Kevin Kiermaier and the Continuing Problem of Arbitration
Back in 2010, the Rays used their 31st round draft pick on a right fielder from Parkland College, a JC that hadn’t produced a Major Leaguer since Juan Acevedo, who was drafted in 1992. This particular pick was the 941st selection in that draft, and no player taken 941st overall had ever made the majors. The Rays offered just a $75,000 signing bonus, as expectations for the long-term value received by a 31st-round pick are generally not very high.
That bit of context is important to keep in mind when reading that Kevin Kiermaier, that long-shot prospect Tampa selected seven years ago, just signed away the likely remainder of his productive years for $53.5 million in guaranteed money. At a time when many of the best young players in baseball have eschewed the early-career extensions that the previous of generation of stars signed up for, Kiermaier’s context helps explain why he’d sign a deal that will, more likely than not, cost him money down the road.
By signing a six year contract that likely includes an option for a seventh year — the Rays generally don’t sign long-term extensions that don’t include team options — Kiermaier is agreeing to sell his first three free agent years in exchange for a significant guaranteed income stream right now. And given that he didn’t get a big signing bonus and has made close to the league minimum in his first few years in the majors, this is legitimately life-changing money for him. Even after taxes and agent fees, he’s now going to bank at least $30 million during his big league career, allowing him to retire comfortably whenever he’s done playing.
For a guy who wasn’t heavily recruited out of high school, wasn’t even considered the best prospect on his JC team — Baseball America put RHP Danny Winkler ahead of him on the Illinios state draft preview — and was never considered any kind of top prospect, it’s probably not easy to turn down this kind of money. But while Kiermaier is probably happy to know he can play most of his career with the same team and retire a rich man, this is the kind of contract that should incentivize the MLBPA to fight for a total overhaul of the arbitration system.
As a player with two years and 131 days of service, Kiermaier qualified as a Super-Two arbitration eligible player this winter, and based on the expected outcome of the hearing, he agreed to a $2.975 million salary for 2017. That put him between the likes of Matt Shoemaker and Cesar Hernandez, or if we want to really highlight the ridiculous valuations the current process spits out, $550,000 below what Sam Dyson got after one year as a saves-accumulating reliever. Dyson’s a nice reliever, a guy the Rangers are happy to have in their bullpen, but the fact that arbitration paid him more than Kiermaier is a sign of how silly the system can be.
Because, while Kiermaier might not be a household name, he’s legitimately one of the very best players in baseball. We project him as a top-15 position player for 2017, and that’s with defensive forecasts that call for his UZR to be about half of what his historical ratings have been. As Jeff wrote yesterday, new data from Statcast confirms that he’s probably the best defensive outfielder in baseball, so even if you’re skeptical of defensive metrics in general, it’s very difficult to argue that Kiermaier isn’t a spectacular force out there.
Realistically, Kiermaier was the most valuable super-two player in arbitration this year, but because of the numbers used to determine arbitration salaries, he wasn’t able to count on arbitration paying him for his defensive excellence, and he got the 10th-highest 2017 salary of this year’s super-two crop. And because Kiermaier is about to turn 27, he can’t realistically count on maintaining all of his elite fielding abilities up through 2020, when he’d finally have a chance to be evaluated on the open market. So Kiermaier sold his arbitration years for roughly the $30 million or so he’d expect to get by going year to year — assuming $3 million annual raises, his arb salaries can be estimated at $3M, $6M, $9M, and $12M — and in exchange for that guarantee, he gave the Rays the rights to three free agent years at a price of around $12 million per year.
Of course, $12 million doesn’t buy much in free agency these days, and Kiermaier could lose almost all of his elite fielding ability and still be worth that in five years. That’s why this deal is a no-brainer for the Rays; even if you think his skills aren’t likely to age exceptionally well, he’s good enough that he can decline a lot and still be easily worth the pittance that the team will be giving him in 2021 through 2023. And, of course, they get the upside if he does age well, keeping him in Tampa Bay in years when he would have been priced out of their budget.
But the fact that this was the deal Kiermaier had to take to get early-career financial security is a stain on the MLBPA’s willingness to let arbitration continue to massively undervalue certain types of players. Because with the amount of money that has flooded into MLB, there’s no reason that a guy like Kiermaier should have to settle for this kind of contract in 2017. This is an extension at prices that made sense five or six years ago.
For instance, here are the recent long-term extensions signed by similar-caliber hitters who were Super Two arbitration guys, when they were four years from free agency.
| Player | Years | Contract | PA | BA | OBP | SLG | wOBA | wRC+ | OFF | DEF | WAR |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Starlin Castro | 2010 – 2012 | 7/$60M | 1912 | 0.297 | 0.336 | 0.425 | 0.330 | 103 | 1.4 | 12.5 | 7.7 |
| Jay Bruce | 2008 – 2010 | 6/$51M | 1412 | 0.257 | 0.327 | 0.474 | 0.346 | 108 | 17.9 | 13.3 | 7.8 |
| Ender Inciarte | 2014 – 2016 | 5/$30M | 1586 | 0.292 | 0.337 | 0.385 | 0.316 | 95 | -2.6 | 43.8 | 9.5 |
| Kevin Kiermaier | 2013-2016 | 6/$54M | 1313 | 0.258 | 0.313 | 0.425 | 0.320 | 105 | 19.4 | 61.3 | 13.1 |
Kiermaier effectively signed the same deal Jay Bruce did in the winter of 2010, as a young outfielder coming off a very good season but with career numbers that showed him to be a roughly average hitter (to that point) with some defensive skills as well. Kiermaier has actually been a better offensive player when you include his baserunning value, and is clearly a better defender now than Bruce was then, but he still signed basically the same contract as Bruce signed six years ago, when the MLB economic market was dramatically different than it is today.
