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Friday, November 06, 2009
The Changing Landscape of Salary Arbitration-Eligible Players and Free Agents in Baseball
With the Yankees winning the World Series last night, the off-season officially began this morning. The clock starts ticking on the free agent filing period of 15 days after the end of the World Series. Buster Olney appeared on Mike and Mike on ESPN this morning. He started his segment with the same point that he made in an article on ESPN Insider on Sunday titled “Baseball's Next Great Economic Disparity.”
Let me quote from his posting:
“Baseball's financial structure appears to have reached a tipping point that can be defined simply. ‘The arbitration process is now outdated,’ said a highly ranked executive, ‘because the players can get more money in arbitration than they would through free agency.’ So now teams are about to adjust to this reality, and this is why multiple general managers expect that dozens of young players with three, four and five years of major league experience will be cut loose rather than offered arbitration in the next 41 days. Not a handful, but dozens.
During the past 48 hours, I went through the rosters with some executives and counted 93 solid non-tender candidates -- players whose current teams simply won't offer them contracts for 2010. If the final numbers come close to that figure, close to 300 veteran players will be looking for jobs in the winter, a staggering number that will inevitably depress the asking prices for free agents.”
Examples that Olney offered in his posted article were J.J. Hardy of the Milwaukee Brewers, Jeremy Hermida of the Florida Marlins, and Bobby Jenks of the Chicago White Sox. In both the article and this morning on Mike and Mike, Olney offered that the big market teams will be able to sign their top choices of both traditional free agents (six years of service) and non-tendered arbitration-eligible players. Small market teams might benefit from a depressed market overall for free agents.
I think that Buster Olney is right on top of this issue. The first two important dates to remember are December 1 and December 7. December 1 is the last day for teams to offer arbitration to their former players who became free agents. Monday, December 7, is the last day for a former free agent to accept arbitration. The non-tender date is December 12. After free agents file, teams have the right the offer arbitration. Often they will do this for projected Type A and Type B free agents to gain a draft choice if the player turns down the offer. Players turn down the offer to talk to all teams about a deal for the upcoming year. If they accept arbitration, they have basically agreed to a contractual relationship with their existing team. They can negotiate a deal or allow the arbitration panel to decide the appropriate amount. This year might be strategically different, however, because of the changing landscape. There will be a lot more free agents this year based on Olney’s prediction. If you offer arbitration to a Type A or Type B free agent, that player and his agent might just accept arbitration when they would have turned it down previously with different market conditions because an arbitration panel might award a figure that is higher than the deal that the player and agent could get on an open free agent market.
I will be monitoring all of this activity in the off-season, and I will post occasional musings.