The non-guaranteed nature of arbitration

Open Thread: A look at Runs For vs. Runs Against
It is high, it is far, it is terrible

With the Red Sox recent signing of Jason Varitek, we’ve yet again been exposed to the non-guaranteed aspect of arbitration contracts. As we learned in late October, a player who accepts arbitration is not guaranteed a contract for the following season. This became a big issue in Yankeeland when the team declined to offer arbitration to any of its free agents. Perhaps now we can gain a clearer understanding of the process.

As we learned from Jon Heyman, Varitek didn’t accept arbitration because he “didn’t believe that accepting arbitration would guaranteed him a spot on the team.” This references a recent and similar case, that of Todd Walker and the San Diego Padres. Following the 2006 season the Friars offered Walker, a Type A free agent, arbitration, hoping he would decline and they would pocket the two draft picks when another team signed him. Walker, apparently foreseeing the lack of interest in his services, accepted the offer. Not only that, but he won the arbitration case, winning a $3.95 million salary vs. San Diego’s offer of $2.75 million.

During Spring Training that year, Walker didn’t hit so well. Over 40 at bats he hit just .225 with just one RBI. Battling with him for the second base position were Marcus Giles, who hit .326 with a homer and 4 RBI, and Geoff Blum, who hit .316 with two homers. The Padres used this terminate Walker’s contract, paying him only $971,000. This was under the non-guaranteed clause:

A Player whose Contract is terminated by a Club under paragraph 7(b)(2) of the Uniform Player’s Contract for failure to exhibit sufficient skill or competitive ability shall be entitled to receive termination pay from the Club in an amount equal to thirty (30) days’ payment at the rate stipulated in paragraph 2 of his Contract, if the termination occurs during spring training but on or before the 16th day prior to the start of the championship season. If the termination occurs during spring training, but subsequent to the 16th day prior to the start of the championship season, the Player’s termination pay shall be in an amount equal to forty-five (45) days’ payment at the rate stipulated in paragraph 2 of his Contract.

Walker and the Players Association filed a grievance, hoping Walker could recoup the total of his 2007 salary and become an unrestricted free agent. This did not work out well for them. The Padres were able to prove, via simple statistics, that Walker failed “to exhibit sufficient skill or competitive ability.” Walker then signed a minor league deal with the A’s, was eventually called up, but ultimately released (in the move which added Dallas Braden to the 40-man).

Given this case, one might understand why Varitek was wary about his prospects should he accept arbitration. However, it’s not like Walker was a mainstay in San Diego. He was a journeyman at that point. In other words, there was no San Diegan loyalty to Todd Walker like there is a Bostonian loyalty to Jason Varitek. I imagine that Theo might catch some flak if he wanted to release the Super Captain after Spring Training.

In the case of Bobby Abreu, well, I’m not so sure this would have been as cut an dry as the Walker case. First and foremost, Abreu is a much, much better player than Walker. Second, the Yanks would have to bank on Abreu having a poor, poor spring if they wanted to release him. Xavier Nady and Nick Swisher would likely have to outhit him in order for the Yanks to even make a case to release him. Not that Swisher and Nady are necessarily worse than Abreu, but it’s not exactly a slam dunk that they’d outhit him in the spring.

Moreover, because of the difficulty in releasing him, the Yankees, as Brian Cashman said at the time, would have had to consider Abreu a signed player, at a minimum $16 million, for 2009 if he accepted arbitration. Considering what we’ve heard from both Cash and Hal back in December and to this day, that might have been enough for them to pass on Mark Teixeira. That means he goes to Boston, and that changes the entire tenor of the off-season.

Looking back on the Walker case helps frame this arbitration debate. Yes, the Yankees could have offered Abreu arbitration, knowing that if he slipped up in Spring Training they could have released him for a fraction of his 2009 salary. However, that would take not only Bobby slipping up, but his potential replacements outhitting him. If that didn’t happen, the Yankees would undoubtedly have been on the hook for his entire 2009 salary, in addition to carrying him on the roster. Clearly, the Yanks couldn’t trade him without picking up a significant portion of the tab. As such, the Yankees would have to take his salary into consideration when making moves this winter. Clearly, the team had bigger plans.