But, dingers. Arbiters love home runs and RBIs, and Bruce had those, while Kiermaier doesn’t. But Starlin Castro didn’t have homers and RBis, and he got basically the same kind of deal as Kiermaier got now, only he got it in 2012; again, pushing five years ago. And Castro was objectively a worse player at the time of his deal than Kiermaier is now. Kiermaier’s deal is what lesser players in similar situations were signing for before the TV rights wars and BAM Tech’s streaming behemoth made every team even richer than they already were.
But the arbitration system just hasn’t kept up with the changes in baseball, especially the way teams are valuing different skills. The system penalizes guys like Kiermaier — or Ender Inciarte, who signed an even worse deal a few months back — in order to funnel more money to guys who specialize in hitting the ball a long way. So now, baseball is left with a system that pays for Chris Carter’s skills in an environment where the teams themselves don’t.
After the 2014 season, Carter was a Super Two player, like Kiermaier is now. To that point in his career, he’d accumulated a total of +2.1 WAR, but because he had 85 career home runs, he got $4.2 million to settle before the arbitration hearing. That’s more than Jacob deGrom or George Springer got as Super Two players this winter, to give you an idea of the kind of value that the arbitration system put on Carter’s home run skill. And that high early valuation led to him getting non-tendered the next year, since he was cheaper to re-sign as a free agent than to take to arbitration a second time, and then led to Carter getting DFA’d this winter, as the Brewers were again unwilling to pay him what arbitration would have awarded him; he eventually got $3 million from the Yankees.
By taking money that should rightfully be going to legitimate stars like Kiermaier and giving it to one-trick ponies like Carter, arbitration gives teams the ability to get huge savings on guys who don’t hit a lot of home runs while also forcing the overpaid-dinger-guys into the open market, where arbitration can’t artificially prop up their salaries. So in the end, the money the Rays are saving by arbitration undervaluing Kiermaier just isn’t going to another player, since teams have gotten more aggressive about non-tenders and avoiding big overpays in free agency.
Guys like Kiermaier and Inciarte are highly valuable players, but because arbitration is still an archaic system that doesn’t acknowledge that reality, some of the best young players in the game are signing long-term deals for a fraction of their value, because they know their skills peak early and they may not have the ability for a make-good contract after accruing six years of service. And this is a problem for the MLBPA, because a significant portion of their union is being systematically underpaid, with teams now circumventing the offsetting overpays by non-tendering guys whose actual value isn’t what arbitration thinks it is.
I’m sure Kiermaier is happy to get $53.5 million in guaranteed money, especially given that he wasn’t expected to ever turn into this kind of player to begin with. But for the players at large, this contract is a reminder that the current arbitration system is incapable of identifying elite players, and that flaw encourages guys like Kiermaier to sign long-term contracts that simply don’t reflect their actual on-field value. If arbitration was going to pay Kiermaier more like $5M/$10M/$15M/$20M over the next four years, at the least he’d have had more leverage in asking for an extension that better matches up with his actual value.
But instead, the perpetual undervaluing of guys who don’t hit home runs or record saves means that another star-level talent won’t free agency after six years of service, and the union’s plan for having free agents lift the bar for all other players takes another hit.
The player’s association needs to take a long hard look at arbitration, and ask themselves whether they want to continue to let teams systematically undervalue some of the best players in the game on the hope that the savings will go to one dimensional sluggers. Because in 2016 and 2017, the evidence suggests that it isn’t all coming out in the wash, and with guys like Carter getting non-tendered while players like Kiermaier and Inciarte sign cut-rate extensions, the current arbitration system is simply not working.
Dave is the Managing Editor of FanGraphs.
There are a couple of issues with this idea. Arbitration is as a process is fine and a great idea. What has happened isn’t the fault of the process but the people involved.
There is a perception that players like Kiermaier don’t make money in arbitration so they don’t challenge it much. Last I checked both sides are given an opportunity to press the case of a player. As more and more advanced metrics get published and accepted as mainstream, more an more players should get the benefit of these numbers in arbitration.
The panels for arbitration are made up of attorneys who have risen high in their profession, a profession where having an open mind and critical thinking are at least given lip service. A good agent should be able to convince these people the value of defensive numbers, OBP and the randomness of RBIs.
If the players association needs to do anything it is to promote the use of advanced metrics, so that they become mainstream enough that an attorney looking over the arguments for a player can see the value of a Kiermaier over a Chris Carter. WAR is a fine metric and maybe it is simple enough that we ask all potential arbitrators that they understand simple advanced metrics before they are added to the pile.
