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Monday, January 28, 2008
 
Baseball Salary Arbitration - Second Post - With a Particular Emphasis on the Houston Astros

After a little over a week since 48 players exchanged numbers with their teams, and according to my research 13 players have signed if you include the Robinson Cano deal with the Yankees. The recent discussion about a trade involving Erik Bedard puts one of the players who exchanged numbers with his team in a position of negotiating with a different general manager.

Six of the deals are multiyear contracts with 1 above the midpoint, 3 at the midpoint, and 3 below the midpoint. The multiyear deals went to Rafael Betancourt (Indians/2-years), Cano (Yankees/4-years), Michael Cuddyer (3-years), Endy Chavez (Mets/2-years), Yadier Molina (Cardinals/4-years), and Rafael Soriano (Braves/2-years). The number of multiyear deals is interesting in terms of my research back through 2004 on players and teams who exchanged numbers but settled before a hearing. In 2004, 5 of the 21 players signed multiyear deals (24%). In 2005, the numbers were 8 of 40 (20%). In 2006, it was 7 of 38 (18%). Last year, 10 of the 48 agreed to multiyear deals (21%). I am certain that the current rate of 46% will come down.

Dave Borkowski (Astros) signed for $800,000 with a performance bonus package of $50,000 based upon appearances or innings pitched. That is still below the $925,000 midpoint ($750,000/$1,100,000). Kyle Snyder settled at $835,000 with a performance package of $15,000 based upon appearances. That still puts him below the midpoint of $875,000 ($725,000/$1,025,000). Michael Wuertz of the Cubs accepted $860,000. That was just barely below the midpoint of $862,500 ($750,000/$975,000). Note that none of these final salary figures exceed $1,000,000.

Settlements at the midpoint include Chad Gaudin (Athletics) at $1,775,000 ($1,500,000/$2,050,000), Matt Guerrier at $950,000 ($750,000/$1,150,000), and Scott Proctor (Dodgers) at $1,115,000 ($930,000/$1,300,000).

The one player to exceed the midpoint is Geoff Geary of the Houston Astros at $1,125,000 ($950,000/$1,250,000). His midpoint was $1,100,000. Geary is also a newcomer to the Astros who dealt Brad Lidge and Eric Bruntlett to Philadelphia for Geary, Michael Bourn, and Mike Costanzo. Speaking of the Astros, they exchanged figures with four players: Dave Borkowski, Geoff Geary, Mark Loretta, and newly acquired Jose Valverde. The Tuesday, January 22, deal with righty Borkowski for $800,000 plus incentives is quite similar to the deal with Brandon Backe allowing both sides to skip exchanging numbers. The deal with Backe for $800,000 plus incentives was reached on January 11. Ty Wigginton was a deadline day signee. Wigginton received a $4.35 million deal plus incentives on Friday, January 18.

Hoping to force a settlement, general manager Ed Wade imposed an end-of-the-workday deadline of Wednesday, January 23, for agents Bob Garber and Bill Rego to complete negotiations with Wade on contracts for Mark Loretta (Garber) and Valverde (Rego) or proceed directly to a hearing. When the deadline passed, the Astros were committed to their first hearings since they lost to Daryl Kile in 1997. Wade’s decision to proceed in this way is a major departure from the club’s past practices. The Astros are 5-6 in their 11 hearings since 1974. The ledger for Houston including the arbitrator if I have located the information is as follows:
The Astros wins were Bill Dawley (1986 - Stephen Goldberg), Bill Doran (1987 - Raymond Goetz), Frank DiPino (1986 - Bernard Melzer), Darryl Kile (1997 - Morton Michnick), and Al Osuna (1994 - Pat Hardin).

The Astros losses were Joaquin Andujar (1980 - arbitrator information not located), Kevin Bass (1987 - Glenn Wong), Glenn Davis (1989 - Stephen Goldberg), Joe Sambito (1980 - arbitrator information not located), Denny Walling (Frederick Reel), Rick Wilkins (1996 - Morton Mitchnick).

As you can see from the list, the Astros have not been to a hearing in over a decade and never before a three-arbitrator panel.

Loretta is seeking $4.9 million and the Astros countered with $2.75 million. The midpoint is $3.825 million and the gap is $2.15 million. Last year Loretta received a base salary of $2.5 million plus a reported additional $1 million for reaching his performance bonuses. Loretta hit .287 while playing all four infield positions. The veteran of 13 big-league campaigns has over 1,500 hits in his career and a .298 lifetime batting average. He signed as a free agent last year with the Astros after the Red Sox cut him lose after the 2006 season when he made $3.25 million.

Valverde was acquired from the Arizona Diamondbacks after amassing 47 saves in 65 games last year when the Astros sent Chris Burke, Chad Qualls, and Juan Gutierrez to the D-backs in December 2007 for the first-time National League All-Star. Valverde received $2 million for that effort, and he is seeking $6.2 million from the Astros for 2008. Houston countered with an offer of $4.7 million. The midpoint is $5.45 million with a gap of $1.5 million.





2 Comments:

The Astros' new stance is similar to that of the Devil Rays, who refuse to negotiate with players once numbers have been exchanged.

The rationale is that settling near the midpoint is arbitrary and that money can be saved by winning hearings assuming the club's numbers are more reasonable.

Still, unless a lot of money is at stake, saving a few hundred grand seems like a pyrrhic victory when you consider the bad blood these hearings usually create between players and their clubs.

Anonymous The KingofSpain -- 1/29/2008 4:57 PM  


You are right that the Rays have the same policy. This year the Rays had three players (Jonny Gomes, Scott Kazmir, and Carlos Pena) who filed for arbitration. All three signed before exchanging numbers.

I also agree with your statement about the rationale and the "pyrrhic victory."

One of the things that I find really fascinating about the process is the number of cases that go to hearings where the gap is really small or the overall numbers are not high. I really wonder why those cases do not get settled. For instance, in 2006 Colorado went to a hearing with Sunny Kim. Kim wanted $800,000 and the Rockies offered $600,000. Why not settle this one? The Rockies convinced Stephen Goldberg, John Sands, and Gil Vernon that their number was better. Kim ended up being dealt by the Rockies in September 2006 to the Cincinnati Reds. He only pitched in 2 games for the Reds after an 8-game, 19.29 ERA for the Rockies. He spent the majority of 2006 at Colorado Springs in the PCL.

Anonymous Ed -- 1/30/2008 12:54 PM  


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