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April 1, 2010

Contractual Matters

The Renewables

by Jeff Euston

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The Orioles gave center fielder Adam Jones a $30,000 raise. Though any bump in pay is great, Jones might have hoped for more after making the All-Star team and winning a Gold Glove in 2009.

But early in spring training, the Orioles unilaterally renewed Jones’ contract for one year, giving him a raise of 7 percent, to $465,000. Each March, clubs may unilaterally renew contracts of unsigned players who are not yet eligible for salary arbitration. The right of renewal gives a club a decided advantage in salary negotiations and leaves the player with a choice. He can accept the offer and sign his contract, or he can refuse to sign and face the prospect of his team renewing his contract at a salary the club chooses, a figure sometimes less than the original offer.

At 24, Jones has already earned about $2 million in his career, so it’s not as if he’s a borderline major leaguer facing an uncertain future, unlike Tampa Bay’s Fernando Perez, one of baseball’s "working poor" who recently lamented the game’s salary inequities in a fun tongue-in-cheek video produced by those wacky pranksters at 12 Angry Mascots. (Hat tip to Tommy Bennett).

The renewal process is a frustrating fact of life for "zero-to-three" players, those who lack the nearly three years of major-league service needed to qualify for salary arbitration. With little or no negotiating leverage, a player and his agent view a renewal as a vehicle to emphasize their belief that the player deserved a better offer. That was the case with Brewers right-hander Yovani Gallardo.

The Brewers are one of several clubs that uses a system of performance and award criteria to determine salaries for zero-to-three players. One factor in the evaluation is the Elias Sports Bureau’s ranking of all players by position based on their performance during the previous two seasons. That element worked to the disadvantage of Gallardo, who missed most of 2008 because of injury, then rebounded with a strong 2009 season. When the two sides could not agree on a salary figure for 2010, the Brewers renewed Gallardo’s contract for $450,000.

Clubs are free to renew contracts of unsigned players in the 10-day window from March 2-11, though some teams move up the deadline to accelerate the process as spring training games begin. This year, the Angels set a March 4 deadline. Each of the players signed, with the exception of right-hander Rich Thompson, whose contract was renewed at the Angels’ number.

The process can also lay the groundwork for future negotiations as a player reaches his arbitration years and free agency. One of two Braves players renewed this spring was shortstop Yunel Escobar, who is represented by Paul Kinzer of Wasserman Media Group. Kinzer did not endear himself to the Atlanta front office during the 2008-09 offseason when another client, shortstop Rafael Furcal, signed with the Dodgers after reportedly agreeing to terms with the Braves. Escobar will be eligible for salary arbitration after the 2010 season.

But the process does not always guarantee acrimonious negotiations going forward. Players like Hanley Ramirez, Prince Fielder, and Nick Markakis have had their contracts renewed in the past, only to reach agreements on multi-year contracts later in their careers.

In some cases, a renewal is simply a temporary agreement while the player and club negotiate a long-term deal. The Diamondbacks renewed the contract of third baseman Mark Reynolds in each of the last two offseasons before signing him to a three-year extension worth $14.25 million this spring.

Other young players whose contracts were renewed for 2010 include right-handers Ian Kennedy of the Diamondbacks, Tommy Hanson of the Braves and Bud Norris of the Astros, as well as Marlins outfielder Brett Carroll and left-hander Andrew Miller. The Orioles renewed four players: Jones, outfielder Nolan Reimold, catcher Matt Wieters, and right-hander Jason Berken.

But Jones nearly had much more leverage. He fell one day short of qualifying as a Super Two, the provision in baseball’s labor deal that allows the top 17 percent of players with at least two years and less than three years of major-league service time to qualify for salary arbitration.

With two years and 139 days of service, Jones was tied with Cubs second baseman Mike Fontenot and Reds reliever Micah Owings for the last spot in the Super Two class. Only one of the three could qualify, with ties broken by service time earned in each immediately preceding season. Fontenot emerged as the winner then avoided arbitration when the Cubs signed him to a one-year contract for $1 million, a 133-percent raise from his 2009 salary of $430,000.

Jones insists he would like to play in Baltimore for the long term, and even his modest seven-percent raise is significant money in the real world. But the renewal system, combined with the Super Two tiebreaker, cost him in the short run. If you catch him commiserating with Perez this season, you will know why.

Jeff Euston is an author of Baseball Prospectus. 
Click here to see Jeff's other articles. You can contact Jeff by clicking here

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