Arbitration Eligibles Do Not Always Provide Value

When the Twins acquired Matt Capps last summer, one of the selling points was that they weren’t just getting him for 2010; as a player with less than five years of service time, they had him under team control for 2011 as well. What they didn’t mention was that, as an arbitration eligible closer with fancy save numbers, he was going to cost them $7.1 million in salary for 2011, the number they agreed to give him today.

Matt Capps is a pretty good reliever, to be sure – his career K/BB ratio is 3.99, and he’s made a successful transition away from being an extreme flyball guy, helping get his home runs under control as well. However, even in this inflated market, $7 million for a not-quite-elite bullpen arm is a pretty good sized expense, and illustrates the point that we can’t simply look at “years of team control” and assume that they’re all of significant value to a team.

Look at the prices for the guys who signed deals today to avoid their final trip through arbitration:

Prince Fielder, $15.5 million
Jonathan Papelbon, $12.0 million
Heath Bell, $7.5 million
Matt Capps, $7.1 million
Ryan Ludwick, $6.8 million
Cody Ross, $6.3 million
Josh Willingham, $6.0 million
Clint Barmes, $3.9 million

Of that group, do any of them strike you as a significant bargain? In most cases, the best you could argue is that the team is saving a few million in annual salary for 2011, and in a few cases, it’s not clear that the player would have done this well on the free agent market. There is value to the team in only having to commit to a single year deal versus contending with other teams who might offer long term deals if these players were available to every team, but in most of these cases (Fielder and perhaps Bell excluded), a comparable player was available in free agency and had to settle for a one year deal.

Once you begin to add in the pretty lengthy list of players who were non-tendered earlier this winter, and the value provided to teams by players in their final year of arbitration becomes even smaller. The reality is that the arbitration system is setup to give a players pretty sizable raises as they gain service time, and if a player’s production slips or he doesn’t develop into a star at an early age, this last year of team control can turn out to be not all that useful.

This is especially true of players who reach Super Two status and kick off their arbitration awards a year earlier than most. For example, Matt Garza got $5.95 million from the Cubs today, and now has two more trips through arbitration before he becomes a free agent. If he stays healthy for the next two years, he’s probably looking at a payout in the $15 million neighborhood for 2013. He might be worth it, but it’s unlikely that he’ll be worth significantly more than that, and that third year of team control the Cubs acquired could turn out to be of minimal value.





Dave is the Managing Editor of FanGraphs.

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Telo
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Telo

Truth. I don’t see Papelbon being worth 2.5 wins. Love the Willingham deal though, and Ludwick and Ross may not be bargains, but definite savings.

Seems to me that maybe it’s relievers that are categorically over valued.

John
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John

Relievers may be categorically overvalued, but the subcategory of relievers w/ a significant number of saves is by far overvalued.