Receiving two draft picks for Bobby Abreu would have been nice, but they weren’t guaranteed. Given Bobby’s contract demands (well, at least until recently), he might have declined the offer and hit the market, only to have his dreams shattered by a complete lack of demand. On the other hand, his agent might have had an inkling of the winter’s chill climate and advised his client to accept, with the hope of getting his multiyear deal in 2010. That would have significantly hampered the Yankees plans. Given how excited most of us are about the upcoming season, I’m fairly certain we prefer the way things eventually unfolded to the speculated outcome of offering Abreu arbitration and netting the draft picks.

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Open Thread: A look at Runs For vs. Runs Against
It is high, it is far, it is terrible
  • BJ

    regarding todd walker, i think you mean “hoping he would decline” not accept

  • whozat

    hoping he would acceptdecline and they would pocket the two draft picks when another team signed him. Walker, apparently foreseeing the lack of interest in his services, accepted the offer.

    FTFY

  • The Evil Empire
    • The Evil Empire

      Noo wrong thread sorry

  • pat

    You summed it up perfectly Ben as usual. In the end cashman looks like an econ nostradamus. Truth is, even the specter of abreu accepting arbitration was enough for cashman to not risk offering it to recoup the picks. Having to sign abreu to a 17 or 18 million dollar contract most likely would have eliminated us from the tex sweeps. Mark Teixera > 50% or 60% chance of 2 compensation picks. Kind of perfect example of a bird in the hand is worth 2 in the bush.

    • http://www.riveraveblues.com Joseph P.

      Except it wasn’t Ben…

      • pat

        Oh shit. My bad joe ur still teh man.

    • Rob

      Yeah, right, cause the Yanks couldn’t afford another 20 million on their payroll.

      • steve (different one)

        accept it dude, you were wrong on EVERYTHING regarding the arbitration decisions.

  • Matthew Raphaelson

    The biggest reason may be that the Yankees knew that they would never receive the draft picks given their FA plans. Had they taken the risk with Abreu and won, those picks would have gone to the Angels and Blue Jays. So offering Abreu arbitration would have only saved their 2nd and 3rd round picks, which lowers the return for the risk greatly.

    • the most felonious vocalist in the wide world of showbusiness

      No, I don’t think so anyway. You can’t lose picks you get for other teams signing your players, only your own picks. It’s why the current compensation system rewards churning of the roster. When you lose a Type A free agent and replace him with somebody else’s your net gain is a supplemental pick. It’s possible that your first round pick moves up in the exchange as well.

      • pat

        Exactly. Once you gain a pick in compensation it cannot be lost. You can only lose your ‘natural picks’.

  • Januz

    I think Cashman did an excellent job with his signings. I agree 100% that it would have been nice to have the extra draft picks, but imagine if they would have offered arbitration, and Abreu accepted it? No Tex and no draft picks. Here is something to keep in mind. With the bad economy, teams may very well cut back on signing IFA’s and not be willing to draft as many “Signability Cases” as before, so that offers the Yankees opportunities to essentially recoup those lost draft picks. That is what they did with Brett Marshall (A projected first rounder they got in the 6th round). Finally, I have heard that this is a very weak draft, so the loss of the picks is not like when they failed to sign Gerrit Cole.

  • A.D.

    if no one has signed bobby yet… we can only imagine how unlikely a team would be to not sign him if he was type A.

    • Mike Pop

      I can’t believe Cashman finally did something right.

      • steve (different one)

        exactly.

        you can’t talk about draft picks when NO ONE HAS ACTUALLY SIGNED ABREU yet.

  • Tom Zig

    At first I was really shocked that none of our free agents were offered arbitration. I expected at the least to have offered arbitration to Abreu. I liked Abreu as a player even though his defense was sub-par. However, in hindsight it was a good idea not to offer anyone arbitration. I guess that is why we aren’t the decision makers hah. I don’t think it is possible to have a better off-season that the one we had. I look forward to the start of spring training.

    It has been pretty quiet these past few days. Has anything happened recently?

  • Baseballnation

    Mark Teixeira > Bobby Abreu

    Mark Teixeira > 2 draft picks

    Mark Teixeira > Bobby Abreu + 2 draft picks.

