Arbitration Case: Phil Hughes

Rivera negotiations going swimmingly
The RAB Radio Show: November 29, 2010
Worst best night ever? (AP Photo/Matt Slocum)

The Yankees have a few players eligible for arbitration this offseason, none more notable than first-timer Phil Hughes. After earning the league minimum or close to it over the last four seasons (or parts of them, anyway), Hughes will see his salary bump up into the seven figures this winter. How much exactly? Well let’s try to figure that out.

The entire arbitration process is pretty archaic, relying on old school stats that don’t tell the whole story to compare players with similar amounts of service time. Hughes will be compared to other pitchers when they hit arbitration for the first time, and his salary will be based on what they earned. Of course both the Yankees and Hughes want to avoid an arbitration hearing and agree to a contract beforehand, but his salary will still be determined in a similar manner.

Because of his 2010 season, Hughes has himself a damn fine arbitration case. He won 18 games and was an All Star, a huge feather in his cap. It’s basically irrelevant that he had the best run support in baseball even though it absolutely inflated that win total. The wins and All Star Game alone are enough to get him a substantial raise, but his other numbers stack up as well. I ran a B-Ref Play Index search to help dig up some similar pitchers, then picked out the best matches. As it turns out, Jeff Euston (the man behind Cot’s) published an article at Baseball Prospectus today (subs. req’d) looking at AL East arbitration cases, so that was helpful as well. Here’s who I came up with…

Those stats are leading up to each player’s first year of arbitration only; career stats don’t do us any good in this situation. I also ignored players that had signed contract extensions buying out their arbitration years because it skews the salary data, otherwise Randy Wolf, Gavin Floyd, Fausto Carmona, and Chris Young would have been included as well. For shame. The average salary in the player’s first year of arb and percent raise is a weighted average based on innings pitched. Nolasco’s relatively small workload will count less than Felix’s mammoth innings total; it’s only fair.

Garza might be the best overall comparison, though Capuano fits as well. Hughes’ strikeout rate is inflated a bit by his 2009 stint as a reliever; as a starter he’s got a 7.3 K/9 in his career, right on par with just about everyone else listed. If we apply that 684.4% raise to Phil’s 2010 salary of $447,000, he’s looking at a 2011 salary of $3,264,588. If we remove Felix since he’s clearly a notch above the other guys, it’s a 679.5% average raise and a projected $3,241,215 salary for Hughes next year. It’s a negligible difference as far as we’re concerned. Remember though, Phil’s got that All Star berth on his resume, something only two guys from the above table (Verlander and Capuano (naturally)) had at the time. That could push Hughes’ salary up towards $3.5M, and that’s a damn fine estimate of what he’ll be paid next season.

One thing is for sure, I had been grossly underestimating Phil Hughes’ earning potential. I had been under the assumption that he’d get a deal worth $2M or so for next season, maybe $2.5M if the Yankees were feeling charitable because I was ignorant to the comparables. He’s going to blow right by that amount and land a contract around three-and-a-half million bones, quite the payday for a 24 year old and a decent dent in the team’s bottom line.

Rivera negotiations going swimmingly
The RAB Radio Show: November 29, 2010
  • YankeesJunkie

    If Hughes proves healthy next year it might be in the best interests of the Yankees to sign him to a 4-5 year deal under a team friendly contract. There is always risks to signing pitchers long terms, but Hughes at 5/40 or something along those lines would keep the Yankees payroll flexible *always a good thing even with such a high budget* and also they would pretty much grab most of his prime years at a great price. Hughes has not shown any shoulder or elbow problems in his recent history and there is no reason to think that he can’t be a 200 IP. He just needs to show one more year that he can stay healthy throughout a year and pitch effectively though.

    • Andrew

      After a (in your scenario) healthy 2011 it makes more sense to look into an extension than it does right now, but I still doubt Cashman does it. Why assume the risk when they would still have the additional arb-eligible season of 2012? I realize he doesn’t have the arm injury history but that kind of thing can come up at any time, even after potentially 2 straight near-200 inning campaigns as a ML starter. I say they wait on going down the multi-year extension route until they absolutely have to.