Instead of saying how the process is screwed and should be reconsidered, perhaps the real important step is to stop undervaluing players like this throughout mainstream baseball. It is clearly started to happen and will continue, but a Players Association stance on advanced numbers would be helpful.
“If the players association needs to do anything it is to promote the use of advanced metrics”
Before the players’ association can promote the use of advanced metrics, they first must understand the advanced metrics too.
I don’t think it’s clear that the MLBPA is on board with advanced metrics.
“There is a perception that players like Kiermaier don’t make money in arbitration so they don’t challenge it much.”
Dellin Betances just challenged the notion that elite relievers without saves don’t get paid much, and he lost, then got publicly mocked by his team president. This idea that all the players have to do is present metrics that support their case and they’ll get paid more is simply wrong.
“A good agent should be able to convince these people the value of defensive numbers, OBP and the randomness of RBIs.”
That’s not really how arbitration works. Everything is based on historical comparisons, so you have to argue that your non-traditional star is somehow comparable to players with very different traditional numbers in order to get paid at the star rate. Because there aren’t any historical comparisons of these defensive studs getting paid at star levels to make.
It would be neat if arbitration were really about convincing open-minded, thoughtful baseball fans about the relative quality of players like Kiermaier and Carter. It’s not, though.
To an extent, arbitration can only work though predicability. By giving the arbitrator only a binary choice, you force him/her to rely on historical patterns and move upwards incrementally. The Betances case was argued poorly by his representative, if you wanted to raise the bar for the next time out. MLBTR pegged him at a likely $3.4. If his reps had come in at, say $3.8-$4M, he would have had a greater likelihood of success, given his aberrant stats. He also would have likely forced up the Yankees bid. But by going to $5M, he was asking the arbitrator to go up by 50% over the estimates. By making it a bridge too far, he reinforced the lower salary platform. Real error in judgement.
MLBTR tries to model previous decisions where the actual process (ostensibly) tries to track how actual comparable players are paid and to track the market to determine what makes players comparable. They were correct to try to compare Betances to Rosenthal and Miller
I keep hearing this–arbitration works against non-traditional players. Why? Who does the arbitration? Why would the process not consider advanced metrics or defensive-prowlness, etc., etc.? I’m not disagreeing with you Dave, I just keep hearing that arb is so different and I do not understand how or why.
It’s really simple, and Dave said it: “Because there aren’t any historical comparisons of these defensive studs getting paid at star levels to make.” Seems like as long as teams can get away with paying next to nothing for high level defense, they’re going to. You’d need a precedent, like a Kiermaier getting a 9 figure contract.
Jason Heyward isn’t an example of this? Arbitration lags the free-agent market in many trends. I’m not sure what makes this particular trend any different.
I went to a talk given by two MLB arbitrators at my law school about 6 years ago, both of whom agreed when asked that advanced statistics are occasionally included in the agent’s binder but aren’t really raised at hearings and aren’t given much consideration. Both had backgrounds as labor lawyers.
The hearing is an hour long and the arbitrators do not understand the advanced metrics or how they are valued.
I’ve asked this question before too, and had to have a person with legal experience to me dispel a common misconception: practicing law is only *somewhat* about using all the facts to make the best arguments. Non-lawyers tend to think this is what law is *all* about: you walk in to court, witnesses talk, lawyers argue, and who ever makes the better argument wins. But it’s not really like that. So much of any legal proceeding is about *what people before you have argued* and with what success. Like you, this took sometime to settle in for because it’s just so damn odd. The arbiter/judge only sort of cares about your argument. S/he also cares about what arguments can be extended from the ones your making, and what type of arguments those disruptions may have.
There’s a logic to this, at least in my opinion. The legal system privileges historical outcomes to make it difficult for radical change to happen swiftly. On the whole, this is a good thing, and provides stability, and prevents a handful of a great and organized litigators from running away off with a fresh set of interpretations that suit their needs right now, without considering what happens to everyone else. That is bad in the short term for Kiermaier, Betances, but good (?) in the long term because it keeps the market generally predictable (though I suppose we could argue if market predictability is a good thing, and good for whom).
Anyway, I realize this echoes what others have already said, and is a serious simplification, but it was really helpful to me (again, I’m not a lawyer) to have it explained this way.
You are absolute right. Previous arbitration cases serve as legal precedent so for Betances, there wasn’t a single example for his legal team to fall back to show that Betances was worth over twice as much as any other non-closer before him.
Betances took an absolutely massive risk and it backfired and actually did the next Betances a massive disservice since now future elite non-closers can’t use his salary as it’s the Yankees filing number, not a settlement.
Dave, Betances had a lousy 2016, frankly. He had an ERA around 5 away from the Bronx, and he was dreadful down the stretch when the Yankees suddenly found themselves in contention for a playoff spot after they’d traded away Miller and Chapman.
