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Arbitration Break Down

Posted By Alex Belth On December 3, 2009 @ 12:50 pm In Bronx Banter | Comments Disabled

Jay Jaffe on the Yankees not offering arbitration to Johnny Damon, Hideki Matusi or Andy Pettitte [1]:

The Yankees’ only Type A free agent is Johnny Damon, who’s coming off an excellent season capped by a key role in the team’s World Series win. He made $13 million a year over the life of his deal, but just turned 36. A one-year deal for him to return via arbitration might have cost the Yankees $15 million, a figure that apparently was too rich for Brian Cashman’s blood. Damon’s got a strong enough hand that he can likely do better in length if not average annual salary, even from the Yankees (two years, $25 million with an option, perhaps).

What’s annoying is that because he’s a Type A, foregoing the arbitration offer costs the Yankees two high draft picks, one in the 16-30 range of the draft (the top 15 picks are protected), the other in the supplemental phase (31-50, roughly speaking). That’s a substantial amount of value; four years ago, colleague Nate Silver estimated those two picks as worth $9 million for the 16-30 and $3 million for the supplemental. Since then, the market has leveled off, inflation has occurred, and WARP has changed, but if anything, the value of those picks is probably higher. Apparently, the fear of being stuck with a pricey one-year deal — though really, it’s difficult to get too badly burned on such a pact — outweighed the return for the Yanks, offering further evidence that even Cashman is on a budget.

The Yankees also decided not to offer arbitration to Andy Pettitte and Hideki Matsui, but both of them are Type B free agents, meaning all the Yankees turned down was the right to supplemental picks worth about $3 million apiece. Weighed against the higher likelihood that both would accept and win their cases at prices out of Cashman’s control, again, the risk was apparently too great. It’s still a likelihood that at least Pettitte returns; the most recent Collective Bargaining Agreement struck down a provision that teams who didn’t offer arbitration to their free agents were prevented from signing them until the following spring. Now, the two sides can hopefully negotiate a more sensible deal.

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[1] Jay Jaffe on the Yankees not offering arbitration to Johnny Damon, Hideki Matusi or Andy Pettitte: http://futilityinfielder.com/blog/2009/12/arbitration-blues.shtml

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