    I think Teixeira will be, if not close to be what the Yankees thought they were getting when they signed Giambi a far time ago.

  • http://incumbentgm.wordpress.com The Third Yip-Yip

    Abreu wasn’t going to be worth $16 million + this year… why open up old wounds…

    • Mike Pop

      I would still bring back Bobby for one year and deal Nady as long as he would take a deal in the 6-8 mill range.

      Bobby in 09+pieces you get for Nady>>>>>one year of Nady in 09.

      You can live with the D for one year because of the offensive upgrade and you can probably get a good prospect or two out of it. Problem is Bobby would not want to be a 4th outifelder but there are probably ways to work around it.

      • Rob

        I agree with this. Trade Nady and sign Abreu for one-year. Let the manager work out the Damon, Matsui, Swisher, Abreu glut IF they’re all healthy.

  • Artist formerly known as ‘The’ Steve

    Every once in a while, PA’s analysis is spot on.

    “My faith in Brian Bruney and belief in Mark Melancon is such that I think Juan Cruz isn’t needed. But wouldn’t signing Wigginton, Aurilia or Garciaparra for the bench make some sense?”

    http://yankees.lhblogs.com/200.....oose-from/

    Can’t add anything to that and agree 100%. Nicely done Pete.

    • Mike Pop

      Except none of them can play the middle infield very well if at all.

      • Artist formerly known as ‘The’ Steve

        You can live with Wiggy. Right now, if anyone of our infielders got hurt, Cody Ransom would be playing everyday. Possibly at SS.

        • http://www.riveraveblues.com Mike A.

          Wigginton has never played SS in his big league career, and Aurilia has played just 68 games there over the last three seasons, Nomar 31.

          They’re an upgrade in name recognition, but there’s no guarantee they can do the job.

          • Artist formerly known as ‘The’ Steve

            I wasn’t clear, but I meant as a hitter. Wiggy is an upgrade over Cody Ransom.

            • steve (different one)

              how does that help if Jeter gets hurt?

  • Rob

    The threat to cut a player needn’t be actually realized. It only needed to be used as an additional reason to have the player reject arbitration. In Varitek’s case that seems to be exactly what happened. After his 2008 and the salary, I see no reason the Sox couldn’t have invoked that clause with a poor Spring Training. $10 million is alot of scratch and even the Boston faithful isn’t that dumb and loyal.

    Secondly, Abreu and his agents seemed to think they could get a three year/ $45 million deal as recently as a few weeks ago. If so, I don’t see how they would have read the market any better a few months ago.

    • 27 this year

      just cause they ask for 3/45 doesn’t mean they think they are going to get it. You’re never going to get what you ask for but you have to start high so the negotiations don’t get too low. Say he asked for 3/39, he ight have to settle for 3/30 but starting at 3/45 he might go down to 3/36.

      I am saying he will get that much though in today’s economic crisis although I think it is bull that teams are really is this situation, they are just trying to get better deals and knowing how the FAs are getting desperate just makes them want to wait for a better deal causing even more slow down.

    • steve (different one)

      let it go. you were WRONG. it’s ok.

      • Rob

        What? No I wasn’t. I called Varitek exactly right. And there’s no telling if Abreu would have accepted or not. Based on what his agents thought he’d get, even up to a few weeks back, they would have declined.

        Besides, when I said exactly what was going on with Varitek everyone was saying that clause had never been used before. Whoops!

        You were WRONG! Let it go.

  • JimT

    Two things to consider, the Varitek and Abreu situations weren’t that comperable.
    And the Jon Heyman comments were just a public “cover up” for Boris’s misread of the Varitek situation.

    The Red Sox wanted Varitek back for another year even if they over paid for that year, they just weren’t willing to give him a multi year contract. An additional year provided them the time and flexibility of trading to improve the Red Sox catchers corps and giving their younger minor leaguers another year of development. It is very unlikely that the Red Sox would have cut Varitek even if they had lost the arbitration hearing. Besides, if the Red Sox had cut Varitek after the arbitration result he would have recieved over $1M as a termination package and been free of the compensatory draft picks going back to the Red Sox. Thus making his signing elsewhere easier. Boris and Varitek badly misread the market here.

