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Posted: Thu Nov 30, 2006 1:19 pm Post subject: Why D Backs should move quickly on buying out arbitration
This is a must read article from the The Hardball Times about the Free Agent Cycle
When you get to the end and read the writers conclusion about how current Free Agent deals will affect arbitration salaries in a few years, it becomes very obvious why.
Basically, I would start looking to buy out Jackson and Quentin's arbitration seasons by mid season. Snyder I would work on right now.
I wouldn't worry about how good they are going to be at this point. Even if they are just league average guys, it will still make them eminently tradeable during their arbitration seasons if there is a fixed reasonable cost. Signing them to extensions that buy out arbitration does not make them untradeable. It HELPS their trade value. I think it's pretty obvious that at least Q & J are not going to have issues providing league average.
The way the market is going, even Chad tracy's contract will still be a bargain in a year or so , EVEN IF he doesn't hit lefties better or play better defense. 3.75 in 2008, 4.75 in 2009.....heck...thats a steal even if he only musters a 100 OPS+ each year
Edit: I left out Drew intentionally....I don't know how I would deal with him and Boras exactly....ideas welcome.
In my opinion, it really makes no sense to offer long term contracts to your young players until they've accumulated around 1000 at bats (for hitters) or around 300-400 innings pitched (pitchers).
Edit: here, of course, I mean full time position players and starting pitchers.
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Posted: Thu Nov 30, 2006 2:08 pm Post subject:
The wisdom of lev's observation cautioning against rushing to offer long-term contracts to players who have yet to demonstrate any sort of "track record" notwithstanding, the effect of the explosion in free agent salaries now underway will, indeed, lead to increased costs for those players eligible (now or later) for arbitration. (Something about a rising tide that raises all boats seems applicable at this point...)
The small and mid-market teams, among which are the Diamondbacks, will have to manage their funds even more carefully in a marketplace that is awash with too many dollars chasing a too-small supply (the classic definition of inflation); as the big-market teams will have more $$$ to spend, and can out-compete the smaller fish in the player's marketplace. (I know, stating the obvious...)
Part of the game, of course, is to be able to recognize the turns -- upward and downward -- before the market makes them; and respond accordingly, so as to maximize gains and minimize losses. The strategy shoe has mentioned makes sense in that context.
It also seems to me to be prudent to continue to invest heavily in the farm system, so as to be "growing your own" rasther than relying on FA purchases or trades. Those teams with an efficient system that develops (replacement) players for the parent team become, in effect, "producers" that "sell their goods" -- wihtout whom there is no market. At the very least, they can survive more readily than those who must go to the market for everything...
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Given this knowledge, wouldn't the agents for our young players be less likely to allow those years to be bought? If I was an agent, I'd immediately ask for at least $1M more per year over Tracy. And if Tracy stays where he is, there should be a prospect that can produce at that level for league minimum. I think buying arb years is only prudent if the guy is going to be really good and we'll be getting a better deal.
As for Drew, he's already getting a good salary from that contract. But I'd extend him before any of the others. Should have been the 1st pick in his draft, and he is very mature at the plate. And that's why Boras will be talkin $10M/yr after this contract. Motherfucker. But Drew could be our Jeter, and those guys are worth every penny. There's no incentive to try to extend his deal past where it goes at this time. His demands won't go any higher.
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Posted: Thu Nov 30, 2006 2:12 pm Post subject:
Generally, I agree...I understand what you are saying....you need to see a larger sample size to have a better picture of the players talent level before you make any longer term commitment.
However in the case of Q & J, I really don't think it is necessary to hit some arbitrary number like 1000 at bats. How wrong can he be? If there are any doubts at this point that they can be at least league average at their positions, we are deep shit.
Jackson already has 655 career plate appearances. If they do something by mid season he will be over 900 by that time. Close enough.
If you want to wait till the end of the year on Quentin, when he is up to about 800 plate appearances, thats fine.
I would definitely put next year this time as the absolute latest to extend Jackson, and mid season 2008 as the latest for Quentin. Based on the information in the article, it seems like it will cost ALOT more money to wait any longer than that.
We should know what we have in CJ, Q, Snyder, and Drew by now. We'll know about Young by the end of the year. Same with the pitchers. If Edgar gets off to a good start, we should extend him, and if one of the others can produce, then buy those years out, too, at the end of the year.
