Wednesday, November 17, 2010

The Arbitration Gamble

Major-league baseball teams operate on an uneven playing field. Some have a great deal of money to work with, while others have relatively little. With their new stadium, the Twins have moved into the upper echelon of team payrolls, but they still operate on a somewhat restricted budget that keeps them from being able to retain all of the free agents they'd like to.

Fortunately, baseball has a system in place to soften the blow for clubs losing valuable contributors to free agency. If a player amasses statistics sufficient to qualify him for Type A or Type B status, he can be offered arbitration that -- if declined -- puts his erstwhile employer in line for draft pick compensation once he signs with a new team.

The Twins have a slew of players with expiring contracts this year, and a number of those players qualify as Type A or Type B free agents. Here's the breakdown:

TYPE A: Matt Guerrier, Carl Pavano

TYPE B: Jesse Crain, Brian Fuentes, Orlando Hudson, Jon Rauch

Acquiring additional high draft picks is key for the Twins, who have done an excellent job of maximizing the value of their top selections in recent years. Their first-rounders from 2007 through 2009 -- Ben Revere, Aaron Hicks and Kyle Gibson, respectively -- arguably rank as the organization's top three prospects. Revere and Gibson could make an impact as soon as next year.

But offering arbitration in these situations can be a gamble. When the player is a marquee free agent in the vein of Carl Crawford or Cliff Lee the decision is a no-brainer, but in some cases a player will opt to accept the guaranteed one-year contract rather than testing the open market. With several of the players listed above, offering arbitration is a risk the Twins cannot afford.

Guerrier is one good example. He's a Type A free agent, so if he declined arbitration and signed with another team the Twins would get back two high draft picks, including a possible first-rounder. However, if offered arbitration Guerrier would almost certainly accept it, knowing that in spite of his quality work over the past several years he'd have a hard time finding a suitor, given that the team signing him would have to relinquish a draft pick. If he accepted arbitration, Guerrier would stand to make around $5 million next year -- a price the Twins probably cannot afford with their current commitments.

Fuentes is another player whose status won't likely yield any benefits. He qualifies as a Type B free agent, meaning the Twins would be compensated with a supplemental pick if he declined arbitration and signed elsewhere. The upside is that Fuentes would not cost the team that signed him a draft pick (only Type A's do) but he'd be a lock to accept arbitration anyway; Fuentes earned $9 million last season as part of the contract he signed to become the Angels' closer a few years ago, and through arbitration he'd make at least that much in 2011. It's not reasonable to pay that kind of money for a guy who would figure to serve mostly as a lefty specialist, accumulating only 50 or 60 innings.

It's less clear what path the Twins will take with their other Type B's. Hudson will surely decline arbitration to test the weak second base market and should net the Twins a pick. Conversely, with the deep free agent market for relievers this year, both Crain and Rauch would likely accept arbitration offers, realizing that they'll earn more in 2011 through that avenue than in free agency. Those earnings are probably more than the Twins are willing to pay with significant bullpen money tied up in Joe Nathan and Matt Capps. (Yes, it sounds like Capps is a lock to return. Ugh.) It's quite possible that the Twins could lose all four of their qualifying relievers without any compensation.

The final arbitration decision might be the most intriguing to discuss, and that's Pavano. He's a Type A, meaning that if he declined an arbitration offer he'd cost the team signing him a draft pick, but he carries more leverage in free agency than his relief counterparts. The market for starting pitching is not very strong this winter, as Pavano would stand out as perhaps the best option behind Lee. Having largely buried the injury concerns that once haunted him, Pavano's outstanding command and workmanlike approach make him a very attractive option for clubs looking to infuse some veteran leadership into their pitching staff.

Pavano is 34 and coming off a very good season. This likely represents his last chance to cash in with a lucrative multi-year deal. Ted Lilly, also 34, set the market for inning-eating vets when he inked a three-year, $33 million pact with the Dodgers earlier this offseason. Pavano's Type A status would be an added burden in free agency, but there are still many teams who would be interested in his services and several of those teams could deal with the loss of a draft pick (like, for instance, the Rangers, who would be getting extra picks back if they lose Lee).

