February 2014

How Clubs Determine Pre-Arbitration Salaries

Earlier this month, MLBTR's Tim Dierkes learned that the Rockies have employed an unusual pre-arbitration pay scale.  As you might expect, agents are less than thrilled with the system in which Colorado pays a league-minimum $500K for players with between zero and one year of service, then bumps that up by just $1K for each additional service year before arbitration.  The pay scale is unique in that it offers only a minute bump over the minimum and doesn't factor in performance.  However, after speaking with a number of agents and baseball officials around the league, it's clear that the Rockies are far from alone when it comes to having a rigid pay scale for players with three or less years of experience, even if theirs is less generous than others.

"I'd say about two-thirds of baseball is using some kind of formula for that," one experienced agent told MLBTR. "Every system is different.  The Indians, for example, take a very sabermetric approach to it to be a little more scientific.  Others will be more about service time.  On one hand, those systems allow you to say to your client, 'This is why arbitration is so valuable, because you can let a third party sort it out objectively.'  Of course, you can't really compare an average player with a couple years of experience to a guy with less that made the All-Star team, so I have mixed feelings about it."

Many agents mentioned the Rays as a club with a similar "sabermetric" approach to calculating pre-arbitration salaries and it's believed both teams have been using that formula for several years now.  The Brewers use something similar to Tampa Bay and Cleveland, a "dumbed down" version of the sabermetric formula, as one agent put it.  Other teams, like the aforementioned Rockies, have a simpler method.  MLBTR's own Steve Adams learned that as recently as 2013, the Astros used the same basic formula as Colorado – players with 0-1 years experience would get the minimum salary ($490K at the time) with a $1K bump for each year.  Players could earn more by making the All-Star team (+$5K), being named organizational player/pitcher of the year (+$1K), and playing time in the previous year, calculated with the following formula:

Position Players: (PA/650)*$10K

Pitchers: The greater of: 1. (GS/33)*$10K 2. (G/75)*$10K 3. (IP/200)*$10,000

Houston's system came with two interesting wrinkles.  Agents were told that no player will be offered a pay cut from the salary they earned on a major league deal signed with the Astros in the previous year, an obvious plus for players and agents.  On the flipside, any player who would reject the offer and opt instead for renewal would get $5K less than the calculated scale amount (or the minimum, if the $5K penalty dipped below that point).  One player, Justin Maxwell, wound up getting his contract renewed by Houston at $492,500, just above the major league minimum of $490K.  The Astros, citing club policy, declined to comment on their pay scale.

One baseball source told MLBTR that even though the Rockies' pay scale has gotten a great deal of attention this offseason, they've been using it for the last three winters.  Even prior to that, they were using a system that was rather similar and also based on service time.  Any extra money given beyond the minimum was dictated by the raise in the league minimum from the previous year.  In the case of this offsesaon, the $1K increase reflected the healthy $10K boost in the minimum.

While agents may not be doing cartwheels over a $1K raise from year to year, there are instances in which nearly all of a club's pre-arb players will earn the league minimum, as was the case with the Marlins in 2012.  That year year saw a drastic spike in the league minimum salary from $414K to $480K, however, so the players received a notable bump nonetheless (and in some cases more, as evidenced by Chris Coghlan's $500K salary).  An executive with one club who uses a modest pay scale told MLBTR that their reasoning is rather simple.

"The thought process from our perspective always been to try and be consistent as possible," the exec said.  "The [Collective Bargaining Agreement] dictates a minimum, now $500K, for these guys.  The philosophical question is, what benefit do you get from paying them significantly above that, or even a dollar above that?  

"It's the one time in the process that the club has the edge, if you will.  We always tried to be consistent and objective and we don't want to have to try and figure out which player is more valuable than another or whether a first baseman is worth more than a relief pitcher…arbitration is all about comps, free agency is just market value, if we didn't have a pay scale, we'd effectively be choosing one of our players over another and we don't want to do that.

