December 12, 2006
Today is the deadline for tendering a contract for the 2007 season to players who are eligible for arbitration (those with at least three years of service, and a handful of players with just shy of three). If you want to retain the rights to your players, you have to make them an offer by the end of the day, or they become free agents. This is the main category of players that has the right to go to arbitration to set their 2007 salary.
The way in which teams handle this date has done through a couple of cycles. As late as 2000 or so, teams tended to offer contracts to most of their players. Just after that, during a period some might describe as "collusive," teams routinely allowed many of these players to become free agents, a process that flooded the market and caused demand for mid-level talent to bottom out. The combination of so many players hitting the market in December, and some recognition that much of this talent was fungible, caused the cost of these players to drop considerably. It made economic sense to allow your players to become free agents, because market conditions were such that you could replace them for less than the expected cost of paying your own through arbitration.
I believe that has changed. As we've seen, the market for free agents is overheated, one of the greatest seller's markets in baseball history. With so much revenue looking for a place to land, additional players hitting the market are likely to be met with offers surpassing their arbitration salary. Now, teams should err on the side of retention when it comes to their talent, because allowing them to become free agents will cost them money, either in re-signing their own players or picking up replacements.
Right now, allowing almost any player with value to hit the market is a bad idea, so virtually all good players in this class, even those coming off of disappointing seasons, should be offered contracts. At the very least, you're locking up a trade chip at a below-market salary and a short-term commitment.
I expect teams to recognize this and do a good job of decision-making today. With that said, let's look at some of the more interesting players waiting by the fax machine today.
The Astros actually have two recent stars they could non-tender in Morgan Ensberg and Brad Lidge. Both fit the profile of potential mistakes: players who have strong track records and who are coming off of disappointing years. Ensberg had another big OBP year (.396, a career high), but a .235 batting average, a dip in power and some missed time to injury created the perception that he's a disappointment.
The Astros have Mike Lamb, who also needs to be tendered a contract today, and there's the potential that the team would choose to keep just one. Even though they only have room in the lineup for one of the two, both are good enough players that they should be tendered contracts. The Astros simply don't have enough offense to be discarding good hitters.
Lidge is the pitching version of Ensberg, a terrific player prior to '06 who struggled mightily. The risk with Lidge is that his 32 saves and four-plus years of service time could produce a massive salary in arbitration, even off of a 5.28 ERA last year. The gap between his perceived value and his actual value is pretty high; Lidge's ERA spiked by much more than his peripherals did-his Stuff score of 30 is still excellent for a closer-and he retained his dominant strikeout rate. Even if the Astros want to go with Dan Wheeler as their closer, they need to keep Lidge in the fold as either a shutdown set-up man or a high-upside trade chit.
To get an idea of the thought process, consider what would happen if the Astros were to non-tender Lidge. His arbitration salary will likely be between $5 million and $8 million. (The broad range is one reason teams non-tender players; they don't like the uncertainty.) If Lidge were to go on the market, though, he'd be in line for a multi-year deal, most likely at $7 million or more. Danys Baez isn't nearly as good as Lidge is, and he got three years, $19 million from the Orioles. That's the absolute floor for Lidge.
The exploding market for free agents should make a lot of these decisions easier than they have been for a while. Players who might have been marginal calls the past few years are trivial ones now.
Sometimes, though, the decision is less about the player's value than the team's makeup. Consider the Brewers, who face a decision to retain Kevin Mench. Mench has four-plus years in the majors and made $2.8 million last year during the worst season of his career. David Dellucci is a better player but a reasonable comp; he got three years, $11 million from the Indians. Frank Catalanotto got $13 million over three years from the Rangers. Mench, coming off a down year, probably would have those numbers as his ceiling on the market. His arbitration salary, just based on a service-time bump, will likely be around the $4 million the two free agents are averaging.
The Brewers, however, have a logjam at the corner-outfield spots and no DH slot in which to play Mench. Geoff Jenkins and Brady Clark are in the final seasons of ill-considered multi-year deals, and have proven difficult to trade. Bill Hall is coming off of a monster year, and many think that he'll be moved to the outfield once J.J. Hardy proves he's healthy. Corey Hart is a better player than Mench is right now, a comparable hitter with more speed and better defense. Top prospect Ryan Braun could be knocking on the door of Miller Park by the end of the year. Braun is currently a third baseman, but he may need to move to right field at some point.
If you offer Mench a contract, you're committing somewhere between $3 and $4 million to a player who might not be good enough to play for you. The optimal Brewers lineup includes Hart and Hardy, with Hall in the outfield. Mench has an argument to play ahead of Clark, at least in a corner, and he might be a better hitter than Jenkins. But those guys are in house already and Mench doesn't have a contract.
Even though Mench will likely make a bit more on the market than he will if the Brewers tender him, I would still suggest that they let him go. They just don't have a place to play him. He's limited to the outfield corners and he doesn't have the kind of dominant bat that makes him a clear choice ahead of their other options.
The Braves were supposed to have traded Marcus Giles by now, but he's still in the fold, and needs to be tendered today. Giles has just about proven that his age-25 season was a fluke (21 homers, .526 SLG), and his declining batting average, power and range-as well as concerns about his level of commitment-have made him a question mark. The Braves have a lot of high-salaried players, and have become penurious in recent seasons. While the decision to non-tender Giles and blow off second base in 2007 would be a poor one, the organization's unhappiness with him and their desire to keep the payroll manageable may lead exactly to that place.
A couple hundred of these decisions are being made today, so I can't get to them all. I'll touch on a few more.
The Cubs have to offer Mark Prior a contract, but what do you think he's worth at this point?...Emil Brown is the kind of guy I'd like to non-tender--a fourth outfielder who's played a lot for a bad team, who has no future and who will suck up $5 million better spent elsewhere...Lew Ford is popular in Minnesota, but he hasn't really hit since '04. Like Brown, he's a guy who's a great free-talent pickup and a good use of a roster spot at six figures, but not worth arbitration.
I was reminded that Wayne Krivsky had lost to Kyle Lohse twice in arbitration while the two were in Minnesota. Given the state of that staff, he'll have to try again…Ryan Madson is an interesting call; he'll probably make $2 million next year, maybe more, but the highest-leverage role he could have is set-up man, and he might not get that…I like Jason Lane a lot, but I think he'll be on the market tomorrow…can you believe that Chris Snelling, with 152 major-league at-bats, is arb-eligible? Tender him and sign him before New Year's…Brad Wilkerson is a better player than he showed last year. I can't see Jon Daniels cutting him loose, but he's the type of player-like Ensberg and Giles-who fits the profile of a cost-cutting non-tender…
Some of these decisions are killer because you just don't want to lose the player, even though you know they'll make too much money if you keep them. I wouldn't want to give up on Oliver Perez or John Patterson or Juan Cruz, but I don't really want to pay them $4 million for their service time, either.
We'll know tomorrow which teams made the right calls, and in the current environment, the right call is almost always going to be erring on the side of keeping the player.