There was a time in professional sports when the only way you could change teams was to be traded. When your contract expired, you had two choices: renegotiate with your current team or be released; this was known as the Reserve Clause. Baseball was of course incorporated first, but Football, Hockey and Basketball soon followed Baseball's lead emulating the reserve clause.
However in October of 1969, Curt Flood, an outfielder for the St. Louis Cardinals challenged his trade to the Philadelphia Phillies. Flood sacrificed the remainder of his career to pursue litigation and the court ruled that the reserve clause was a base for collective bargaining. This, however, did not do away with the reserve clause.
In 1975 the reserve clause was put to rest when arbitrator Peter Seitz ruled that pitchers Andy Messersmith and Dave McNally played a season without contracts and therefore declared that both players were rightfully free agents. This landmark decision opened the floodgates on widespread free agency.
Once the MLB introduced free agency, things started to spiral out of control. Take this past season for instance: the average salary topped $3 million for the first time, in only 35 years since the reserve clause was rendered obsolete.
The New York Yankees are the biggest offender, having contributed the most to the record salaries. Alex Rodriguez signed a 10-year $275 million dollar contract in 2007 that breaks down to $27.5 million a year (duh!). As it stands right now, he will make more this year (plus endorsements) then the entire Arizona Diamondbacks or Tampa Bay Rays payrolls.
How can one team signing and vastly overpayig for the best free agents on the market be good for baseball? I was overjoyed when Cliff Lee spurned the Yankees and signed with the Phillies, but then he still signed for $120 million for five years or in reality, $24 million a year over five years. What is he going to do with $24 million dollars?
This in turn creates a situation within the front office and leads to teams driving up prices of everything from parking to a cup of coffee. When this happens, it leads to a "win or else" mentality from the fans, owner(s), basically anyone that isn't a player, why would they care their sill getting payed an asinine amount of money anyway.It can lead to coaches, and managers getting fired and/or players getting traded or released if they cannot keep up with a team loaded with stars who came over via free agency.
Examine the last "dynasty" in Baseball in the 1996-2001 Yankees: even with the above statement, signed virtually no free agents, kept the same players every year, and just kept winning. Imagine the 50's Yankees if free agency existed back then. Yogi Berra, Mickey Mantle and Whitey Ford all might have chased more money, or the Twins would have been without Harmon Killibrew and the Red Sox without Ted Williams.
This is why Free Agency is evil; is breaks up great teams, and the only thing it's serves is the almighty dollar.