March 23, 2011

Contractual Matters

Six-Figure Blues

by Jeff Euston

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With Opening Day about a week away, contract negotiations for 2011 are all but complete. There are exceptions, of course. There’s the occasional extension—the long-rumored Adrian Gonzalez deal comes to mind—and the handful of free agents still looking for work (Doug Davis, anyone?).

But the players in training camps in Florida and Arizona are now all under contract. As always, the final group to sign consisted of young players without enough major-league service time to qualify for arbitration. While free agents may shop their services to all 30 teams and arbitration-eligibles may compare their production to other players around the league, zero- to three-year players have limited negotiating leverage. For them, contract talks more closely resemble a kid asking for a raise in his allowance than a negotiation between equals at the bargaining table.

With all 30 clubs free to compensate their young players however they choose, the result is a patchwork of approaches. Several teams use statistical performance criteria to determine salaries for pre-arbitration players. One factor in the Brewers’ evaluation, for example, is the Elias Sports Bureau’s ranking of all players by position based on their performance over the past two seasons.

The Athletics, on the other hand, make things relatively simple. Last season, Oakland paid $420,000 to players with two or more years of service, $410,000 to those with one to two years, $405,000 for players with less than one year, and the $400,000 minimum for rookies with no time in the majors. The A’s allowed for one exception to the scale, paying $435,000 to one-year man Andrew Bailey, the 2009 winner of the Jackie Robinson Award as the American League’s top rookie. The Oakland roster included another outlier, reliever Edwar Ramirez, who upset the scale when he and his $427,400 salary joined the A’s in a March trade.

Salaries for most zero- to three-year players generally are not made public until Opening Day. Most clubs would prefer not to discuss financial matters at all, and not many agents are touting the relatively small six-figure salaries for their younger clients. But figures have become available for a few players. The Giants will pay $575,000 to budding star Buster Posey, who posted a WARP of 3.5 and a Total Average of .305 last season, despite not being recalled from the minors until late May. Though Posey remains 11 days shy of a full season of service, his Rookie of the Year performance was enough to put him on the salary fast track, following the path of teammate Tim Lincecum, who jumped to $650,000 in 2009 after winning the 2008 Cy Young award in his first full season.

The financial reward was not as great for Posey’s counterpart as the American League’s top rookie, however. The Rangers re-signed Neftali Feliz for $457,160—a raise of $55,160—after he won the closer’s job and posted a 2.98 SIERA in 2010.

Still, a number of young players will earn $500,000 or more in 2011. Boston’s Clay Buchholz earned a $112,000 raise to $555,000 in his final season before becoming eligible for arbitration. Red Sox reliever Daniel Bard—in line for arbitration as a Super Two at the end of the year—agreed to a $505,000 contract. The Dodgers signed Opening Day starter Clayton Kershaw for $500,000. Atlanta’s Jason Heyward re-upped for $496,500 after a 4.7 WARP performance in his first season. And Florida rewarded Chris Coghlan with a $490,000 deal, a $15,000 raise for the 2009 NL Rookie of the Year.

But inevitably, players—and their agents—are not always happy with the offer from the club. With little or no negotiating leverage, a zero- to three-year player has the choice of accepting the offer or refusing to sign and facing the prospect of his team renewing his contract at a salary the club chooses, a figure sometimes less than the original offer. March 11 marked the end of the 10-day period when clubs could unilaterally renew the contracts of any unsigned players—a right contained in Paragraph 10(a) of the Uniform Player Contract—and about a dozen players had their deals renewed this spring.

Atlanta renewed starter Tommy Hanson for about $456,000, about a five-percent raise from his 2010 salary, but $40,000 shy of Heyward. Hanson joins Arizona’s Ian Kennedy and Baltimore’s Jason Berken as players who have had their contracts unilaterally renewed for two consecutive seasons. Hanson and Kennedy both are represented by Scott Boras.

Complicating the issue this year is the increase in the minimum major-league salary, which jumps from $400,000 to $414,000 under the cost-of-living increase stipulated in the league's collective bargaining agreement. While the clubs tend to view the $14,000 increase as a significant pay raise by itself, players and their agents see the new minimum as only a starting point.

 The Marlins, for example, renewed the contracts of their starting corner outfielders for salaries at or near the 2011 minimum. Left fielder Logan Morrison spent 69 days in the big leagues last season, and the club renewed his contract for 2011 at the $414,000 minimum. Right fielder Mike Stanton, promoted by Florida in early June, was renewed at $416,000. Their four percent raises look modest compared to the seven- and eight-figure contracts flying around this winter. But it’s not bad at all in the real world—and more than a kid looking for a raise in his allowance could imagine. 

Jeff Euston is an author of Baseball Prospectus. Follow @JeffEuston
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