning a title are expected to obediently plunk down $40M or $50M so their fans can enjoy 71 wins instead of 68. The real effect of Cooper’s idea, if it has any, would be to act as an artificial price support for second- and third-tier free agents, an idea that the union would no doubt find just dandy but one that makes no baseball sense at all. This simply illustrates the true cause of the current market slowdown: Teams have figured out that, in most cases, spending well into eight figures on second- and third-tier free agents is a remarkably inefficient way to spend money or win baseball games. The problem is with the current system, with its economic structure that’s intended to take from younger players and give to less deserving veterans. Trying to require still more inefficient behavior is a poor way to solve it.

If you’re a Pirate fan, one disturbing aspect of a plan like this is that it could encourage behavior very much like what the Pirates are already doing, by trying to force teams to prioritize winning 70 games. Judging by their behavior over the last two and a half years, the Pirates’ overriding priority seems to be to hang on year after year at a “competitive” level, without really trying to excel. They even have their own, bargain-bin version of the third-tier veteran charity arrangement that Cooper proposes: they’re set to shell out $15.5M to David Freese, Sean Rodriguez and Daniel Hudson to provide dead-end veteranosity, while likely blocking younger players who might be a part of a more promising future. The last thing I want to see is a measure that gets this front office focused on the 70-win mark.