The exec went on to say that virtually every agent has complained about his club's pay scale and he understands their frustrations since it's the one time in the process they don't get to negotiate their client's salary.  However, even though agents don't like the system, he says there have yet to be any negative consequences for it.  He believes that it's partially because the scale promotes consistency.  One American League executive whose club uses an "objective and subjective" method for coming up with salaries and is "in the middle of the pack" in terms of pre-arb player compensation supported that notion, saying that agents will typically protest more over how their client is paid compared to his teammates rather than the actual dollar amount.  

The other reason that the official from the modest pay scale doesn't fear any sort of retribution is because agents will approach arbitration and free agency the same way regardless of how their client is paid within the first three years.  The official used an example that came up numerous times in conversations with other executives and agents – Ryan Howard's $900K deal with the Phillies in his final year before arbitration.  The Phillies gave their star slugger more than double their obligation, but it obviously didn't buy them a loyalty discount through the arbitration process.  General Manager Pat Gillick & Co. offered $7MM, Howard's camp countered at $10MM, and the first baseman walked away with the the largest first-time arbitration salary ever.  That could be of some comfort to the Angels, who took a good deal of heat from fans and the agent for Mike Trout after they opted to pay their star outfielder just $20K over minimum last year.  In short, you'd be hard-pressed to find someone in baseball to bet on Craig Landis taking it easy on the Halos in their current contract talks if his client had received another $50-$100K a year ago.

It's worth noting there is at least one documented instance of a player taking his hard feelings into the arbitration process.  Outfielder Cody Ross told Ken Rosenthal and Jon Paul Morosi of FOX Sports in 2012 that his previous low pay was "one of the main reasons" why he went to a hearing with the Fish in 2010.  Ross won his case, coming home with $4.45MM instead of the $4.2MM he was offered.  However, that doesn't appear to be the norm.  In conversations with MLBTR, agents admitted that even in instances where they feel their client is underpaid in the pre-arb years, it doesn't affect how they approach arbitration or free agency since they're always pushing for top dollar no matter what.  Baseball people also say that while they have seen pre-arb pay come up in hearings, there is no evidence that it factors into the arbitrator's decision.

That could help explain why most clubs have opted to use rigid formulas rather than dole out significantly more money than required.  One high-ranking executive with a club that negotiates pre-arb pay with agents acknowledges that players won't take it easy on teams in arb hearings over the extra money, but he believes that it makes for a stronger relationship with the players.  

"Players will pass judgment on how a club treats them relative to anything and everything," said the National League executive.  "They'll think about how a club treats them when it comes to their family, travel, their contract, tickets…clubs are constantly being evaluated by players, justifiably, and every club can choose where they want to be evaluated well and where they're prepared to take a hit."

While that exec didn't like the notion of clubs giving their pre-arb players a near-minimum salary, he admitted that he understood the allure.  The up-front savings, even if they're not significant, are a nice perk.  On top of that, it's also less time-consuming to send an agent a dollar figure and say, "take it or leave it."   "I couldn't imagine how much longer it would all take if we were negotiating with every player," said one executive with a pay scale club.   

The player-friendly notion of negotiating appears to be going out of style throughout baseball.  "Most clubs, if they don't have a strict formula where you input the service time and certain numbers based on performance, they at last have some basic parameters in place versus 'Hey, this is what we feel like paying you,'" one exec said.  While negotiating pre-arb pay might make a player happier in the short-term, it seems that many clubs would rather expedite the process, and perhaps save a few dollars, with a pay scale.

This article was originally published on February 26th.


NL Notes: Padres, Minicozzi, Dodgers, Hannahan

MLB.com's Corey Brock brought readers into the dugout for some game action in an interesting read today. Receiving permission to camp out with the Padres during their game Thursday, Brock observed a number of inside snippets. For instance, infielder Stephen Carmon, who came over from minor league camp as depth and did not play, enjoyed a peaceful afternoon chatting with some veterans and sampling the wide variety of sunflower seed flavors made available. 

