Wednesday, November 24, 2010

Hot Stove...Huh?

Or: A Fan Tries to Wrap Her Head Around Baseball Contracts

Disclaimer: This isn't really a well-researched piece; it's more of an exercise in thinking through the complexities of baseball contracts. Everything I say here is either something I've known for a while and I don't know where the information comes from or I've heard on sports talk radio. Regard this as you would something from Wikipedia. If you find something that is wrong, please correct me. I'll even let you point and laugh. However, for more in-depth analysis, I do highly recommend the TwinsCentric Offseason GM Handbook. It's only $9.95, and it's packed with helpful and interesting information regarding the current Twins and their contracts along with predictions on how this offseason will shake out. It's very interesting and thought-provoking, and it would be a bargain at twice the price. But anyway, I digress...

Tuesday's announcement that the Twins offered arbitration to Carl Pavano, Jesse Crain, and Orlando Hudson (and subsequently declined to offer to Matt Guerrier, Jon Rauch, and Brian Fuentes) caused a lot questions on Twitter, and in real life (specifically, my own household) about how baseball contracts, free agency, and arbitration work. I'm pretty sure I've got it figured out; let's go over what I know.

Pre-Arbitration Eligibles:
When a player first becomes a big leaguer, he is under the team's control for six years. However, for the first three, he makes league minimum with no hope of a raise in salary. Of course, at any time, the team may send him back down to the minors, and then service-time is considered. But that's pretty complicated. Just remember the first three years, he's cheap.
  • Alex Burnett
  • Drew Butera
  • Brian Duensing
  • Jose Mijares
  • Jose Morales
  • Matt Tolbert
  • Danny Valencia

Arbitration Eligibles: 
After those first three years (for some players, it's two-plus years, depending on service time -- they're called super-twos), he becomes eligible for yearly pay increases (usually). He is still on the roster for the next three years, but the team may tender, or non-tender, new contracts on a year-by-year basis. If the team chooses to non-tender a contract, it's usually because his worth is getting more expensive than what the team is willing to pay, or the team simply doesn't want him anymore. A player whose contract has been non-tendered becomes a free agent and may sign with any team. Many fans fear that this may be the situation with JJ Hardy.

If the team does tender a contract, the player remains under control for the following year, and they have until the arbitration hearing date to come to terms on the salary. If not, then they go through the arbitration hearing process. I'll talk about this later.

Of course, the team may offer new multi-year deals at any time. This happened with Nick Blackburn last offseason. Oh, and Joe Mauer.

The deadline to tender or non-tender offers is Dec. 2.
  • Matt Capps (3rd year of arbitration eligibility)
  • Alexi Casilla (1st)
  • Clay Condrey (3rd)
  • JJ Hardy (technically 3rd, but really 4th, he was a super-two)
  • Francisco Liriano (2nd)
  • Pat Neshek (2nd)
  • Glen Perkins (1st)
  • Jason Repko (3rd/4th)
  • Kevin Slowey (1st)
  • Delmon Young (2nd)

Free Agents with Options:
A free agent's contracts is up, but sometimes optional years are added to the end of the contract. Either the team or the player, or both, can have the option depending on how the contract is written. It's kind of a built-in "out" clause. Most are team options; only superstar players get player options. If the option is exercised, the contract is extended. If it's not, then the player is a free agent and may sign with any team. He may, in fact, sign with his original team. This might happen if the salary for the optional year is higher than the player is worth.
  • Jason Kubel -- Twins picked up his 2011 option, he's under contract
  • Nick Punto -- Twins declined his 2011 option, he's a free agent

Type A and Type B Free Agents:
Again, these players' contracts are up, but Elias Sports Bureau has deemed them to be a "Type A" (top 20% based on last two years) or a "Type B" (next 20% over last two years) free agent. Teams may offer a player arbitration if they feel the rewards outweigh the risks. The risk is that the he'll accept and they'll have to give him a salary increase. That could also be a reward if they really want to keep him.

If a player accepts arbitration, he is under contract for the following year, and the terms of the salary will be determined before or through the arbitration hearing. They could work out a multi-year deal if they want to.

If a Type A player refuses arbitration, he is a free agent and may sign with any team. However, the team who signs him gives up a high-round draft pick to the original team, plus the original team gets a supplemental (between the first and second rounds) draft pick. This may hurt a player because teams may shy away from signing him so they can save their draft pick.

If a Type B player refuses arbitration, he is a free agent, and the original team gets a supplemental draft pick.

The deadline to accept or refuse arbitration is Nov. 30.
  • Jesse Crain (B) - Twins offered arbitration
  • Brian Fuentes (B) - not offered
  • Matt Guerrier (A) - not offered
  • Orlando Hudson (B) - offered
  • Carl Pavano (A) - offered
  • Jon Rauch (B) - not offered

Regular Free Agents:
These guys' contracts are up, and they're free to sign with any team, including the original team.
  • Randy Flores
  • Ron Mahay
  • Jim Thome

Under Contract:
These guys are under contract and aren't going anywhere unless the Twins trade them.
  • Scott Baker
  • Nick Blackburn
  • Michael Cuddyer
  • Brendan Harris (in the minors, not on 40-man roster)
  • Joe Mauer
  • Justin Morneau
  • Joe Nathan
  • Denard Span

Arbitration Process:
A player who qualifies for arbitration and the team submit salary figures to each other in mid-January for the new contract. Then they work on meeting somewhere in between. They have until the time of the arbitration appointment, sometime in February, to come to terms. They can literally have their hand on the doorknob going into the room and come to an agreement (this happened to Michael Cuddyer a couple of years ago). If they can't agree, they go to a hearing. A three-person panel of independent arbiters listens to both sides' cases and reviews other stats, accomplishments, etc. However, when each side is presenting it's case, things can get ugly. The team's GM is trying to downplay the player's value, while the player's agent is trying to upgrade it, all while the player is sitting there feeling like a piece of property up for auction. Weaknesses, bad habits, and all sorts of negative things are brought up. Egos are bruised; nerves are touched; backs are stabbed. Then, as they leave the room, the player tries convince himself it's "just business" while the GM tries to convince him that it's great to have him and that he needs to bust his balls for the team. This happened to Tim Lincecum and the San Francisco Giants last year. It wasn't pretty. Then the panel makes its decision, choosing either the team's or the player's salary figure -- no in-between.

There's a reason that teams, players, and fans rejoice when they avoid arbitration.

So, yeah, I think I've got it all. Any comments or corrections?

1 comment:

JimCrikket said...

I thought you pretty much had it "all", k-bro. Then I started digging in to the whole "posting" thing that MLB and Japanese Baseball have worked out. It makes the arbitration process actually sound like it makes sense... and I didn't think that was possible!

And then there's the Latin American process, through which several MLB scouts have managed to find themselves fired and charged with various crimes, I believe.

All I know is... I can't wait until the games actually start again!