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In my book, you need at LEAST two seasons before you start thinking about signing someone long term. Maybe bandy around the idea with CJ after 07, and with Quentin/Young/Drew after 2008. There really is no need to do anything sooner. With pitchers like Edgar, Enrique, Nippert, Eveland, you probably wait until after their first year or arbitration or so... Unless they go all Webb/Willis on you, which they won't...
I kinda liken it to the Suns waiting to resign Joe Johnson, then his salary doubling by the time he signed his deal.
We gotta figure wich ones we want to keep and which one's we want to ride out the low salary with and then move by arbitration.
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Posted: Thu Nov 30, 2006 4:21 pm Post subject:
Lev...his analogy makes perfect sense.....it's the concept.
IF there is a quick spike on the way a year or two down the road for arbitration salaries coming, then it makes perfect sense to play the futures game on the players you are most confident will at least be league average and retain some trade value.
I am not proposing a general rule. I am looking at the specific market conditions that are developing, and if I were in charge of making the bets, I would take the chance at this moment in time, because to wait two more years to try to buy their arbitration years is going to cost more than the small amounts I'll overpay over the next 24 months, and I don't believe either of these players are any kind of risk at all on a contract extension.
It's one thing to have fiscal discipline. But good businessmen also have flexibility, and don't box themselves in with too many rules and paremeters.
I'm talking about something where they maybe over pay 100K per year for the next 2-3 years until arbitration hits, and basically negotiate the arb years at just slightly more than CURRENT arb levels. If you think ARB numbers could explode in a couple of years, which seems like a good bet, you would come out ahead, have your player locked up, and even increase their trade value.
From an organizational standpoint, I dont see how it would be any different than giving a draftee a major league deal, a la Drew. Well, other than the fact that they held the player (CJ or Q in this scenario) at a reduced cost for a few years - which would give them a better read on the player IMO - prior to upping the ante. IMO, Giving Drew $7.5M over 5 years to sign is riskier than extending CJ or Q at this point to deals that fall somewhere between that contract & Tracy's (3 years $13M, 4yr $19M if AZ exercises the club option).
We really oughtta trust that our analysis of these players is correct, and move on it. The ones we're convinced will be above league avg, lock 'em up. If we have questions about some, then wait for the picture to get a little clearer. The worst thing an org can do is not trust that they know their own players best. But any of those guys gets a bigger, more long-term deal on tha table and they're fired up to get a little more $ right now.
That's the good thing about rookies. They're making close to $400K, but they're surrounded by guys making $5M+, so they're more likely to take a deal that bumps their salary up by a high % early, like $400K to $600K, and accept the the arb years being a little cheaper, which could wind up saving a couple Mil over 2 yrs. We come out ahead over the course of 4 years or so.
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We gave Tracy his extension in his 3rd year, while he was about to enter arb, right?
Hypothetically, it would be much easier and cheaper to sign a guy still facing another year or two making league minimum than one about to enter arb. Tracy got a 3 yr, $13M deal for his 4th through 6th seasons. So if Q is through yr one, facing 2 more years of making $400K, then arb, maybe we say we'll give you $8M over the next 4 or 5 yrs. He'l lose out on some $ in the future, but he'll go from making $400K to $1.5-$2 per right now. Looks like it'd save us around $5M over the first 5-6 yrs compared to Tracy.
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Posted: Fri Dec 01, 2006 9:47 am Post subject:
The last paragraph of the article is what stimulated me to post this thread.
Quote:
In fact, arbitration is how these outrageous salaries will come back to bite the owners. By agreement, arbitration results are tied to free agent salaries, so today's higher free agent salaries will increase arbitration results in a few years. How do you think owners will act when they see their arbitration-eligible salaries rising rapidly?
The author was kind enough to point me to the relative language in the CBA
Quote:
"The arbitration panel shall, except for a Player with
five or more years of Major League service, give
particular attention, for comparative salary purposes,
to the contracts of Players with Major League service not exceeding one annual service group above the
Player’s annual service group.
This shall not limit the ability of a Player or his
representative, because of special accomplishment, to
argue the equal relevance of salaries of Players
without regard to service, and the arbitration panel
shall give whatever weight to such argument as is
deemed appropriate."
What this means is that it is now part of the agreement that playes will be compared to players in the league one year longer. So for example, players in their final year of arbitration will be compared to Free Agents.
Players in their second year of arbitration will be compared to players in their final year of arbitration, and so on.
Therefore it should be obvious how this years escalating free agent market will have a direct effect on future arbitration awards. This will start to impact the players the D backs have within a couple of years. If the D backs wait too long to extend their better young players, it is likely to cost the team quite a bit more to buy out these players arbitration years then they were previously calculating prior to the new CBA.