      • YankeesJunkie

        Obviously there is risk involved because a pitcher’s arm can blow up at any time so waiting as long as possible is the safest choice. However, Hughes on 5/40 deal from his age 26-30 season is better than an FA deal from his age 28-33/35 age season where if he stays healthy will be in line for at least 70mm deal. Under signing him early he only needs to produce 10 WAR throughout the contract so even if he misses half a season or even a full season to injury the chances of him getting to or surpassing 10 WAR are much higher lets say if he misses the same amount of time, yet has to get 15-25 WAR to be as valuable to the contract.

    • vin

      I doubt the Yanks buy out his arbitration – its just something they’ve avoided doing over the past 15 years. Cano is really the only exception that I know of.

      I remember when people were clamoring for the Yanks to sign Wang long-term. It was after the 2007 season, the had just given Cano the contract extension, yet they were taking their ace to arbitration (not a friendly process). Cashman obviously lucked out.

      I’m sure they have their reasons why they don’t seem interested in locking the young guys up long-term. It certainly would be nice to have some cost-certainty during Phil’s age 25-30 seasons.

      • YankeesJunkie

        I was one of the people that clamored for a long term deal for Wang and Cano, but now that I think I understand the game more, the shoulder injuries along with the low K/9 rate would scare off most GMs from a long term deal.

        • Ed

          I think the K rate wasn’t something that would prevent a long term deal, but rather would just factor into how much the team thought he was worth.

          Having multiple shoulder injuries though, that was the big issue holding back interest. I think the team would’ve considered it if he was willing to take a *big* discount, but as we saw in his arbitration case, he was looking to maximize his money. Can’t blame him for it, I probably would too if I had his injury history.

  • Beamish

    I wonder if the sizable nut of this first arbitration year might not prompt them to reconsider a multi-year deal instead of going year-to-year as with Wang. Since almost no one ever gets a salary decrease they face the real potential of significant arbitration year salaries for Hughes if he lives up to his potential.

    If the Yankees really are a team with a budget (albeit a huge one) it might behoove them to get into a predictable salary sequence with Hughes and not be surprised with a Cy Young arbitration year.

    • Carlosologist

      I’m not a fan of giving arb eligible pitchers a big extension because pitchers have the biggest chance of getting hurt. It can literally happen on any pitch. I’d rather go year-to-year with a young ace.

    • 28 this year

      A long term deal is probably not the best idea yet. I’d give him one year to see if he doesn’t feel any ill effects from the massive innings jump he just had. Regardless of how the Yankees managed his innings, he still pitched almost 50 more innings than ever before. History suggests that could be a negative factor.

  • Steve in PDX

    Anyone else (pleasantly) surprised by those comparables?

    • Thomas

      Yeah. They definitely are better than his B-Ref comparable pitchers though age 24:
      1. Fausto Carmona (974)
      2. Len Barker (972)
      3. Jeff D’Amico (967)
      4. Don Aase (967)
      5. Wayne Simpson (966)
      6. Brad Penny (965)
      7. Chris Knapp (965)
      8. Andy Pettitte (965)
      9. Carl Erskine (964)
      10. Gil Meche (963)

      Yikes. Other than Pettitte and Penny (maybe Carmona), they aren’t good.

      • JGS

        Eh–he spent most of his first two years in the Majors hurt, then was a reliever for the third. His comparables were never going to look pretty.

        In general those aren’t useful except for guys with standard career arcs, and even then they should be taken with large grains of salt.

  • http://deleted Richard Deegan

    Just wondering how many of those who don’t want to take a chance on a coupla years of Phil Hughes are on the bandwagon to toss away 25 million for the aging Cliff Neagle

    • Steve H

      lol whatevs

    • steve (different one)


    • Ross in Jersey

      I’d love to know who “doesn’t want to take a chance on a coupla years of Phil Hughes”

  • J.R.

    Mike, I love the photo in the background.