Here are a few notes from around baseball:

  • In another great story out of the NL West, Alex Pavloic of the San Jose Mercury News tells how 31-year-old Mark Minicozzi took an improbable path — around the world, through multiple injuries, and over multiple years — to rejoining the Giants. He left the organization after 2007, only to come back in 2012. Last year, he homered in his first Spring Training at-bat with the big club after coming over from the minor-league side for a road trip. This year, he earned his first non-roster invitation, and had his first ever start today. In his first trip to the plate, he swatted another long ball. Though Minicozzi still has many obstacles to overcome to reach a regular-season MLB game, his tale is testament to the power of perseverance and positive thinking.
  • The second base position for the Dodgers is now a "full-blown tryout camp," reports MLB.com's Ken Gurnick. Major offseason acquisition Alex Guerrero continues to try to learn second while adapting to the pace of the big league game, and Gurnick says it seems as if he'll start off in Triple-A. Though Dee Gordon is the other player that the team would like to see emerge, he too has not separated himself from a pack that includes Brendan Harris, Chone Figgins, Justin Turner, and Miguel Rojas.
  • Infielder Jack Hannahan has not yet appeared in full spring action for the Reds because he underwent offseason surgery to repair a torn labrum, reports MLB.com's Mark Sheldon. Hannahan struggled mightily last year, but was apparently playing through the injury the entire time. The 33-year-old is in the final guaranteed year of a two-year, $4MM deal that comes with a $4MM club option for next season.

Phillies Notes: Wetzler, Starters, Kendrick

The ultimate lesson of the Phillies-Ben Wetzler affair, writes Baseball America's Aaron Fitt, is that leverage has shifted too far in favor of MLB teams in the amateur draft. Teams generally force quick (albeit legally non-binding) decisions by players on draft night, pressuring them to agree to accept below-slot deals. "The NCAA is going out there saying basically, don't get an advisor," an agent tells Fitt. "Meanwhile, MLB has changed the rules to where advisors are more necessary than ever." And now, Philadelphia's reporting (and the NCAA's suspension) of Wetzler for utilizing an agent adds a stick to the carrot of bonus money and the pressure of the short decision-making timeframe. Needless to say, Fitt advocates for a change to the system.

Here's more out of Philadelphia:

  • Shoulder issues are putting an early strain on the Phils' pitching depth, reports Matt Gelb of the Philadelphia Inquirer. Having already seen prospect Adam Morgan go under the knife, Philadelphia is now monitoring young pitchers Jonathan Pettibone (who threw a pen session after getting a cortisone shot for a lingering shoulder problem) and Ethan Martin (who took an MRI because he was dealing with pain and working well under peak velocity). It is worth noting that the team also lost a potentially valuable rotation depth piece when it waived Chad Gaudin over medical concerns.
  • GM Ruben Amaro Jr. said that the injuries were not explainable, other than the fact that, "sometimes anatomy is just anatomy," reports CSNPhilly.com's Jim Salisbury. Noting that the organization had "one of the most state-of-the-art, medically sound organizations in baseball," Amaro indicated that the cluster of issues was plain bad luck. "You can't do anything about it, other than try to prevent it," said Amaro. "If the guy breaks, he breaks."
  • One starting pitcher without apparent physical issue is Kyle Kendrick, who is entering his last season before reaching free agency. As Gelb reports, the 29-year-old righty says that this offseason's free agent spending spree — which included some sizeable deals for durable, mid-rotation arms — provided added motivation. "When similar guys close to your numbers sign those deals, that's a good thing," he said. " … Obviously you see them and you just want to put up better numbers." Though Kendrick hopes to remain in Philadelphia, he says, he has not had any talks with the club about a multi-year deal. 


Minor Moves: Steve Edlefsen, Todd Glaesmann

Here are today's minor moves:

  • The Dodgers have inked 28-year-old righty Steve Edlefsen to a minor league deal after holding a recent tryout, reports MLB.com's Ken Gurnick. Edlefsen had spent his entire career with the Giants, and saw 26 2/3 innings of MLB work between 2011-12, posting a 6.75 ERA in that span. He struggled last year at Triple-A, throwing 53 innings and allowing a 6.28 ERA as his walk-rate skyrocketed to 7.6 BB/9.
  • Minor league outfielder Todd Glaesmann of the Diamondbacks has been placed on the voluntary retired list, tweets Matt Eddy of Baseball America. A third round pick back in 2009, the 23-year-old Glaesmann was the player to be named later in the three-team deal that sent Heath Bell and Ryan Hanigan to the Rays, David Holmberg to the Reds, and Justin Choate to the Diamondbacks. Curiously, Arizona GM Kevin Towers said at the time of the deal that the PTBNL (who turned out to be Glaesmann) was the key personnel piece from his team's perspective, although money saved by moving Bell no doubt was a significant motivator.
  • Three players are suspended in DFA limbo, per MLBTR's DFA Tracker: Andy Parrino (Athletics), Chase D'Arnaud (Pirates), and Justin Sellers (Dodgers). 

