Tuesday, December 2, 2008

Offering Arbitration

This story has been heavily reported in the past few days, more so than I can ever remember, but last night was the deadline for offering arbitration to your own free agents. The result was a total of 24 offers across the industry.

Once upon a time, actually up until just a few years ago, if a Club failed to offer arbitration to one of their free agents then they could basically no longer negotiate with that player. He was essentially cut off from returning. Therefore, this was actually a huge deadline, and you'd often see many deals get done at the 11th hour. Under the new collective bargaining agreement, this is no longer the case. Players who did not receive the offer may still sign with their old organizations.

With the new system, the offer of arbitration has just two components: 1) if the player accepts he is deemed a "signed" player, immediately returns to the 40-man roster, and enters into the arbitration process just as a younger player would, and 2) if the player rejects the offer, is a Type A or Type B free agent, and signs with another Club, then the original Club receives some sort of draft pick compensation. So, basically, Clubs will offer arbitration only if they want draft pick compensation or would be happy with a one year deal that the arbitration process would create (or both, really - they want draft picks but would also be happy with the one year deal).

At the Padres we had one ranked free agent, Trevor Hoffman, and we declined to offer him arbitration. Therefore, we will not receive draft pick compensation should he sign elsewhere.

What yesterday's events also mean for the Padres is that the 2009 Rule IV draft has begun to take shape. We have the #3 pick overall in the amateur draft next summer, and now our second round pick will be no deeper than the mid-50's. If a number of players who were offered arbitration accept the offer or re-sign with their current clubs, our second round pick could end up somewhere in the 40's, which has been the area of many compensation picks in past years.

It will certainly be interesting to see how these 24 players react (they have until Sunday to accept or reject), as this is the most undeveloped market I can remember.

17 comments:

Zach Sanders said...

Paul,

Do teams worry about giving up draft picks when signing a ranked player, or is that just accepted as an inevitability?

-Zach Sanders
http://www.mlbnotebook.com

Paul DePodesta said...

Zach,

Under the new Collective Bargaining Agreement, signing Clubs only lose a pick if they sign Type A free agents. Type B's do bring compensation for the old Club, but not at the expense of the signing Club.

I think there were only five Type A's last year who brought compensation and maybe 10 or 11 the year before.

Tom said...

The Rule 4 is 7 months away. Let's talk Rule 5! Because if there was ever a time to load up on low-risk, high-reward players, it's now. That's assuming the Padres actually have 50K to spare for at least one pick. No more groundballing relievers like the MIT kid. No more 5h outfielders. Grab one of the high-velo lefties (Veal, Lugo, Figueroa). Perdoma, Strop, or Vaughn from the right side, although Vaughn looks a lot like Meredith. Not many position players of interest.

Cary said...

Hi Paul,

I was just wondering- how does the Rule V work in terms of the draft order. I know teams may elect to pass on their pick, but is the set order the same as the amateur draft order or is it determined differently? thanks!

field39 said...

If the bridge with Hoffman is burned, why not offer arbitration?

elsrbueno said...

Do players who accept arbitration count as free agent signings in that they can't be traded right away? Just a thought-- if a team like the Padres were to offer Hoffman arbitration (it's a hypothetical situation since they didn't), and he accepted, and a deal was reached either before the hearing or after, could they deal him? Seems like he could be in demand on a 1 year deal.

Paul DePodesta said...

cary,

It's the same order as the amateur draft, so we'll be picking 3rd. Also, teams who are at 40 on their 40-man roster get passed over. We're currently at 37.

Paul DePodesta said...

elsrbueno,

That is a fantastic question. They are treated as signed free agents, so they can't be traded without their permission until about two months into the regular season.

Tom said...

field, it doesn't sound like Hoffman doesn't want to stay. If he could get everything he wanted - 7+ million salary, live in San Diego, and stick it to the guys who slighted him - why wouldn't he do that? As a player he wouldn't have to deal much with Alderson or even Towers. Any discomfort would probably be less powerful than the feeling of victory. If you could be sure Hoffy wouldn't accept, sure, offer arbitration. But I'd say the odds of him accepting were well above 75%.

Players who accept arbitration "should" be treated as free agents, in that the team owes them X dollars for the season. If you try to get around that and cut the player in spring training, you eventually reach a confidential settlement because "should" turns out to mean "will." You can't sign a guy to a 3/39 deal and cut him, and you can't offer arbitration, have it accepted, and then cut the player without consequences either.

Cpt Top Off said...

elsrbueno,
Hoffman also has 5/10 rights (5 yrs w/current team, 10 yrs in MLB), so he'd have to agree to a trade anyhow...

Alex said...

I too am quite surprised with how few players have been offered arbitration. The biggest shocks to me were Adam Dunn and Kerry Wood, who I feel both are likely to seek (and receive) multi-year deals elsewhere. Even if they accepted arbitration, are one year deals really that bad a deal for either???

I'm sure there's more these teams know than I do though

Didi said...

Paul,

why not offer arbitration to Hoffman?
Isn't arbitration salary not guaranteed?

Also, does the possibilities of losing draft picks due to signing a Type A free agents cause teams to think twice? Do the Padres?

Thanks for blog, Paul.

hector said...

Paul,

The biggest disagreement I have is not offering arbitration, it is a calculated risk you need to take because Trevor (although a Diva) is the face of the franchise with Peavy and Adrian.

Also, because of the way he feels, I doubt he comes back.

Butt, and this is a bigger butt than Mo'nique. Had the Padres massaged this relationship better, perhaps a gentleman's agreement is reached with Hoffman to decline arbitration.

I just got back and read that Greene got traded to the Cards, please tell me you got Motte and Chris Perez from them, please.

Sean said...

Paul,

How would compensation work if a team signed 2 Type A free agents? Do they lose their first two draft picks or does the league somehow compensate the old club?

Alex said...

On Trevor Hoffman:

While the percentage was probably not too high, I do think there was a high enough percentage that if you offered Hoffman arbitration, he could accept it. Trevor might currently be upset with the Padres, but San Diego is still is home and his teammates obviously still like him. In arbitration he would have earned 6-7 million dollars fairly easy, which is just too great a risk for the Padres to take. While I, like many of you, probably feel he wouldn't have taken it, I still think there was maybe a 1 in 4 chance he would accept it, which is too great a risk to take when you are trying subtract salary, not add it.


As for two type A's, I believe you lose a pick for each type A. Depending on their ranking, the team will get compensated accordingly. In 2004 the Giants signed Omar Vizquel, Mike Matheny, and Armando Benitez who were all type A's I believe. As a result, they didn't pick until the 4th round that year because the lost their first 3 draft picks. Their 1st round pick went to the Marlins, because Benitez was the highest ranked FA, the second roudner went to Cleveland for Vizquel, and the 3rd rounder went to STL for Matheny. At least I think that's how it went down

That might not be precisely correct, but I believe it is

hector said...

Paul,

I like Worrell, is Motte too much to ask for as the player to be named later?

Could this trade open the door for the Padres to sign Felipe Lopez?

axion said...

paul, who'd we get/who are we looking at for Khalil?