There's always the chance that Pavano accepts an arbitration offer and comes back to play for the Twins next year for around $10 million. It wouldn't be the worst thing in the world; the veteran's 221 quality innings this season were invaluable and would be difficult to replace. However, the Twins have the pitching depth to get by without Pavano next year (especially if they took a flier on a low-cost reclamation project like Brandon Webb or Chris Young), and committing that kind of money to him would likely eliminate any payroll flexibility while perhaps preventing them from being able to bring back someone like J.J. Hardy.

The deadline for offering arbitration to free agents is November 23 -- next Tuesday. By then, we might know a lot more about the Twins' true payroll situation moving forward. The amount of money they have on the table could be evident in the gambles they're willing to take.

21 comments:

Anonymous said...

Hudson, who batted .268 with 10 stolen bases and six home runs, is believed to be seeking a one-year deal again, but it's unlikely to come from the Twins
-Joe C

Kopy said...

I really hope the Twins do offer Pavano arbitration. $10 million is a reasonable price for the numbers that he has shown he can still put up, and if Pavano walks (or even worse, arb. isn't offered) the Twins are likely to spend at least half that on reclamation projects like you said, which is a whole other gambling story (Ponson, Livan, that Ortiz guy). I think the Twins would be better off coming up with new young arms instead of a fixer-upper for Rick Anderson.

If another year of the 'stache for $10 million is the "downside" of the offer, I think the Twins have to do it. If he tests the market in search of that multi-year deal, those picks will come in real handy. Personally, though, I hope he accepts, or maybe they can discuss some sort of 2-yr., 15-16 mill. deal.

Anonymous said...

The twins have to offer arb to pavano because hes a good bet to decline. However, if he were to accept, hes a very good bet to underperform the arb contract he signs.

So bringing back fuentes at 9 mil has no chance of happening but capps at 8 is a lock. Thats frustrating. Fuentes is better and more versatile than capps, and neither is worth 8-10 mil. The twins should bring back neither, resign crain as the joe nathan insurance policy and use the other money to fill a bigger need. The way they are handling capps makes me think they dont understand the mechanics of arbitration. That or they are really poor evaluators.

Anonymous said...

I thought it was in Hudson's contract the twins couldn't offer arbitration. That way he wouldn't be saddled with the draft picks.

Anonymous said...

I thought it was in Hudson's contract the twins couldn't offer arbitration. That way he wouldn't be saddled with the draft picks.

If a team signs a type B free agent, they don't lose any picks. The team that loses the player to free agency gets a supplemental pick between the first and second rounds.

Dave said...

Sign me up for Webb or Young, or both! Well, just one. But seriously, one of those guys should come here regardless of the Pavano situation.

Anonymous said...

I wouldn't ugh on Capps yet. Give him a chance to work with Rick Anderson in spring training and see what happens.

Are there other options? Nathan won't be near to his old self. Crain? What's his playoff ERA which would be similar pressure to a regular season close. Anyone else - minor leaguers or convert a starter?

Anonymous said...

Need to tender Stache and Matt both. Carl is an innning eater and a stopper last year. He has earned a raise and he solidified the whole staff. Matt has been a workhorse and is solid. Look at all his appearances and ask yourself who would have been able to do that if not him? Crain can be great but he is undependable. Still offer him for the po alone.
I prefer Fuentes to Capps as a closer, esp since he is a lefty and we have other righties and maybe Nathan makes it back after the all star break. Let Hardy go. Punto was almost as good, and a team first guy. Cas at 2B. But most of all resign Thome!!!!

Anonymous said...

History shows you need pitching to win in the playoffs. You don't win the Series by letting your 2nd best pitcher go. Twins need to upgrade pitching, not hit the bargain basement.

Anonymous said...

"Crain? What's his playoff ERA which would be similar pressure to a regular season close." Who cares. Capps' post season era is 9. This is a worthless way to evaluate a pitcher.

"History shows you need pitching to win in the playoffs." Prove this. This is cliche BS. Playoff caliber teams always have adequate pitching, and there are way more examples of teams loading up on, or having a ton of great pitching and losing. It must be catchy to say pitching wins in the playoff because its certainly not obviously the case.

