Astros and Arbitration

Arbitration decisions are looming and the fate of the Astros offseason will likely be determined by the decisions made by the front office. I know each of us here has some thoughts on the matter, so here's a fanpost with my analysis (hopefully a little more in-depth than you get elsewhere)...disagree with me in the comments!

Of the Astros free agents this offseason, only four of them really matter for arbitration purposes: Doug Brocail, LaTroy Hawkins, Miguel Tejada, and Jose Valverde. Each of these guys is a Type A free agent. If the Astros offer these guys arbitration, then a few things can happen.

Possibility 1: The player accepts arbitration. At that point the player is considered signed for the next season, and if the team and the players have not agreed on salary terms by February 1, 2010, the player's salary will be determined by an arbitrator. Both the player and the team submit proposed salary figures, and the arbitrator chooses the salary that is closest to the player's fair value.

Factors that an arbitrator can consider are:

  • the player's performance, public appeal, and leadership
  • the length and consistency of the player's career contributions,
  • the player's salary history
  • the club's record and attendance,
  • the player's special accomplishments (All-Star appearances, awards, post-season performance),
  • the player's mental or physical defects
  • and the salaries of comparable players within a similar class of service-time.

Arbitrators cannot consider any of the following:

  • the club's/player's financial situation
  • salary offers made before arbitration
  • comments from the press
  • salaries of players in other sports.

Keep in mind that most players who accept arbitration end up agreeing to a contract after figures have been exchanged but before an arbitrator makes a ruling. Out of the 46 players who exchanged figures with their teams last offseason, only two went all the way to an arbitrated decision. As you might expect, this figure is usually about halfway between the player's figure and the team's figure.

Possibility 2: The player declines arbitration. This is the part of salary arbitration that most of us armchair GMs focus on...this is where the team can pick up draft picks.

If the player declines arbitration and he is a Type A free agent and he signs with another team, the Astros would receive two draft picks. One draft pick comes in the supplemental round between the first and second rounds of the draft. If the team that signs the Type A free agent finished 15th place or better in the 2009 overall standings, the Astros would receive that team's first round draft pick in 2010. If the other team finished 16th or worse in the overall standings, the Astros would receive that team's second round draft pick. Things get more complicated if the signing team signs more than one Type A free agent, but we won't worry about that here.

If a Type B player declines arbitration and signs with another team, the Astros would receive a pick in the first supplemental round of the 2010 draft. The signing team would not forfeit any draft picks.

Regardless of the player's type, if he declines arbitration, he can still sign back with his original team.

Now that we have a thorough understanding of the arbitration process, let's look at the four guys I identified at the beginning of this post, starting with..

Doug Brocail (Type B)

This is an easy one. Doug Brocail is a 42-year old Type B free agent coming off an injury-plagued 2009 campaign. The Astros have already declined his option for 2010 and offered him a coaching spot in the minor leagues. The Astros have already indicated to Brocail that they would not sign him back for 2010 at a lower salary ("I told him it was to time for us to fold in the younger kids and he was professional about it," Wade said.") and I can't say that I blame them. The Astros are not likely to want to risk him accepting, so they will not be offering arbitration.

LaTroy Hawkins (Type A)

To me, this one is only a slightly more difficult than the Doug Brocail decision. The Astros already have an offer to him on the table, so it's clear they would like him back. The 37-year old Hawkins has been on a series of one-year deals since 2006, and given his age, he's unlikely to find a team willing to go multiple years on the free agent market.

If the Astros offer Hawkins arbitration, he's highly likely to accept. There would be very few teams on the free agent market who would be willing to give up an early-round draft pick for an aging reliever who is due for statistical regression and who has a history of not dealing well in the closer's role. Teams would factor the draft pick into Hawkins's cost, and as a result, would offer him a lower contract than he could get with the Astros.

My verdict: Astros offer arbitration, Hawkins accepts, they exchange numbers (Hawkins around $4M, Astros around $2.5M), and they settle on a number in the $3.25M range before arbitration happens.

Miguel Tejada (Type A)

This is a difficult decision mainly because of the uncertainty surrounding the figure an aribtrator would decide is proper for Miggy. You might have seen writers say that historically, players get pay raises in arbitration. What they don't mention is that most of these players are still under team control, and a lot of them are seeing more-than-league-minimum for the first times in their careers. Very few players with Miggy's 12+ years of service time make it to arbitration. Last year, for example, out of the 46 players who exchanged figures with their teams, only David Weathers had more than 6 years service time (15+ years). In 2008, out of 48 players, only Mark Loretta had more than 6 years service time (12 years -- and we won that arbitration hearing). So it's hard to say what a typical arbitration award would be for Tejada...there's not a lot of precedent.

What could Tejada get on the free agent market if we didn't offer him arbitration? Davoag already did some fabulous legwork for us and found contracts for various SS, 3B and utility players free agents in recent years. I largely agree with his conclusion, so I'll just yank it and plop it down here:

[I]t's safe to assume Tejada will sign for somewhere around 7 million per year for two years. Some team may be willing to up that number to around 9 or 10 million, but only over one season... I don't see Tejada getting more than a two year deal from anyone.

John Heyman says the word on the street is that the Cardinals, Rangers, Phillies, and the Giants are all showing interest in Miguel. First, I doubt that the Rangers are looking for more than just a backup sort of SS/3B. But more importantly for this analysis is that none of these teams have their first round draft pick protected. This would depress the possible salary Tejada could receive from any of these teams if he were offered arbitration.

And we can't forget that free agent salaries have been trending downward. For example, Adam Dunn, who made $13M in 2008, signed with the Nats for 2 years/$20M. After the 2008 season, Bobby Abreu was coming off of a 5 year, $64M contract...he had to settle for a 1 year, $5M contract with the Angels. But the economy could be picking back up...Abreu signed a 2 year $19M deal just a few weeks ago.

My verdict: Astros do not offer arbitration, but do sign him to a 2 year $15M deal to play 3B...though it is possible that some other team does something stupid.

Jose Valverde (Type A)

My analysis here will be short...I've been ignoring my wife for too long tonight. Here was davoag's analysis. $10 million a year sounds about right, whether it's a free agent signing or an arbitration award. Valverde's public statements make it seem as if he is intent on testing the free agent market so he can get multiple years.

Verdict: Astros offer arbitration, Jose finds multi-year deal with another team.

What's your take?