http://sportsillustrated.cnn.com/2009/writers/sky_andrecheck/12/10/free.agents/index.html

This was on the Sports Illustrated baseball page.  It's kind of interesting food for thought about what happens to teams that aren't successful and as a result avoid signing free agents.  I've put two interesting quotes below.

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.

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.