This is only tangentially relevant, but here’s an argument that in the legal world, the arbitration process regularly and necessarily uses and creates precedent.
http://scholarship.law.unc.edu/cgi/viewcontent.cgi?article=4556&context=nclr
It doesn’t take a big stretch of the imagination to realize that the MLB salary arbitration process is based almost exclusively on historical precedent. Otherwise, MLBTR and other resources wouldn’t be able to predict arbitration salaries as accurately and regularly as they do.
The process as it currently exists can’t entertain any “disruption” in conventional wisdom. Changes can only come about slowly and methodically, as player agents incrementally build arguments (and win cases) espousing the value of their clients in terms of advanced stats and traditional metrics in parallel.
Player agents have successfully promoted the value of advanced metrics in free agent negotiations, and most (if not all) front offices are willing participants, as they compete with one another to identify and exploit the next market inefficiency.
The antiquated arbitration process really is the bottleneck, not some industry-wide distrust of math.
This doesn’t really apply to baseball arbitration because baseball arbitration has no written opinions, so it doesn’t have any precedential reasoning to follow.
The precedents are the decisions themselves, and the financial models (implicit or otherwise) that allows so many third parties to accurately and consistently predict both arbitration bids, and decisions.
I would be very surprised if any knowledgeable expert describes the MLB arbitration process as ad-hoc.
OK, you didn’t read your source carefully, because it concludes that a system like MLB’s arbitration (which resembles securities arbitration in that it also doesn’t publish opinions) is likely to be ad hoc.
See, for example, page 1110:
“a pattern of citing to no precedent would provide some evidence that parties are content for arbitrators to resolve disputes in an ad hoc, discretionary manner.”
Part of this confusion is that “precedent” in a legal context, refers to the *reasoning* of past decisions, and not merely the decisions themselves. MLB arbitration is necessarily not a precedential system, because it does not explain its reasoning.
Arbitrators do use ad hoc reasoning to determine which players are comparable. The fact that their decisions are somewhat predictable does not mean that they are applying precedential reasoning. That’s simply not what precedent is.
Fair enough. My lack of understanding of legal semantics is duly noted.
This is very well said. Thanks
You missed the point entirely. This is a huge win for the players association. The more you screw over young players the more money left for the old timers in the union
No, I think you’ve missed the point. The owners aren’t paying the veterans. They have largely adjusted, meaning more money is simply going in their pockets. The MLBPA has chosen so far to look the other way on this.
Absolutely true. Would love to see the exact numbers again. Relative to the money in baseball now vs then, stars are getting paid less than they used to.
More advanced thinking is fine, but you can’t promote metrics like WAR that are based on guesswork over cold hard statistical facts.
Which cold hard statistical facts are you referring to? Honest question. It’s my understanding that determining total player value (whether that’s a super-formula like WAR, or an examination of a group stats you favor) you’re still interpreting data to make an opinion about value. There “facts” are the strikeouts, the hits, the catches, but that’s not where the “value” comes from in a non-WAR calculation. The value comes from you, a player, a team, an agent, saying what the facts mean. Someone correct me here. Non-statistician, non-attorney, non-economist here….
Ties into not paying minor league players. And 6 years of being tied to one team (well, more than that really counting minor league years and sitting out 1-2 months of the first year)…..
I don’t understand how sports unions keep voting for a stars and scrubs pay system that causes most of them to get very little of the money compared to the handful of super highly paid stars. Plenty of research out there showing that the middle class is disappearing in the NBA and NFL. Probably the same in MLB. But then, maybe that’s just a reflection of our nation as a whole.
We seem to have a national obsession with exceptionalism. An awful lot of people are more worried about the top limit of best case outcomes, than of the more realistic probability of middle class existence. Not saying that’s right or wrong, just that sports unions are reflective of society at large.
Agreed. The MLBPA has some strange priorities. Ok they’ve fought off a salary cap but their players get a much lower percentage of revenues than NFL and NBA players do. The luxury tax system is a de facto cap (and if there were a cap they could presumably get a salary floor too). And the arbitration system has been antiquated for a while but now teams can really turn it into heads-I-win tails-you-lose by non-tendering the Carters and settling with the Kiermaiers (mocking the Betanceses does not seem wise). Getting more livable wages for minor leaguers definitely seems like the right thing to do but I’m sure not holding my breath.
Minor league players do not have a representative at the bargaining table. Non-starter.
Right, and neither do international players (or for that matter high school and college players who haven’t been drafted yet). So those groups always get sold out. It seems strange that the MLBPA is all about preserving the earning power of the very top tier at the expense of everyone else (and at the aggregate expense of the whole). I guess removing the first round pick penalty from the qualifying offer process is a small victory for mid-tier free agents but still most everything seems motivated only to help those who have accrued six years of service time. It is what it is though, this seems to be what the membership keeps asking them to do.
It’s kind of like the social security trap. You’ll never convince a majority of people who have spent their entire careers “paying their dues” to support the previous generation to suddenly give up the benefits they have earned in favor of the current crop of rookies.
All sports professional associations are like this. Basketball negotiates to give LeBron and similar superstars the highest contracts. PGA Tour continues to pay nothing to half the field at most tournaments (The Senior Tour is wiser and makes sure everyone gets a paycheck).
