Arbitration: A First Look

I'm not sure how many readers here are, like me, sports polymorphs who are as big an NBA fan as a baseball fan. If you are, you've undoubtedly followed the sad affair that the NBA Lockout and ensuing negotiations have become. 

A big sticking point for the NBA is the ability to put in place a system that gives teams greater control over the futures of their young superstars, an obvious reaction to the actions of LeBron, Wade, Bosh, Carmelo, and the rest of the superstars who have taken their own fates into their hands in recent  years.

While the NBA has always been a star-driven league, and the fight has long been to reign in the power of the stars, MLB has seen an opposite movement. Prior to the days of free agency, baseball players were essentially shackled to their teams, with little to no negotiating power to speak of. While players have certainly gained a lot more power, there still exists one avenue where teams control much of their player's fate:

Arbitration.

For the first three years of a player's service time, a franchise is under no obligation to pay a player anything more than the minimum MLB salary. Last year, it was $414,000, and it generally goes up a few percentage points every year to account for inflation and various other factors too obtuse to get into.

However, after a player has 3 years of service time, players begin to gain a little of that power back, through the arbitration system. It's kind of a complicated process, so I'll point to James Lincoln Ray's "Quick and dirty explanation of Major League Baseball's player arbitration process."

Essentially, the team and player both submit offers to a three-person panel, and the arbitration panel decides which will become the player's contract for the upcoming season, which then becomes essentially guaranteed. More often than not, the two sides will come to an agreement prior to getting the panel that satisfies both sides. 

The Marlins are a team that often takes advantage of these cheap club controlled years, but will often jettison underperforming players once they reach the arbitration years. They will likely continue this, regardless of how much payroll is expected to go up in the upcoming years due to increased ballpark revenue.

This process allows teams to employ players at drastically below market value for the first six (or, in rare cases, seven) years of their careers. In some instances, it allows teams to keep stars at significant, often laughable prices; the Marlins will be paying Mike Stanton somewhere in the neighborhood of $420,000, or probably around $10k per home run next season.

It also allows teams to hang on to marginal and replaceable players while they make the minimum and retain options, and then make the decision on whether they are long term options once they become arbitration eligible. The potential for a great amount of flexibility exists in this sort of system.

Here's a look at the Marlins' payroll obligations for the upcoming season:

2012 Guaranteed Salaries:

Hanley Ramirez, $15,000,000

Josh Johnson $13,750,000

Ricky Nolasco $9,000,000

John Buck $6,500,000

Omar Infante $4,000,000

Randy Choate $1,500,000 

$49,750,000 

*Source: Cot's Baseball Contracts

Pre-Arbitration, Club Controlled Players (Estimates)

Gaby Sanchez $435,000

Matt Dominguez $415,000

Logan Morrison $425,000

Mike Stanton $435,000

Bryan Peterson $425,000

Ryan Webb $435,000

Mike Dunn $425,000

Steve Cishek $425,000

Jose Ceda $425,000

Chris Coghlan $500,000

Looking at 16 players there that are basically locked into contracts, there's a ton of great value on that list, and this category will be, in my opinion, the key to the Marlins' success next season. The ability to employ these guys for a combined $4.5 million puts them well ahead of the curve and gives some margin for error with the big contract players. This is a system the Marlins must still exploit, even with an expanded payroll.

The reason all of the "minimum" guys don’t make the same is because, historically, the Marlins have been willing to offer small raises each year to players who win recognition (Coghlan’s Rookie of the Year award; Gaby’s All-Star Game appearance) as well as to recognize their increase in service time. It’s a largely symbolic gesture, but I’m sure Gaby won’t mind another $10k in his pocket, and if it bothers him, I’ll post my address up on this site and he can send it to me.

Obviously, there's some question over whether guys like Dominguez and Ceda will actually make the club next year. Dominguez in particular didn’t show enough in his cup of coffee to warrant a starting job, and his position, third base, has been the subject of a number of rumors for free agency targets.

I think Ceda is pretty much a lock, given his 15 IP, 13 K, 7 BB, .189 BAA, .510 OPS against numbers in August and September. This is a guy the team views as a major piece of the bullpen moving forward, has been talked about as a potential closer, so he's going to be the 6th man out of the pen, I think.

That leaves the Marlins with 15 players under contract for next year at a cost of roughly $53 million. In the coming weeks, I'll be taking a look at each individual player's upcoming arbitration battles, offering comps and salary estimates based on recent history.

The list of 2012 club-controlled, arbitration eligible players for the Marlins looks like this, rank in rough order of importance moving forward:

Tier 1

Anibal Sanchez (Year 3)

Tier 2

'Leo Nunez'* (Year 3)

Edward Mujica (Year 2)

Emilio Bonifacio (Year 1)

Tier 3

Chris Volstad (Year 1)

Burke Badenhop (Year 2) 

Tier 4/Possible non-tender candidates

John Baker (Year 1)

Clay Hensley (Year 2)

Donnie Murphy (Year 1) 

*Obviously, an argument can be made that Juan Carlos Oviedo should be Tier 4; he's a very strong non-tender candidate, but it won't be because of performance, which would probably be the case with Baker, Hensley, and Murphy. Oveido represents the toughest choice for the club moving forward.

However, Volstad also probably represents another tough decision for the club. Back in December, Joe Frisaro said "Chris Volstad, who [will] be entering arbitration for the first time, is a possible piece to be dealt."  I'll work under the assumption that each one of these guys will be offered arbitration, at the very least, until we hear more about their status.

Starting with Tier 4, I'll begin posting weekly estimates and breakdowns of their recent work.


*Edit: Chris Coghlan was originall on this list in tier 3, however he fell just short of the Super Two deadline, and thus will not be eligible for arbitration until next offseason. 

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