    Abreu situation is different in that the Yankees were not willing to risk a high arbitration finding. I believe that they were looking to move on and re-tool their team with a different right fielder. The compensation picks would have been a bonus, but not at the cost of over paying a player when they had other, lower cost options.

  • walkoffblast

    Seems like the two years worth of data that went into giving someone like walker type A status should trump 40 spring training at bats. I wonder if those spring numbers were even out of line with walkers career in spring training.

  • Babe’s Ghost

    Hmm, where are all the people who were so critical of Cashman back in December? I would love to hear their thoughts now that we’ve signed CC, Tex and AJ. Which of those three would they have foregone for Abreu?

    EricL says:
    December 1st, 2008 at 5:51 pm
    This is absolutely ludicrous… this was just sheer stupidity.

    Yankee1010 says:
    December 1st, 2008 at 5:52 pm
    Pretty dumb. I generally believe that Cashman does a good job, but I’m just not seeing the reasoning behind this.

    thisisthedavid says:
    December 1st, 2008 at 5:54 pm
    Sad and Pathetic……So angry…

    Bryan says:
    December 1st, 2008 at 5:55 pm
    That doesn’t make any sense

    jobatheheat says:
    December 1st, 2008 at 6:03 pm
    I disagree with this move.

    Bill says:
    December 1st, 2008 at 6:03 pm
    Hank and Hal are making the Yankees operate like a small market team.

    gg says:
    December 1st, 2008 at 6:04 pm
    this is really really bad…

    LC says:
    December 1st, 2008 at 6:04 pm
    I can understand not offering to Abreu or Pettitte, but Pudge?

    Bill says:
    December 1st, 2008 at 6:15 pm
    This is just the first step in there excuses. At the end Hank, Hal & Brian will try to spin why they did not sign any high profile free agents.

    Matt says:
    December 1st, 2008 at 6:33 pm
    I think not offering to Pettite and Pudge was perfectly reasonable, but not offering to Abreu is borderline indefensible.

    Rob says:
    December 1st, 2008 at 6:47 pm
    I’m really disappointed as well

    kenthadley says:
    December 1st, 2008 at 8:18 pm
    IMO, anyone that says they buy these non-tender decisions of Cash is just drinking his Kool-Aid

    A.D. says:
    December 1st, 2008 at 8:29 pm
    I can see the arguments with Pudge & Pettite… but Abreu, seriously?

    Reggie C. says:
    December 1st, 2008 at 9:08 pm
    Its surprising to think the market for Abreu being so weak that Cash wouldn’t offer arbitration.

    Rob says:
    December 1st, 2008 at 9:16 pm
    I’m now convinced that Cashman is an idiot. That point will be hammered home when he signs Lowe and Burnett.

    Reggie C. says:
    December 1st, 2008 at 10:34 pm
    Watch Abreu sign a 3 year deal the week of the winter meetings. He’s not likely to get 16 ML per, but watch him get 3 years.

    Andy says:
    December 2nd, 2008 at 10:40 am
    Bottom line, this was stupid.

    • steve (different one)

      I can understand not offering to Abreu or Pettitte, but Pudge?

      this one is the best.

      so dumb.

      • steve (different one)

        This is just the first step in there excuses. At the end Hank, Hal & Brian will try to spin why they did not sign any high profile free agents.

        this was the next best, everything this guy said all offseason was completely wrong.

    • Rob

      Um, yeah, so I’m right here. I nailed Varitek and if the Yankees had the nuts to bluff cutting a player, Abreu would have declined too esp cause he thought he’d get more. That’s why he hasn’t settled yet like Bradley and Burrell. I’m not sure what I thought on Pudge, but if they had offered to him and he accepted, they could have cut him if Posada was healthy in the spring.

      • Rob

        BTW: Giving 5 years and 82 million to Burnett and 8 years to a underpowered 1B isn’t exactly a genius move. Sabathia I can live with. The other two contracts are going to be stinkers before all is said and done. Yeah, so Teixeira in 2015? He’ll be lucky to OPS .800.