Not really true, the NBA has specific max salary levels tied to the salary cap (indeed the max contracts are expressed as a percentage of the salary cap). Yes they’ve gone up under the latest CBA but they’re still below what LeBron and the superstars would get in an uncapped system. I get that most pro unions favor the veterans and superstars and big free agent paydays which they think set the market, but the MLB seems really tilted in a more extreme way than the NBA (the NFL with non-guaranteed contracts and short career durations is a bit apples and oranges). And in both of those leagues a salary cap actually works to the aggregate benefit of the players as a whole. It seems strange that MLBPA is so stuck on “no salary cap,” to the ultimate detriment of their members as a whole (and to prospective members who get stuck into the same system when they get drafted/signed). The arbitration trap is just another wrinkle on it.
The prior reply addresses this, but: the max contract system absolutely ensures the top tier players are underpaid. 538’s analysis has the superstar contracts in the $300-400M/5 year range, were the max salary not instituted. The NBA fulfills your distribution ideal more than any other league.
Plus it has the *incredibly* unusual tendency to give individual players a really effective bully pulpit. It’s been used to great effect by LeBron in shaping the Cavs’ roster decisions, and it’s influence he wouldn’t be able to wield if he signed a contract that paid him what he was ‘worth,’ in a surplus value sense.
Good point, and hard to understand since the middle class of baseball players vastly outnumber the elite few. Sure, many of the middle class players feel that they’re on the brink of elite and want to get PAID when they cross into that upper echelon, but still, it’s banking on becoming the 1%, rather than having a more lucrative piece of the pie for the actual talent you have.
It’s a democratic process; you’d figure the middle class would have the numbers on this.
Agree with all the points raised. But not with the notion that collective bargaining arbitration is the solution. The interests of MLBPA simply do not align well with the things that are undervalued in either arbitration or the minors or among marginal players (eg non-closing relievers). MLBPA will always favor veterans and old player skills. And there is zero possibility that younger players/skills will ever be fairly valued as long as the anti-trust exemption is in place. This is Monopoly101 – with the owners/teams and key players (ie owners recognize that no one goes to games to watch them own) splitting up the rent at the expenses of taxpayers/fans/kids/minors.
Absent that change, the best opportunity is that a couple of teams arbitrage the things you point out – and succeed at it.
Nope. The MLBPA will have to adjust, as owners continue to be less likely to sign vets to lucrative long-term contracts.
Who are these arbiters? And shouldn’t both sides be presenting their case? I don’t understand why they all value/devalue the same things. Does the MLB/MLBPA use the same small group of individuals for each case every year?
Because they care more about what similar players got in the past than anything else, and what they used to value those past players was old stats.
Imagine if every arbitration hearing had to re-litigate the very legitimacy of advanced stats. Imagine if every time Keirmaier or a similar player entered the room, his agent had to explain what UZR was and what WAR was and how to properly fold UZR into WAR and so on. Then the team would just say “this guy with this many homers and RBI was paid this much so you should pay Keirmaier this much.” I don’t think the arbitrator is someone who has much time to evaluate the whole of sabermetrics, they are just following an existing process, one which has never considered UZR.
If there was a strong precedent of paying players based on WAR, then arbitrators would be able to say “this player with X WAR got Y so we will give you Z because your WAR is ###”, but there is no such precedent. I imagine it is very hard to get an arbitrator to break precedent and set a new one, which is probably why the process was bargained this way to begin with – it allows for less variation in salaries, something that both sides of the CBA probably agreed on. After all, players want to know what they will be paid and teams want to know how much they will have to pay.
From the collective player’s perspective, there’s nothing “wrong” with arbitration valuing the wrong skills as someone is still getting paid. Yeah, it’s not fair that Carter gets rewarded for homers when he does nothing else while Kiermaier gets screwed, but some player is still benefiting from the arrangement.
The problem from the collective-player perspective is that arbitration is valuing things very different than teams do when constructing a roster. So while Kiermaier and Betances get screwed, the Brewers non-tender Carter and neither of them gets the nice payday. So if you’re good at advanced stuff but not homers you are underpaid, and if you’re good at homers but bad at advanced stuff you get cut.
You would think the owners would have some incentive to address this because home runs are on the upswing, but they probably save so much money by not paying Kiermaier and Betances for their dominance that they’ll never bring it up first.
“there’s nothing “wrong” with arbitration valuing the wrong skills as someone is still getting paid”
You touch on this later in your post, but that’s not entirely true because you see a player like carter just get cut and instead of getting the 8.5ish through arbitration he only got 3.5.
Did you not read the article?
Dave clearly shows how the owners’ option value ensures that it doesn’t even out: Chris Carter doesn’t get paid – he gets non-tendered.
The is finance 101: any volatility or variation benefits the option-holder. MLB is an option-holder because they have the option to non-tender (or release without much liability) any overvalued player while capturing the full benefit of any undervalued player.
Doesn’t sadtrombone say that? I’m confused.
He said it but doesn’t seem to fully understand the consequences.
