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December 8, 2004

Prospectus Today

Arb Barbs

by Joe Sheehan

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One of the midwinter deadlines that always gets my attention is Dec. 7, the day by which teams have to decide whether to offer arbitration to their free agents.

The decision triggers two things. The most important is that by making the offer, the team publicly declares its interest in keeping that player, and as such, makes itself eligible for draft-pick compensation should the player sign elsewhere. All free agents lost before this date also return compensation.

The second is that offering arbitration extends the time a team has for negotiating with the player. Without an offer, the free agent cannot sign with his old team before May 1. With an offer, the player has until Dec. 19 to accept it; if he does, he returns to his old team. If he does not, the player can negotiate with his old team through Jan. 8, but again, if a deal is not reached, he cannot rejoin the team until May 1.

Generally speaking, teams should offer arbitration to most of their free agents who have any market for their services. Your negotiating window is extended, you get draft-pick compensation, and at worst, you have a good player for the next season on a one-year deal. Remember that in most cases, it's not the cost of a contract that burns a team but the length. There are few desirable players for whom a one-year deal would be a bad risk for the signing team.

A twist to this is that as contracts from the last bull market for players expire, teams find themselves unable to offer arbitration because of the rules governing salary cuts. The most notable example this winter is Carlos Delgado. Delgado made $18 million last year in the final season of a long-term deal signed during the previous Collective Bargaining Agreement. While the Blue Jays would like to have him back at less than half that--not far from what he'll likely sign for in the market--and would certainly like to have the draft picks in return, they cannot cut his salary by more than 20%. That means a minimum arbitration offer of $14.4 million, far beyond Delgado's market value. Were it to be offered, Delgado would certainly accept arbitration and his $14 million, so the Jays could not make the offer.

The 20% rule seems to be a motivator in a number of cases this year, especially with players who were injured in 2004 while making a lot of money such as Troy Glaus and Magglio Ordonez, to whom the Angels and White Sox declined arbitration.

More often, though, teams are just too risk-averse, or in some cases, have lost sight of the value of the draft picks. The Braves declined to offer J.D. Drew arbitration; is the downside of having Drew back at, say, $13 million for one year worth forfeiting the chance to add two of the top 40 picks (a first-rounder and a supplemental pick) in next year's draft? Neither of those is a bad solution, and yet the Braves passed on both, as well as the chance to keep negotiating with Drew.

I'm not a big Eric Milton fan, but as a left-hander coming off a year in which he was credited with a lot of wins, Milton will get a multi-year deal with someone. For the Phillies to renounce his rights without compensation is a waste of resources. The Astros passed on Jeff Kent; Chris Burke is a nice little player, but he won't be as good in '05 as Kent will be, and as long as the Astros are paying the last Bs, they might as well try and win in the short term. The Dodgers, who don't really have a center fielder who can be relied upon, declined to offer Steve Finley arbitration. Finley is expected to sign with the Diamondbacks or Padres, and even if he were to accept arbitration, would be a decent one-year solution in center field for a team that is going to have a serious power shortage in 2005.

Some teams use the arbitration offer as a tool to extend negotiating time. Theo Epstein was explicit about his tender offers, according to ESPN.com. Referring to the nine players offered arbitration, Epstein said, "Some of them were offered arbitration with the understanding they won't accept arbitration." If this kind of agreement is available between a team and a player, it lessens the risk for the team that a player coming off of a high salary will accept and stick the team with an above-market arbitration award. Not that the Red Sox have any right-handed starters from the Dominican who fit that description.

One player not offered arbitration was Barry Larkin, whose 19-year tenure with the Reds officially came to an end. This was no surprise; I remember the Reds basically renouncing Larkin in October, and I never got the chance to write about it.

We hear a lot about "loyalty" when players elect to leave their teams through free agency, or when, the first time they have leverage, they make demands for a high salary and other perks. The term "hometown discount" gets tossed around as if players actually played in the town of their choice, and not simply in the city of the team that drafted them as much as 10 or 12 years ago.

What gets less coverage is a team's loyalty to its players. We don't expect the same concessions from teams to their players, don't expect them to pay a bit extra for a guy who's been around a while, or extend a contract for a guy who might not be able to get much on the open market. Loyalty, as defined in the baseball media, is largely a one-way street. Be loyal, players, by asking for less and taking less.

Look at Larkin, who wants desperately to stay in Cincinnati, will likely play for less than a million dollars, would serve as insurance for Felipe Lopez and Anderson Machado, and who has a 19-year history with the team. If loyalty was paramount, wouldn't he be a Red today? The Angels and White Sox cut loose players they'd drafted and developed in Glaus and Ordonez, rather than risk paying them a lot of money in 2005. The Blue Jays are severing ties with Delgado, who has been with the organization since 1988.

There is no loyalty in baseball. There has never been, and there shouldn't be. The myth of the good old days ignores the fact that players never had the chance to display loyalty under a system by which their choices were "play for my team or don't play." The sepia-toned images of ballplayers never show Babe Ruth in a Braves uniform, or Ty Cobb as an Athletic.

So when your team's young star begins fielding free-agent offers and contemplating life in a different city, remember that he's showing exactly the same amount of loyalty that the industry shows to him.

Remember Barry Larkin.

--

  • The Twins came up big winners by signing Brad Radke to a two-year, $18-million deal. It's a great contract for them; any time you can keep your commitment to a pitcher to two years, you've won. Radke is durable and effective, a good #2 man behind Johan Santana. With the Twins likely to have the AL's best bullpen in 2005, they're left only needing to patch the back of the rotation and fix their problematic offense. They should go into next year as the favorites in the AL Central.

  • The Yankees officially went off the reservation, signing Tony Womack and Jaret Wright to contracts. Womack continues the ongoing downgrade at second base that will apparently end with Will Carroll taking over in 2008. He's a bad player coming off a fluke year driven by a high batting average. Robinson Cano is almost the exact same hitter at this point, and better defensively.

    Wright had a good year with the Braves, but lots of pitchers have come out of the woodwork to have good years with the Braves. A recent study places the impact of Leo Mazzone and Bobby Cox into stark relief, and implicitly questions the wisdom of making a big investment in a pitcher who's not been successful in any other environment. Do the Yankees not remember Chris Hammond?

    I'll be blunt: I see Willie Blair.

  • Nomar Garciaparra officially joined Jody Reed and Juan Gonzalez in the Pantheon of Bad Decisions, signing a one-year, $8 million deal to stay with the Cubs, just $40 million less than the total value of the four-year deal he declined to sign with the Red Sox last winter.

    Maybe Garciaparra will have a good year and get a multi-year deal in next year's market, but he'll be a year older and a year less suited to shortstop by then, so I think his chances of making up the $40 million are slim. Sometimes, the bird in the hand really is worth more.

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

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