        • Babe’s Ghost

          There’s no guarantee that Abreu would have declined, no doubt they sounded him out and he refused to say that he would since that would increase his price to other teams. From the description of how it went down with Walker, cutting in Spring Training without paying out requires cause. So I don’t think it would have been a legit threat to Abreu. Regardless it would have added more uncertainty to their salary calculations, which are obviously an issue otherwise they would have just signed Pettite without the long drawn out negotiations.

          Bottomline, Cashman had a gameplan and wanted to maximize his likelihood of being able to carry it out. The added risk of having having either (or both) of those guys accept arb wasn’t worth the potential payoff in picks because it would have blown up his plan. Controlling what you can control is smart in my opinion.

          I’m curious, sounds like you’re saying Abreu + ?? 1B + ?? P > Nady/Swish + AJ + Tex? Who would you have signed if you had $16M less to spend? Dunn for 1B and Lowe? Or Tex, make Hughes the 5th starter and bring up IPK when Joba hits the innings limit?

          I’d call this our best off season in a long time.

          • Rob

            But signing an often injured pitcher to a five-year deal isn’t risky? Or signing an underpowered 1B to an 8 year deal isn’t risky? I rather the short-term risks. Still I don’t see Abreu accepting. He’s still waiting for a pricey three year deal. Pudge would have been very easy to cut in Spring Training.

            Right now, and for much less money, the Yanks could have signed Manny and Dunn. Signed Sheets for rotation depth (on top of CC and Pettitte). If you look back, I was saying the same thing very early in the off-season. Between them, that’s maybe $280 million in deals (with only CC’s longer than three years) rather than $450 million.

            I also trade Hughes+ right now for Matt Kemp.

            So that’s a lineup of:

            Damon LF
            Jeter SS
            Dunn 1b
            A-Rod 3b
            Manny RF
            Matsui DH
            Jorge C
            Cano 2b
            Kemp Cf

            Trade Nady. Swisher is the backup at 1B, RF, LF.

            and a rotation of:

            CC
            Wang
            Joba/Sheets
            Pettitte
            Aceves/IPK

            And that’s expecting very little from Sheets.

            I say that’s an even better off-season than the current one. Better lineup. Less long-term money and risk.

  • Babe’s Ghost

    You didn’t really address my question, which of the three would you have passed on if Abreu had accepted arbitration. Because that was the risk that Cash decided not to take.

    Even if Cash had targeted Sheets instead of AJ, if Abreu accepted that would have forced you to pass on one of the FA’s. Given today’s announcement signing Sheets would have been a disaster, so Cash looks like a genius. (I won’t even begin to compare IPK/Aceves vs AJ)

    Now, I’m not an expert at this, so if I made a mistake let me know, but looking at win values, Tex looks better offensively and totally destroys Dunn when you take the glove into account. (Based on Fangraphs/Chone wRAA projection/last years UZR)

    Donkey vs Tex
    wRAA 23.9 vs 34.7
    UZR -20* vs 11.7
    position -12.5 vs -12.5
    Total -8.6 vs +23.9

    Clear advantage to Tex. If you added in Manny instead of Nady, which I don’t think is possible given the salary constraints since AJ+Tex+Nady is undoubtedly cheaper than Sheets+Manny+Dunn, the ‘math’ still favors Cashman.

    Manny in Right vs Nady
    wRAA 38.3 vs 6**
    UZR -4.8*** vs 1.2
    position -7.5 vs -7.5
    Total +26 vs. -0.3

    Net-net
    Donkey and braided headcase = +15.4
    Tex and Nady = +23.6

    So Cash’s choice is worth almost a full additional win. Not to mention avoiding the inevitable pouting and disruption Manny would bring. (Even if he is the greatest right handed hitter in a generation)

    *Dunn played LF/RF/1B, I couldn’t find UZR for 1B alone, I’m sure it’s better, but the small sample size would probably make it less reliable.
    **Nady’s projected wRAA of 6.0 assumes last year’s 22.8 was a fluke.
    ***Manny’s UZR was shockingly good last year at -4.8. For the three previous years it averaged -19.7, which would add an additional two wins! Making the deal a true slam dunk.

    I apologize for the weird formatting. I can’t seem to get rid of it.