On a risk reward scale, it just seems to me that it's better to move sooner than later, as I would be willing to bet alot of money that Q & J will be at least league average, and therfore there is little risk. The upside for the club is they could potentially save millions in those last two years of arbitration.
Finally, there is the good will factor. Let me use Webb as the example.
After his excellent rookie campaign in 2003, the team gave him a 3 year extension right on the spot. Here is what it looked like:
Quote:
3 years/$3.3M (2004-06), plus 2007 club option
04:$0.335M, 05:$0.715M, 06:$2M, 07: club option worth up to $4M based on IP ($0.25M buyout)
IP incentives paying as much as $0.45M/year (220 IP), 2004-06, bringing total package to 4 years, $8.65M
re-signed 3 /04
I think because the team did this, Webb and his agent were feeling much more loyal to the organization and were more receptive when the team offered to tear up this deal and proposed the deal he got prior to the 2006 season.
Quote:
signed extension 1/06 (replacing final year & option of previous contract)
06:$2.5M, 07:$4.5M, 08:$5.5M, 09:$6.5M, 10:$8.5M club option ($0.5M buyout, which increases by $0.5M each time Webb finishes in the top 5 of Cy Young balloting, 2006-09)
Now Josh and his crew are more aware of all this than I am of course. It is simply my contention that the language of the new CBA as show above in this post moves up the time table that would be most optimum to start talking about extending Conor Jackson and Carlos Quentin.
If Jackson gets off to a good start and is raking through April and May, I really think they should contact his agent and propose an extension.
And if Quentin manages league average or better production in 2007, they should look to give him an extension prior to the start of the 2008 season.
Basically, just move things up 6-12 months to avoid the oncoming freight train that is arbitration salary inflation.
Tracy got his deal in May, 2006. He would have been arb eligble at the end of the year (2006). His deal is:
1M signing bonus
07 2.75M (first year arb)
08 3.75
09 4.75
10 7m (club option 1M buyout)(first year FA)
This is pretty close to what I would have guessed a year like last year would bring in arb. The club has an upside in the buyout year especially if Tracy is better than average. In return Tracy gets the assurance of being a wealthy man even if he gets injured or falls off the charts.
At the time, we also discussed probablities of Tracy being a star (as it appeared very possible at that time) and this deal made sense given those rough probabilities.
Remember that the arbitrators for 3-6 year players are instructed to give special consideration (I forget the exact words I'ill check it) to the salaries of players in the player's service time class. IOW, the salaries of other first year arb players are given the highest consideration for a player in his first year of arb and so on. Other salaries may be considered at the arbitrator's discretion, but the service time is a huge factor. Gagne, I think got "only" 7M in arb after he won the CY.
So while the increase in FA salaries is going to have a trickle down effect, it is not going to be immediate nor will it be as intense as the arb awards for FA. Many sportwriters don't know that there is a difference between the 3-6 arbs and the FA arbs. Don't compare apples and oranges.
Also, a player needs 6 full years before he is eligible for FA and 3 full years or be in the top 18%(?) of the second year service time class in service time. Unless the Dbacks screwed up and brought CQ up too early, he will not eligible for arb for another 3 years.
Also don't forget the injury factor. Don't assume that the downside is that you have an average or replacement level player. You could get zero for long term contract. I am confident that if healthy, CJ and CQ are going to be at least average players and would jump at a Tracy like contract right now if I was assured they would be healthy. Young I need to see more of.
Having said that, buying out arb years for players who may be stars is an excellent idea. However, the team needs to get a discount. The worst scenario to panic and give a Burrell type contract. A team can survive 4M or so hits, but to have a 8+ contract on the books really hurts.
The market will more likely than not will fluctuate over the next 6 years (the time the Dbacks have CQ under their control or the 5 they have CJ). If Tracy type deals are now available, by all means consider them for CJ or CQ, but I suspect their agent knows that the market is going crazy and will want more. Maybe now is not the best time to negotiate these contracts when the market is so bullish for the players. I don't know. Depends on the deal. If no deals are done, I would not be hard on JB.
Last edited by stu on Fri Dec 01, 2006 10:18 am; edited 1 time in total
Remember that the arbitrators for 3-6 year players are insticted to give special consideration (I forget the exact words I'ill check it) to the salaries of players in the player's service time class. IOW, the salaries of other first year arb players are given the highest consideration for a player in his first year of arb and so on. Other salaries may be considered at the arbitrator's discretion, but the service time is a huge factor. Gagne, I think got "only" 7M in arb after he won the CY.
