Don’t Call Us, We’ll Call You

Interesting to see the breakdown of who was and wasn’t offered arbitration among this year’s free agents. Recall that if a player is offered arbitration, he can accept or he can decline and be a free agent, in which case the team gets compensation in the form of a draft pick. If the team doesn’t offer arbitration, it loses the chance to get a draft pick. (In 2006, the CBA eliminated restrictions on re-signing players denied arbitration). In other words, given that offering arbitration gives the team a benefit (a draft pick) it would otherwise miss out on, the team should offer arbitration to ensure it gets compensated for its possible loss unless one of the following things is true:
1. It doesn’t want the guy back at any price; or
2. It thinks the arbitrator is likely to give the player more money than he’d get on the open market.
In theory, the purpose of arbitration is to give players something like their value on the open market; the system looks at what comparable players make, and values them accordingly. Since the comparable players are either guys who signed on the open market or guys who lacked the leverage of free agency (usually because they’re not FA-eligible yet), in theory, there should be almost zero risk of an arbitration award greater than the player’s open-market value. Which means that if a significant number of teams are declining arbitration offers to players they still have some interest in employing (obviously some of the players denied arbitration are genuinely unwanted by their teams), the teams must feel that the arbitration system isn’t working and/or that its system of comparisons is out of whack because the salary market is declining.
Here’s ESPN’s list of significant players denied arbitration so far:
Johnny Damon
Miguel Tejada
Randy Wolf
Orlando Hudson
Bengie Molina
Jermaine Dye
Octavio Dotel
Placido Polanco
Darren Oliver
LaTroy Hawkins
Orlando Cabrera
Kevin Gregg
Hideki Matsui
Andy Pettitte
Vladimir Guerrero
Kelvim Escobar
Jon Garland
Jarrod Washburn
Erik Bedard
Carlos Delgado
Mike Cameron
Miguel Olivo
By contrast:

Just 23 players received arbitration offers — one fewer than last year — and only 10 were position players: St. Louis outfielder Matt Holliday and third baseman Mark DeRosa; Boston outfielder Jason Bay; Los Angeles Angels third baseman Chone Figgins; Seattle third baseman Adrian Beltre; Tampa Bay catcher Gregg Zaun; Texas catcher Ivan Rodriguez and outfielder Marlon Byrd; and Toronto catcher Rod Barajas and shortstop Marco Scutaro.
Pitchers offered arbitration included Angels ace John Lackey; Boston reliever Billy Wagner; Detroit’s Brandon Lyon and Fernando Rodney; Minnesota’s Carl Pavano; Oakland’s Justin Duchscherer; Tampa Bay’s Brian Shouse; Atlanta’s Mike Gonzalez and Rafael Soriano; Colorado’s Rafael Betancourt and Jason Marquis; Houston’s Jose Valverde; and St. Louis’ Joel Pineiro.

Look at the Yankees as an example of this. They presumably want Pettitte back. They seem to prefer dumping Matsui and keeping Damon, but it’s hard for me to see why they’d not even try to get Damon to accept arbitration. Yet they didn’t offer arbitration to any of them. That suggests a lack of faith in the system.

9 thoughts on “Don’t Call Us, We’ll Call You”

  1. Sorry to thread jump, but the Mets’ first FA signing is a marginally guy who hates the team? More Madoff please, the Wilpons are a hate crime against the fans.

  2. Marco Scuttaro just got $11M for 2 years. I guess, in comparison to Julio Lugo he came on the cheap but dude is a slappy hitting, 34 year old SS with a career OPS+ well south of 100. All these dudes waiting for a contract shoukd kiss his agent’s butt.

  3. Very interesting! I agreed the clubs not offering arbitration only makes sense if they want to re-sign the player but feel the open market price will be significant less than the arbitration. Also they must feel that either they can re-sign the player or nobody else wants them or thyey don’t want them at all. This must be espsciallyt true of Type-A FAs.

  4. This is a case where the most simple answer is the most likely correct one. Teams have finally woke up and realized arbitration is the culprit most affecting the salary scale. Bobby Abreu probably ended up accepting less than half of what he would have gotten last year if the Yankees had screwed up and offered arbitration. It isn’t worth taking that risk on a player unless their is no one else available with comparable skills.

  5. Considering they are generally regarded (correctly, I would have to say) as a smart organization,the disregard the Braves show for their draft picks with regard to free agents is kind of odd. Just a couple years removed from giving up two picks for a washed up Tom Glavine, they do it again for Billy Wagner. There are certainly times when it makes sense to give up picks, but neither of those seems like one to me.

  6. Jerry, I agree with you about Glavine, but Wagner showed at the end of the season that he is still dominate and is much better than anything they had in the back of the pen last year.

  7. Time will tell. Wagner only pitched a few innings, and was typically unimpressive in his brief playoff work. And a guaranteed $7 million doesn’t even seem like that much of a bargain under the circumstances.

  8. Interesting that you bring up the Yankees since they are among those teams driving the market value of players way, way up with their free agent offerings.

  9. Another thing about arbitration, is that for players where the arbitration award is close to market value the value of the compensatory draft picks is probably enough to tip the expected FA price below the likely arbitration award. The guessing game then becomes – does the player realize this or will he be greedy and try for a big FA payday anyway? In a booming market, players are more likely to misread their value, but now I would expect agents everywhere are advising players to take a one year contract/arbitration and wait for things to turn around.
    The other reason for teams to decline arbitration is simply one of control. It’s like tossing back marginal keepers in a Rotisserie League. Even if picking and choosing among the available players ends up costing you a little bit in the end, the chance to choose the player you want is also the chance to get a bargain as well. This has a feedback element too – the more teams start to toss players into the pool, the more choice you have and the greater the chance to score a better deal than arbitration. Most of the really stupid signings (from the team’s perspective anyway) happened when the pool was small and a couple of teams got in a bidding war because they had to have something (pitchers usually). With a larger pool, this is less likely to happen (look at last year’s second tier OF free agents for example).

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