Today the baseball world begins the twenty day period designated for arbitration hearings. As February dawns, there are still 35 unresolved cases. If all 35 went to hearings, it would tie the record for cases in a season, set in 1986. It is still unlikely that all 35 will go to a hearing, but at this point it is likely that many will. This is just another remarkable turn in what has been a fascinating off-season.
Hearings were scheduled to start today with Tony Graffanino (current contract details) first up, but he and the Brewers came to an agreement on a $3.25 million contract on January 19. Had he made it to the room, Graffanino would have been the first free agent to have a hearing since 1981. After Graffanino, 16 hearings were scheduled to take place from February 2-9. From this group, eight remain unsigned – OF Lew Ford (current contract details), OF Austin Kearns (current contract details) (2/1 - Editor's Note: Kearns signed. Details here) , IF Freddy Sanchez (current contract details), OF Alexis Rios (current contract details), IF Justin Morneau (current contract details), C Josh Paul (current contract details), P Scott Downs (current contract details), and P Joe Beimel (current contract details). One thing to remember is that both parties have all the time in the world to finish a deal. They can agree to terms in the time before the hearing, during the hearing, and even after the hearing provided they make their announcement before the arbitrators. On a side note, there are no hearings scheduled for February 5. Working in Arizona, deciding the financial fate of the best players in baseball, and a three day weekend to sleep off that Super Bowl hangover – being an arbitrator is a pretty sweet gig!
While there is certainly a surprise in the number of cases left, there is equal surprise in the magnitude of some of the cases that remain. The Minnesota Twins, in particular, have two cases that if brought to a hearing, will serve as giant markers in the road for years to come. In IF Justin Morneau and C Joe Mauer (current contract details), the Twins have two MVP caliber players that every team in Major League Baseball is curious to see enter the room. Should the Twins win either case, they will not only save themselves a great deal of money in the players 4+ and 5+ seasons (and 3+ in Morneau’s case since he is a Super-Two player) but also figure to save teams from watching agents stretch the asking price on their sluggers.
The Twins don’t get to hog all the glory however, there are plenty more headlines to go around. IF Miguel Cabrera has the second highest filing number in history for a 3+ player, trailing only IF Albert Pujols. If he goes to a hearing, he could help set a precedent for corner players for years to come that Pujols did not however, as Pujols signed a multi-year deal in lieu of entering a hearing. Second, there is IF Freddy Sanchez. All he did in 2006 was win the National League batting crown, not too shabby. Then there is P Carlos Zambrano, who is guaranteed to get the highest arbitration award ever if he and the Cubs enter a hearing. Alfonso Soriano currently holds the bar with his $10 million award in 2006. However, the Cubs filing mark of $11,025,000 is higher than that, and that is the minimum Zambrano will earn if he enters a hearing. In years past, we would also be pontificating on the importance of cases like P Brett Myers, IF Brian Roberts (current contract details) (2/1 - Editor's Note: Roberts signed. Details here), P Aaron Harang, and P Chad Cordero. This year, they are almost lost in the shuffle.
Of course, many cases for players with zero to six years service time have been settled already. To start, there are the 22 players who were placed in the clearance bin – non-tendered, waived, released, or in the case of P Danys Baez, the recipient of a fantastic clause that made him a free agent a year early. Next, there are the 90 players who came to terms with their teams prior to the exchange deadline. As is almost always the case, most of them received a goodly raise, with an average bump of 64% over their 2006 salary (it should be noted that 2006 salaries for P Kyle Snyder, P Dave Borkowski, and P Rick Bauer were unavailable, so their salaries are not included in the 64% calculation). Of this group, only four players will actually receive a lower salary in 2007 than they did in 2006 – P John Parrish (-6%), P Dave Williams (-20%), C Jason Phillips (-9%), and 1B Lyle Overbay (-47%). However, Overbay doesn’t fit neatly in this group since he signed a four year deal that was heavily back loaded. His deal called for salaries of $380K, and then $5.8, $7, and $7 million respectively, with a $3.8 million signing bonus that is prorated across each season evenly. If you took the Average Annual Value (AAV) of Overbay’s deal, he would actually be receiving a 138% raise.