Matt said...

Pitching won in the playoffs this year with the Giants, but look at Cleveland a few years back with Lee and CC. Playoff teams are complete teams, with the Giants scoring lots of runs at times, too.

Cliche or not, I don't think it's possible to have too much good pitching on your team. Every team has a chance to win when the starter gives you seven solid innings.

Anonymous said...

Let Hardy go. Punto was almost as good, and a team first guy.

i don't have the energy to tackle this one, does anyone else want to rip this apart?

Kopy said...

Let Hardy go. Punto was almost as good, and a team first guy.

i don't have the energy to tackle this one, does anyone else want to rip this apart?

I honestly started to, and then stopped. I just... no, just no. I would've thought it was a troll, but it was cleverly hidden among other coherent thoughts, so who knows.

Anonymous said...

CLONE NICK PUNTO AND START HIM AT EVERY POSITION!

Anonymous said...

"Pitching won in the playoffs this year with the Giants"
Yeah but no matter who won youd say they had pitching. The phillies without a doubt had a better pitching staff than the giants. They lost. The rangers gave up a lot to get cliff lee and he pitched great in the playoffs. He was added to an already good rotation. The rangers lost. The yankees spend more on pitching than any team in baseball. They lost. The rays have a bunch of very high draft choice pitching. They lost. Just because the giants won, and they have good pitching, doesnt mean thats proof that indeed pitching does win in the playoffs. The giants played well during the playoffs, but they didnt have the best pitching in the playoffs, and they were probably the worst team to make the playoffs.

Its true that have a lot of pitching isnt bad, acquiring pitching is expensive and inefficient. Even mediocre pitching doesnt typically come cheap and pitchers are so fickle year to year.

Matt said...

Even on the greatest regular season team of all time with the manager of the year, Nicky Baseball doesn't deserve a starting spot.
All those wonderful "we've done enough" division titles might be in jepordy.

To the pitching guy:
I agree, I pointed out the Cleveland rotation with arguably the two most expensive/sought after guys in recent memory leading the charge and they still dropped 3 straight to Boston. Take CC. Great in the regular season but he gets worked so hard he fades down the stretch and has a history of being ineffective in the playoffs.
Still, due to pitching being so fickle, a team has to stockpile potential in the farm. If you've got a bunch of good, cheap young guys, you have to admit the team will probably do well in the scheme of things.

Anonymous said...

Yeah but no matter who won youd say they had pitching.

that is because every team that advanced past the 1st round of the playoffs did have good pitching.

great pitching beats great hitting and vice versa. there is no magic formula to win a postseason series. the only thing we can do is build the best possible team and give ourselves a decent chance.

Anonymous said...

In my opinion, to win in the playoffs, you need to score more runs than the other team or allow fewer runs than the other team. You really need to focus on one or the other - you can't have both.

Polish Sausage said...

You mentioned the Giants, Phils, Rays, Yanks, and Rangers pitchers. Every one of those teams had a better rotation than the Twins. The blog THe Bat Shatters looked at the staffs for each of the WS teams for the last 10 years. I'd argue only 1 team made it to the WS with a worse staff than the twins - 07 rockies who won about 34 games in a row to get in. You need to be a good team overall to win a WS, sure, but it's very rare to be able do it with a mediocre staff.

Anonymous said...

the polish sausage gets it, why can't everyone?

Anonymous said...

"You mentioned the Giants, Phils, Rays, Yanks, and Rangers pitchers. Every one of those teams had a better rotation than the Twins." Id say the twins staff matched up fine with the yankees, rays, rangers. Liriano was better than sabathia, andy pettitte was either hurt or getting shelled the entire second half of the season, and hughes hadnt pitched well the second half of the season. The twins made those pitchers look dominate. I think lots of twins fans dislike the twins pitching staff because their perception of other teams pitching is perspectiveless hyperbole. Liriano was easily a top 10 pitcher in baseball this year and youd get the impression from some people that the season was proof positive they guy just cant handle it mentally.