You know, I thought Dave didn’t clearly spell this out in the article, but re-reading it I am clearly wrong. Will edit post.
But if you’re good at homers but bad at advanced stuff, you get cut… and then you’re also underpaid since $0 is less than you’re worth. So overall, people are underpaid. And THAT is clearly not in MLBPA’s interests.
This is a very good piece. MLBPA has bought into the wrong framework: pay your dues for six years and be undervalued in order to score big when you hit free agency. The problem is now threefold: 1.The arbitration system is a slave to outdated stats that produced historical precedent. 2. The teams have enormous leverage with the player’s service time–a couple of months can make for many millions or even tens of millions. 3. Six years to FA (really seven, after the teams fool with it) is just too long for many players to be able to realize good value–and they know it, which is why they sign extensions like this. MLBPA should have negotiated higher ML minimums and changes to service time. As to fixing arbitration, that’s an education problem as much as anything, but if you deal with minimums and service time, you can at least raise the bar a bit. Keirmaier did what was right for him–you can’t blame him.
“But the fact that this was the deal Kiermaier had to take to get early-career financial security is a stain on the MLBPA’s willingness to let arbitration continue… ”
Oh come on. The one-year arb number was $2.9 million.
For most of us, $2.9 million would give us financial security…
Oh come on, the Tampa Bay Rays are estimated to be worth $650M. For most of us, $650M would give us financial security.
“Hey, every baseball player ever: since $2.9 million is a comfortable number to live on, we’re capping everyone’s salary at $2.9 million. BE HAPPY DAMMIT.”
Haha! Yeah, that’s so funny! $2.9M is a lot of money. I get sooo little money, and I’m a disabled army vet! I wish people would stand up for me and say that $2.9M is too “little” for me! GO USA!
Castro was 22 when he signed his extension. Bruce was 23. Kiermaier is 26. These are not comparable contracts.
Hey, you want a comparable contract? Try Andrew McCutchen, 26 years old with 3 years and 12.4 WAR when he signed for 51.5M/6 yrs with a team option. That’s exhibit A on how quickly superstar outfielders can fade at age 30. Risk isn’t free and Kiermaier is absolutely being treated like potential future superstars with comparable service time, and what’s that saying about paying for past performance vs paying for future performance? Change the title to “Kevin Kiermaier gets the Andrew McCutchen contract”, see how the narrative changes.
Also, I don’t want to be anal about typographical errors, but please, at least make sure you spell his name right in the title.
McCutchen wasn’t a Super Two, and you can’t compare the expected arbitration payouts (and thus, contracts that cover primarily arbitration years) for guys who get 4 trips through arbitration versus guys who get 3 raises. And age is not a factor, at all, in arbitration hearings.
Age may not have anything to do with the arbitration hearings, but it certainly will have something to do with both the team and the player being willing to sign an extension. The younger player will get a better extension for the same performance because:
1. They are more likely to improve, meaning the team has to pay them more in future arbitration years.
2. The free agency years being bought out are going to be at lower ages, so likely leading to bigger paydays for the players.
3. The older player is likely to be more risk averse since even in many of the bad outcome cases, the younger player will still make some money in free agency since they will be 25.
Age might not be a DIRECT factor in arbitration hearings, but age is a factor in performance, and performance is a factor in arbitration hearings. This is even more true for FA (as age is a direct factor there as well).
The original commenter has a point here. Obviously Kiermaier is signing for well under market value, but you absolutely cannot ignore age.
Kiermaier isn’t going through arbitration, he’s signing an extension and he’s being compared to other players who signed extensions. This article is talking about how he’s purportedly signed a cheap extension. Age is EVERYTHING when signing long-term extensions. Teams are much more willing to go year-to-year with older players than to sign them to long-term contracts and older players have much less leverage when discussing pre-FA extensions.
So Kiermaier is a super two. Kiermaier’s contract buys out 4 arbitration years and 2 free agent years. McCutchen’s contract buys out 3 arbitration years and 3 free agent years. If anything, McCutchen gave up more value.
The article is trying to create a narrative that Kiermaier signed for cheap because his skills aren’t valued in arbitration. There is no evidence that he signed for any less than the best players with similar service time. According to this article, it’s the second biggest Super Two extension in recent years, the biggest in per-year value, over much younger players who at the time were expected to be future All-Stars, and blows Enciarte’s out of the water. It edges out a similar 6-year extension by Andrew McCutchen, a superstar who was widely regarded as the most promising young center fielder at the time, while giving up less in replacing a free agent year with an arbitration year. He has absolutely signed a contract fitting of his past production, by the Rays no less, while presenting greater uncertainty regarding future production because of age and volatility of defensive value. When he reaches free agency, he would have made much more than someone like Chris Carter. Non-tenders and extensions are part of the arbitration system too and you can’t just dismiss them.
McCutchen’s contract was who Bob Nightengale compared it to:
https://twitter.com/BNightengale/status/841864631828250628
It IS a factor in extensions, which is what you were comparing with the table above.