On the other side of the ledger, 13 of the 90 who settled before exchanging terms received more than a 200% bump in salary. Of the 13, 11 were 2+ or 3+ players, exactly the type of player who generally receives the largest percentage raise. The ten highest percentage raises came to 2+ or 3+ players, with OF Matt Holliday (780%), P Nate Robertson (710%), P Mike Gonzalez (577%), P Jose Valverde (457%), and IF Khalil Greene (456%) leading the way. Again, there are some multi-year deals obscuring the real gains here. For instance, P Jeremy Bonderman technically gets a 96% raise, but he is only receiving $4.5 million from his four year, $38 million deal in 2007. Using his AAV number of $9.5 million, his percentage raise jumps to 313%. This is seen, albeit on a much, much smaller scale, in the multiyear deals for P Mike MacDougal, P Will Ohman, C Dave Ross, IF Jamey Carroll, P Fernando Rodney, IF Brandon Inge, IF Robb Quinlan, and P Randy Flores.
This leaves only the 20 players who went through the process of exchanging figures, but agreed to terms before a hearing. This group has fared slightly better to date, with the 20 players receiving an average raise of 68% as compared to the 64% for those who settled before exchanging numbers. Of course, this figure could change in the coming days, as some of the remaining 35 players inevitably reach accords with their clubs. When looking at players who have exchanged figures with their teams, it is usually instructive to focus on the “midpoint”, which is the halfway mark between the player’s filing number and that of the team. For instance, Doug Davis and his agent filed at $7,500,000 and the Diamondbacks filed at $5,250,000, creating a midpoint of $6,375,000. Of this 20 player group, only two received a figure above the midpoint, with 12 cases settled below the midpoint and six coming in exactly at the midpoint. Finally, only two players in this group – Mark Prior and Jody Gerut – will receive lower salaries in 2007 than 2006. Given that Prior only pitched 43 2/3 innings and Gerut missed the 2006 season entirely, this isn’t a big surprise.
The big story of this group of course, is Chase Utley’s seven year, $85 million contract extension. Utley’s contract breaks down thusly:
Bonus: $2 mil (prorate $285,714 across each season)
Year Serv Salary
2007: 3+ $4.5 mil
2008: 4+ $7.5 mil
2009: 5+ $11 mil
2010: FA $15 mil
2011: FA $15 mil
2012: FA $15 mil
2013: FA $15 mil
Total: $85 million
Looking at the deal, we see that the salary for Utley’s 3-5 seasons are in line with the two most recent landmark middle infielder cases – Alfonso Soriano and Derek Jeter:
Player 3+ Year 3+ Salary 4+ Salary 5+ Salary
Utley 2007 $4,785,714* $7,785,714* $11,285,714*
Soriano 2004 $5,400,000 $7,500,000 $10,000,000
Jeter 1999 $5,000,000 $10,000,000 $12,600,000*
* Salary has prorated signing bonus built into total
It is clear from this chart that the Phillies consider Utley one of the absolute best middle infielders in the game today, and there really isn’t much to dispute that notion. By taking it a step further and covering his first four free agent seasons as well, the Phillies have essentially made Utley the face of the franchise. As a player with few flaws and a game that should age much better than infield partner Ryan Howard, there is no finer candidate in Philly. However, deals that extend past a fourth year often serve better as cautionary tales than shining beacons of management brilliance. And while the free agent market exploded in general this off-season, the second base market didn’t percolate quite as loudly. Only three free agent second sackers – Mark DeRosa, Adam Kennedy, and Ray Durham – received multi-year contracts. And while Utley’s production compares to Soriano in his arbitration years when Soriano was being paid for his time at the keystone, Soriano’s free agent contract should not be used as a basis of comparison for Utley. Finally, there is the market correction that will occur next off-season when teams find they are not as awash in cash as they thought they were. When looked at through those prisms, the back end of Utley’s deal looks a bit more questionable. However, if there is a player to take the gamble on, Chase Utley would be on the short list. If nothing else, the public relations and ticket sales boon the Phillies should get will help soften the blow in the short-term.
2006 was a historic season for Major League Baseball. It saw a second consecutive Collective Bargaining Agreement successfully negotiated without a strike. It saw the signing of a seven year television contract with FOX and TBS that will boost its national TV revenue by almost 20 percent. It saw one club open a new ballpark while five others secured deals for their new ballparks. It saw two teams rich in history reach the World Series. Finally, the off-season saw three players become $100 million men, a total topped only in the 2000-2001 off-season. 2007 has kicked off with a bang as well. MLB is poised to announce a polarizing deal with DirecTV for the rights to its Extra Innings package, and the long rumored Baseball Channel may finally come to fruition. And now there could be a record tying number of arbitration hearings. In just 20 short days, we could have seen some decisions that will affect the landscape of baseball for years to come, with no shortage of landmark cases still on the docket. Added together, it truly is an exciting time for MLB, and one can only hope that excitement continues on into 2007.
Paul Swydan is a contributing writer for Biz of Baseball.com. He can be contacted through our Author Profiles page.