Teams had until Monday to decide whether to offer their free agents arbitration. As I’ve written before, I consider this to be something of a bright-line test of competence for an organization, as the risks and rewards are clear, and in almost all cases favor making the offer. Article XX, Section B(3) of the current CBA (thanks, Maury) states:
The former Club of a free agent, no later than by the December 1 following the free agency election period, may offer to proceed with the Player to salary arbitration under Article VI of this Agreement, for the next following season. The Club’s offer shall be communicated to the LRD, which shall notify the Association in writing. Said offer shall be effective upon receipt by the Association and the Club will not be permitted to retract the offer. If the former Club of the free agent does not so offer, it shall lose all rights to compensation under Section B(4) of this Article XX with respect to that free agent.
On or before December 7, the Player may accept the Club’s offer to arbitrate. The Player’s acceptance shall be communicated to the Association, which shall notify the LRD. The Player’s failure to accept the Club’s offer on or before December 7 shall be deemed to constitute rejection of the offer.
If the Player accepts the offer to arbitrate, he shall be a signed player for the next season and the parties will conduct a salary arbitration proceeding under Article VI; provided, however, that the rules concerning maximum salary reduction set forth in Article VI shall be inapplicable and the parties shall be required to exchange figures on the last day established for the exchange of salary arbitration figures under Article VI.
The choice for the club is pretty simple. If the player is valuable enough to warrant a one-year contract, offer him arbitration. You will get draft-pick compensation if he signs elsewhere, and if he does not, you will have a good player signed to a one-year deal. Remember that the risk in signing free agents is almost always performance after the first season; we generally have a good handle on what any player might do the next year, so evaluating whether you want any player for one year is simply a matter of estimating performance and salary. The Venn diagram that shows “players who are good enough to return a draft pick” in one circle and “players who wouldn’t be worth signing to a one-year deal at an arbitrated salary” intersects in a very, very tiny space.
I’m damned sure that Bobby Abreu and Andy Pettitte don’t fall into that space.
The Yankees made a mistake by not offering arbitration to either player, the biggest mistakes any team made in this round of decisions. For a team with the Yankees’ revenues, especially as they move into an ATM with foul poles, to decline the services of above-average players or draft picks in the event of their departure is a stunning waste of resources. Bobby Abreu projects as a five- or six-win player, Pettitte a bit below that. Even if you account for the fact that the Yankees may not have much room to grow marginal revenues for the next two years or so, those wins are valuable because they could be the difference between making the postseason and missing it.
Certainly there’s no baseball reason to not want either player. In Abreu’s absence, the Yankees nominally have an outfield of Xavier Nady, Johnny Damon, Melky Cabrera and Hideki Matsui, with Nick Swisher at first base. Abreu is better than all of those players, and if having him would create a logjam, it does so by forcing inferior talent to the bench, the waiver wire or the trade market. Pettitte was the team’s #3 starter last year, and would project as the #4 even if the Yankees were to sign multiple starters in the free-agent market.
All of that assumes, of course, that the players accept arbitration, foregoing multi-year contracts at market salaries to take a one-year contract with the Yankees. The more likely scenario is that both players would sign elsewhere (or in Pettitte’s case, retire), allowing the Yankees to collect two draft picks for each, either a #1 and a sandwich pick or a #2 and a sandwich pick. Even with the Yankees’…mixed…record in the draft of late, forfeiting the right to those picks is an enormous waste.
Two days ago, the Yankees had assets in Abreu and Pettitte that could have been considered short-term investments with minimal risk and fairly certain benefit (were they to rejoin the club), or long-term investments with more risk and uncertain benefit, but higher upside (were they to become draft picks). Now, they have nothing. How a team with the cash reserves of the Yankees can make a choice like that is inexplicable, and recalls the decision to forego the services of Carlos Beltran three years ago, a decision also motivated by short-term cash concerns.
The inability to balance risk and reward wasn’t restricted to the Bronx. By my count, there were 50 Type A or Type B free agents, one of whom, Jeremy Affeldt, had already signed and will be treated as if he were offered arbitration. That left 49 who could have been offered arbitration, and just 24 were. Of those 24, just five strike me as possibly questionable, and at that, I’m not sure you can criticize any team for rolling the dice on getting the draft pick. Casey Blake, Paul Byrd, Darren Oliver, Dennys Reyes and Brian Shouse are all marginal talents that could accept the offer, but only Blake and maybe Byrd would make enough in arbitration to outweigh their 2009 contributions or make eating their contract painful.
On the other hand, the list of players who were not offered arbitration includes a whole bunch of guys in the same situation as Abreu and Pettitte. The Phillies punted Pat Burrell and Jamie Moyer, both Type A free agents, in a situation identical to that of the Yankees. They have the money and the absence of the players is not easily rectified. Having both on one-year deals would have been a solid solution, and giving up the shot at draft picks is a waste. The Diamondbacks may not be terribly attached to Adam Dunn, but as much as they need his OBP, they should have dangled arbitration. See also Johnson, Randy, given their questions behind Brandon Webb and Dan Haren in the rotation. The Cubs allowed Kerry Wood-arguably the perfect pitcher to have one year at a time, given his health history-to walk.
You can’t even argue any longer that these decisions freeze a team. A player offered arbitration has until just December 7 to accept or decline, allowing a team to go to the winter meetings without uncertainty. Moreover, the player can be traded at midseason (beginning June 16), and sooner should you get his permission. Theres is simply no reason, even given the externalities present, for teams to be as risk-averse as they were in this process. The risk isn’t great enough, and the reward is considerable.
So credit the Dodgers for offering arbitration to Derek Lowe and Manny Ramirez, and the Brewers their decision to offer it to Ben Sheets and CC Sabathia, and the Angels to Francisco Rodriguez and Mark Teixeira. Even if those players accept, and even if that creates a higher payroll in the short term, no MLB team has to be so concerned with cashflow that it can’t accept having good players on one-year deals. The more likely scenario is that these teams will reap the benefits of their decision down the road, when the players they take with the draft picks they get as compensation begin contributing, or becoming valuable properties in trade.