But Dave, arbitration wasn’t the only issue in that table comparing Castro’s and Kiermaier’s deals. Age is a big factor in projecting 7 years out: Castro signed for age 23-29, Kiermaier for 27-33 (assuming an option year). Other things being equal, Castro’s age range is much preferable when estimating the value of the 3 FA years they sold. The FA years in Castro’s deal were age 27-29, while Kiermaier’s are 31-33. That’s a huge difference, especially when the older guy’s biggest value is CF defense, which ages poorly after 30.
(Edit: Now I see MichaelD made the same points, and more. Kudos, MichaelD.)
Is there non-anecdotal, empirical evidence that this is true?
“a significant portion of their union is being systematically underpaid, with teams now circumventing the offsetting overpays.”
IMO it seems that the article above offers only 2-3 anecdotal examples to support the following sweeping conclusion:
“Because in 2016 and 2017, the evidence suggests that it isn’t all coming out in the wash”
Where’s the evidence?
Is it really a concern that “the union’s plan for having free agents lift the bar for all other players takes another hit.” ? – and if this is a concern, where is the non-anecdotal evidence that this is actually happening?
We have no relationship with Fox. The entirety of our agreement with ESPN is that we provide them three articles per week for them to run on ESPN Insider; they have no (and never have had any) say over anything published on FanGraphs.
Stop believing that everything you don’t agree with is a conspiracy.
I’m going to have to assume the original comment was heavily edited otherwise I am very confused.
Yeah, he took out the parts where he said we were in bed with Fox and Disney to carry a liberal agenda.
I was pretty sure you were outright Commies pretending to love the national pastime as a way of gathering all our email addresses.
Damn, he’s on to us. Abort! Abort!
“Yeah, he took out the parts where he said we were in bed with Fox and Disney to carry a liberal agenda.”
Ah, so it’s FANGRAPHS’ fault there’s a gay scene in the new Beauty and the Beast movie.
So, when millionaires do business with billionaires, it is a liberal communist position to side with the millionaires. Hm.
HA! Anyone got a screengrab, would love to see the original
It was edited. It contained a rambling conspiracy theory about how FG takes orders from agents, the union, ESPN, and Fox.
It wasn’t very coherent.
Ok, that makes sense then. I have to admit I read through his comment, then dave’s response, then had to read the original comment twice more to see what the heck I was missing.
If I am understanding you correctly, you seem to be saying that there is no real evidence for a predetermined conspiracy to screw the younger members of the union out of money, in favor of giving more old-timey members more money.
I agree that it is a sweeping conclusion, and the “evidence” provided in the article is more circumstantial/anecdotal, and it does kind of come off as an emotional pleading to the audience and kind of desperate. Thanks for that input, cause you tell you the truth, I was kind of leaning the other way till I read some of the comments. LOL! Thanks!
The Rays are my favorite team and Kevin is my favorite player. I feel nothing but elation over this extension. The Rays get a great player for another 6-7 years at a bargain price and Kevin is guaranteed more money than any sane person would spend in a lifetime even if he’s never able to play in another game.
Sometimes life is grand.
Since the Rays are getting such a bargain are your ticket prices reduced for the next 6-7 years? Or is the wall street banker just putting more cash in his pocket? I feel nothing but elation when wall street bankers take more cash from my pocket and put it in their offshore bank accounts too.
Pretty meaningless comment here, but Danny Winkler (now goes by Daniel) did make the big leagues with the Braves. He broke his elbow throwing a pitch last year – it was very gross. Hope he makes it back. Anyway just thought it was interesting that a small JC team produced 2 MLB players.
In a roundabout way, exploiting this inefficiency could lead to opportunities for players that simply didn’t exist a few years ago. Teams may be more inclined to target high defense/low offense players to suppress costs via arbitration and eventually, free agency. These players may also be fast-tracked to the big leagues over sluggers. Two players that contribute similar value to choose from, I’ll take the one that will cost less.
In the end, the defensively minded player may not make as much money but they could have more opportunities. I suspect, for many players, that is a trade-off they would take.
It’s a zero-sum game though. There are only so many MLB roster spots. If teams use this to bargain players down all that’ll happen is, in the aggregate, player salaries will be depressed.
According to the theory, it is a zero-sum game for the players as a whole, not for certain types of players. But I also don’t think we would notice any effect beyond the additional value teams are *already* putting on defensive players.
I would be blown away if a GM decided to go all-in on defense at draft/trade time to keep down arb costs. They’re more likely to just trade them at arb time to get more prospects (like the A’s do).
Whenever I see contracts like this where a player is clearly selling himself for less than he is worth, I always imagine teams using Grady Sizemore as the horror story to get the player to sign. Even if you are performing at MVP level pre-arbitration, you can potentially get hurt and be unemployable once you reach your FA years. It has to be really hard not to just take the guaranteed money, even if you know you could potentially be worth more. Everyone has a different level of risk aversion, and if playing it safe is accepting $53 million I know I would be just taking the money in that situation.
I imagine Kiermaier’s injury last year led him to sign this kind of contract. A sort of “just in case” signing.
I wonder about that: he had a freak injury in an arbitration season, but still recovered fantastically and still got reasonably paid as far as super twos go (yeah, he definitely got underpaid relative to his talents, but it’s still rare for a player who only plays 105 games to do so well).