So while the increase in FA salaries is going to have a trickle down effect, it is not going to be immediate nor will it be as intense as the arb awards for FA. Many sportwriters don't know that there is a difference between the 3-6 arbs and the FA arbs. Don't compare apples and oranges.
That's what I was telling shoewizard on the phone last night, but he wouldn't listen...
Excellent post, Stu. Couldn't agree with you more. Say, are you a lawyer?
"particluar attention" is the term that is used as to the weight to be given to salaries in the same ST class.
I should have said the FA salaries will not have as immediate impact on 3-6 arb awards. They will have some impact this year, but it is not going to be the same as FA awards.
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Posted: Fri Dec 01, 2006 10:36 am Post subject:
Thanks Stu....I was hoping you would weigh in on this. As always, your insight and experience is extremely valuable.
I assume the language you are referring to is still in the new CBA? I wonder where that is in relation to the CBA language I linked above.
Specifically, the portion I quoted above instructs the panel to
give particular attention to those players that are one year ahead in the process.
That seems like a pretty clear instruction, and seems to contradict a little of what you are saying....however I defer to your interpretation, as clearly this is much more your field of expertise than mine.
Please advise your opinion on the use of the word "particular" here, and how I should interpret that.
Thanks.
(Running out for the day....will check out responses this evening)
EDIT: Never mind. You already answered in the above post. I had the reply box open a while as I got a phone call in the middle of responding, hence the gap.
03 1m (2+ service time priior to this year, he was a super two so this would have been his second arb year)
04 4
05 7
06 9.5
07 13 (first year FA)
08 14M
Burrell was signed at a similar time (IIRC) when the market was going crazy. People thought this was good signing because the market was surely going to continue to increase and these prices would be reasonable when the time came.
Fact is they are not now that out of whack for FA, but they are for 3-6 arb players. This is only true "now" because is a market that has just this past month gone beyond any sanity. And it is true there is no sanity clause in baseball.
Shoe, I just saw your post timed 9:46 (the one that got interrupted by a phone call). None of my posts were written with your post in mind. I think you are right that I have inadvertently posted a response to it however.
Of course, I agree that the language is "not exceeding one year above the annual service group". It is "not exceeding" so while the arbitrator can look out one year, they can also look at the actual class. My recollection is that the final year awards do not reflect full FA value, but I could be misremembering.
I do agree that FA awards for last year arb players may drive the awards more than I implied. This should then trickle down to the other classes. However, there are not that many arb awards each year. The more likely scenario is that clubs will give higher contracts to 3-6 players and this will drive up the awards.
The clubs have not have had much faith in the arb process. I think this lack of faith has been justified in the FA awards, but not in the 3-6 awrads where I think the arbitrators have generally followed the service time mandate. I haven't looked at this in any serious way. This is just my impression.
Building off shoe's point, one player this may have an immediate effect on is Eric Byrnes. Matthews, Pierre, Soriano would be a comparable salaries. EB is not as good as these guys, but their inflated slalaries may drive his up in arb. All the more reason to trade him.
Shoe, I couldn't find that porion quoting the language of the CBA in the article. It is accurate. I am not questioning that. I am only trying to find out how far my attention/reading abilities have sunk.
I guess I should check my facts more cerefully, but where is the fun in that. I had assumed that since Matthew, Soriano and Pierre were all in their first year of FA, they would all be in the Brynes puls one year class.
Wrong arbitration breath.
Bynres has 5 years plus 75 day service time. Matthews has six year plus 104 days, Soriano six years plus 79 days so Soriano and Mtthews exceed one year ST and do not deserve "particular attention".
Pierre's time does not exceed one year for Byrnes. He has a 5 years 44M contract, but he earned just 5.75 as a settlement to avopid arb. This would seem a better comp and Pierre is at least perceived as a better player than Byrnes.
I had guessed 5M for Bynres in arb. This still seems pretty close. I still say trade him. Pierre's contract history.
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Posted: Fri Dec 01, 2006 2:21 pm Post subject:
Quote:
Shoe, I couldn't find that porion quoting the language of the CBA in the article. It is accurate. I am not questioning that. I am only trying to find out how far my attention/reading abilities have sunk.
I didn't read through the CBA to find that....Dave Studeman sent that to me in an e mail, quoting the CBA
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