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Why do teams rebuild?

What is it about MLB’s superstructure that channels franchises into the cycle of rebuilding and competition?

MLB: Detroit Tigers at Houston Astros Troy Taormina-USA TODAY Sports

Rebuilding is a thoroughly modern phenomenon. Some investigation via Google reveals fairly sparse use of the term prior to 2010 or so. You get the occasional article like this one, Baseball America’s ranking of Cleveland’s farm system prior to the 2003 season (side note: holy cow, that top 3 of Brandon Phillips/Victor Martinez/Cliff Lee was something else), that use the term in the way we’ve come to understand it today: trading away veterans, stockpiling prospects and draft picks, and planning for the future. But it wasn’t until the Astros took the process to a new level, losing 111 games in 2013 en route to their current outstanding roster, that the concept of rebuilding was truly a systemic concept that we could all agree on a definition of.

Almost as soon as “rebuilding” became a recognized thing, debate raged over whether the practice is desirable — at least somewhat. The debate has been pretty one-sided: if you search “baseball tanking problem,” only two of the ten results on the first page suggest that there might be an issue with teams not trying to win, while the other eight instruct readers that “[n]o, MLB does not have a 'tanking' problem” and to “[s]top saying baseball has a "tanking" problem”.

And I think I agree. I don’t think it’s a problem, necessarily, that baseball’s structure encourages teams to go through periods of losing. But it’s not ideal. Baseball, as it currently exists, is a great sport, but that doesn’t mean it’s the best it could possibly be. There’s nothing special about the rules as they currently exist, and we shouldn’t be afraid to tinker with them in an attempt to improve the sport, something I’ve frequently argued.

I don’t think rebuilding is awful, but I do think it’s less than perfect. Fans can draw joy out of a team’s rebuild by looking to the future and hoping, but you can also hope while your team is winning games in the current season, and simultaneously draw a lot of present-tense joy from your team’s good-faith attempt at winning games. If I could get rid of rebuilding, I would.

But how? To brainstorm methods for eliminating the incentives that drive teams to ignore the present, and to determine whether those methods would be a net positive or whether their collateral consequences would outweigh the benefits, we have to first understand the current system; to do this we can ask a few seemingly simple questions: why do teams rebuild and what is it about baseball’s superstructure that pushes teams into these periods of extended losing that can be eliminated?

Rebuilding exists because of the combination of two things, one biological that can’t be changed, and one that’s set by the league and can be tweaked or overhauled at will.

Jeff Zimmerman, “Hitter Aging Curves”

The first factor, the biological one, is aging. The precise contours of MLB’s aging curves have changed over time, and individual players vary widely, but the general picture — a peak in the mid-20s, followed by a steady decline that accelerates in the early-30s — has remained fairly constant.

The second factor is MLB’s compensation system, the way it treats new players and free agents.

The third is the playoff structure; how the “rewards” of each season are distributed, and to whom. Together, those three cycles have combined to create the boom-bust era of franchise development.

A team that’s looking to get better in the present has to add major league-caliber players to its roster in order to do so. These players are usually in their late 20s or early 30s. Both ways of adding major leaguers — trades or free agency — tend to result in a team having fewer young players, either by sending them to other teams in a trade or by giving up an early draft pick. Additionally, most major leaguers value job security, and seek contracts that will continue to guarantee them employment several years past the point at which the team would likely do so voluntarily. Acquiring a good player in the present therefore means also acquiring an obligation to continue paying that player in the future, when they won’t be as good.

The result is that for a team to get better in the present, the must acquire players that inherently get worse in the future. This isn’t just a question of resource allocation, and teams choosing between spending their money with a goal of winning right now or three years from now. The more a team attempts to improve now, the worse it gets in the future. The boom causes the bust, unequivocally.

Then how do teams move from the bust back to the boom? There are a few mechanisms by which being bad causes a team to be better in the future. (Notably, unlike the boom-to-bust path, teams aren’t necessarily locked into this one; a franchise that makes some bad decisions or gets unlucky can stall out in the losing section of the cycle for a long while.)

The obvious way to move up from the nadir of a franchise’s fortunes is via the amateur draft. Pick order in the Rule 4 draft is set using records from the prior season, so a team that loses a lot of games gets to choose from a better pool of players. The impact of that is limited — it’s really hard to say with any much confidence what kind of player a 17-year-old or a 21-year-old is going to develop into, which mutes the effect of an earlier pick — but it’s not zero, so teams that don’t have a realistic shot of making the playoffs are incentivized to lose in order to get a higher pick.

Bad teams can also take advantage of the inverse of the ways that good teams get better. Simply put, they can choose not to sign free agents or trade with other teams for established players, thus keeping young players in their system and progressing toward an improved future in the normal way that a team would in a vacuum. But every team trying to get better needs a corresponding team that is trying to (or at least doesn’t mind) getting worse. A team deciding to tank can send away their veterans, exchanging their present value for future value in the form of young prospects, and they can choose not to sign free agents (picking up an extra draft pick with a qualifying offer, if the free agent is departing their team).

MLB: Kansas City Royals at Los Angeles Angels Kelvin Kuo-USA TODAY Sports

Aging, on its own, creates a constant roil in the landscape of MLB. Each team has to face the near-constant decline of their established players, and gets to enjoy the improvement and development of their young players. But what the above shows is that, because of MLB’s current rules, teams can boost themselves to a higher peak by stocking up on established players, at the cost of wins in the future.

On its own, that structural relationship explains why a team that tries to experience a boom has to face an impending bust. But it doesn’t explain why teams decide to go through this cycle, instead of cruising along with constant decline and constant improvement. The reason teams opt into the building-and-rebuilding pattern is because of MLB’s relatively top-heavy playoff structure. If the goal of a franchise is playoff success, then it’s almost never good enough to be mediocre. Mediocrity might be enough to stay in a playoff race through August, or to sometimes catch a lucky break and make a single-elimination Wild Card game or even a Divisional series. Both of those are valuable things, things that make fanbases happy and that should be viewed as successes. But for most teams, “success” means something at or above an appearance in the LCS, and to gain that, it’s not enough to float in the normal back-and-forth of decline and replenishment.

That’s why teams aim for a boom, and fall into busts: aging, MLB’s system of compensation, and the top-heavy structure of the playoffs.

In my next article, I brainstorm the ways we could change each of these things if we wanted to discourage or eliminate that cycle, and try to guess at all the unintended consequences that could result.

Henry Druschel is the co-Managing Editor for Beyond the Box Score. You can find him on Twitter at @henrydruschel.