If anything it seems like a case of “well, a really bad thing happened and I’m still alright, maybe I should risk year-to-year”
After reading this, I looked it up, Siezmore had contracts for 10m after his Indians extension ended. Some of these might not have been fully guaranteed money or prorated or something, I was too lazy to fully check. That’s obviously less than the 60+ for KK, but more than I thought he’d get post injuries. His story makes me so sad though, we all got robbed of a very exciting player.
Definitely easier to run full tilt into the wall with 50m in the bank. It benefits both sides. I’m sure the players don’t want to be playing within themselves.
Dave, I only have one nit to pick with this article.
“By taking money that should rightfully be going to legitimate stars like Kiermaier and giving it to one-trick ponies like Carter…”
Arbitration didn’t do that. Carter, as you mentioned, got non-tendered twice, so the arbitration system didn’t line Carter’s pockets in spite of all his dingers.
Teams still have to decide that the arbitration salary of a player is below market value. For Carter, that wasn’t the case. For Kiermeier, it’s way on the other end of the spectrum. The system is broken, in a way, but teams are given an opt-out clause whereas players are not. In that sense, arbitration is doing exactly what it was intended to do.
This was the line that got me too and made me think Dave had missed something, but it turns out Dave addresses this later in the article and I just was so hung up on this part that it didn’t click he was saying it.
Defense peaks young. Very young. You’re asking the MLBPA to publicly push the notion that defense is more important, even though it is a skill that is generally absent from all of its senior members.
Baseball’s four-tiered salary structure is so peculiar and flawed that it hardly seems worth the effort to improve any one of them marginally — and if I had to pick one that most cried for justice, it would be minor-league pay.
Still, getting arbitration to update how it measures value isn’t a bad idea. But you can’t expect it to change as quickly as the free market does. Lag time is baked into the process. A shift in FA skills valuation, like Heyward’s big deal last year, or this year’s collapsed market for bat-only sluggers, is irrelevant to Kiermaier’s immediate situation.
A further complication is that when teams give long deals spanning arb and FA years, they smartly structure the pay raises to avoid a big impact on the “comparable service” pool that arbitrators can look at. So, while there are some defensive wizards who’ve gotten these deals — Andrelton Simmons, Juan Lagares — their modest pay during arb years doesn’t move the needle that much for Kiermaier.
Lastly, don’t overlook the mixed results on these deals, from the team’s point of view. Two years ago, Lagares looked much like what Kiermaier is now. But he’s had two injury years totaling 1.4 bWAR, and the Mets might be lucky to get fair value for their $20 mil in the next three. Simmons is a good player, but he’s settled into a range well below his perceived ceiling when that deal was signed. So while Kiermaier would likely earn more going year-to-year if he stayed healthy, he also might get hurt or just tail off. The record of elite defensive CFs maintaining value past 30 is ugly. So he traded some upside earnings for a nice chunk of security. I’m not sure arb values even had that much to do with it.
Kiermaier is a significantly better offensive player than Lagares at similar points in their careers, both by batting and running. I don’t think that’s a great comparison. Though I don’t discount the risk.
MLBPA does a very poor job at PR. No effort made in this area at all. Public perception needs to be altered in order for them to have leverage.
From where I sit MLBPA seems content and complacent. Zero effort to do much except to seek common ground on MLB terms, so I guess they dont care about having leverage.
Is that Clark being weak? Could players be intimidated for fear of being blackballed? The majority of players in MLBPA are non stars making near the minimum. These are the most disposable and replaceable members though and the union does not seem to care about them.
The stars with long term deals got theirs and dont want to miss a pay check. But they are a minority so why are their interests weighted more highly?
I don’t know how MLBPA dues are structured, but I’m guessing the players making the big paychecks are the ones paying the majority of MLBPA dues, and that’s why they’re the ones MLBPA cares about.
Great post, only one question. Who the hell was playing CF to push Keirmaier to RF in college?!
Maybe they didn’t have a fence in right. 😉
One more note just to say I’m sorry for amount of backlash one thought experiment is getting. I know I’ve never really read the comments before so perhaps this is usual but Jesus Christ, you’d think you pledged allegiance to the Nazis or something.
Dave,
This piece moved me. Thanks for caring
I don’t question Kiermaier’s defense. However, I do question the idea that his defense makes him one of the best players in the game. Personally, I think the two major WAR systems overvalue defense compared to offense. While they could use some work in other areas like relief pitching, I think the arbitration models are actually pretty good in this case.
Next market inefficiency: paying players what they’re worth? Obviously this is only viable for the large market clubs, but maybe if a club starts having a reputation of paying their players instead of screwing them over in arbitration/extensions, a player would be more open to discussing a deal with them. Maybe I’m way toof hopeful this happens, because really otherwise there’s no reason for the teams to NOT lowball their players like this.
This. Thanks Dave, exactly the kind of writing I keep coming back for.
I understand we’re talking MLB money here, but to see Dave use the term “pittance” when discussing $12 million per year, or even $3 million, struck me as a bit much.