AL Central Notes: Sano, Masterson, Scherzer

Here are a couple of bullets relating to the American League Central:

  • Consensus top-five overall prospect Miguel Sano of the Twins is headed for an MRI after suffering an injury to his throwing elbow. His agent, Rob Plummer, tells Mike Berardino of the St. Paul Pioneer Press that he fears the worst — a torn UCL — although he makes clear that nothing is yet known for certain. Rehab is always an option, though club and player had already considered Tommy John surgery after Sano strained the ligament over the winter. The health of Sano's elbow could have quite a significant impact on his future value, not just due to possible delays in his development, but because some already believe he will not be able to man the hot corner at the MLB level.
  • Though Justin Masterson said yesterday that he thinks he'll ultimately reach agreement to extend his stay with the Indians, Peter Gammons of GammonsDaily.com says that may be hard to reach in reality. A GM told Gammons that the two top starters most likely to be truly available on the open market are Masterson and James Shields. Looking ahead to the potential payday he could land, suggests Gammons, Masterson may be forced to choose between playing in Cleveland and earning market value.
  • The GM that Gammons spoke thought it likely that Max Scherzer would stay with the Tigers. But while the club has reached massive extensions with superstars like Justin Verlander and Miguel Cabrera, negotiating a new pact with Scherzer will be most difficult of all, writes Jon Heyman of CBSSports.com. In large part, says Heyman, that fact is driven not only by Scherzer's skyrocketing value, but also his own "cool business stance" towards his next new deal. Detroit has played its part by agreeing to a record arbitration raise with Scherzer and clearing space for a new deal through several big offseason deals. But Heyman says that the reigning AL Cy Young winner has his sights set on matching — or even exceeding — the kinds of guarantees achieved by Clayton Kershaw and Justin Verlander in recent years.

AL East Notes: Barlow, Lester, Lackey, Rasmus

The Orioles organization suffered a major loss today, as PR director Monica Pence Barlow passed away at just 36 years of age after a long battle with cancer. As this morning's outpouring reveals, Barlow was an inspiration to those who knew her. Among the many writers impacted by the loss was MASNsports.com's Roch Kubatko, who offers a tribute: "Whenever someone would ask, 'Why you?,' Monica would reply, 'Why not?' Pretty much says it all, doesn't it?"

As MLBTR joins in offering its condolences, here are some notes from around the American League East:

  • Sam and Seth Levinson, the agents for Jon Lester and several other Red Sox players, have arrived in Fort Myers, reports WEEI.com's Rob Bradford. It is not yet known whether they will engage in talks with GM Ben Cherington regarding a new deal for Lester, but Cherington has made clear that he would to keep negotiations to the spring.
  • Fellow Sox starter John Lackey says he is not worried about the fact that he'll be subject to a league-minimum club option net year, writes Bradford"It's different," said Lackey. "There will be some things I will have to think about, for sure." But he says he isn't worried about that now. "I haven't even gotten to that point of thinking that far ahead," Lackey said. "We'll play this year out and see what happens. I'm not worried about the money. I've made plenty of that."
  • Blue Jays center fielder Colby Rasmus is entering his walk year, but he says he'll join Lackey in focusing on the present, reports Shi Davidi of Sportsnet.ca"I haven't thought about it at all," said Rasmus. "For me, it's all about right now, and next year don't matter." After a turnaround 2013 season that restored some of his earlier luster, the 27-year-old Rasmus could play his way into (or out of) a big contract.

AL West Notes: Walker, Mariners, Blanton, Fielder

The Mariners announced today that Taijuan Walker will be shut down for the next week due to shoulder inflammation. It's a precautionary move, it would seem, based on manager Lloyd McClendon's comments. Said McClendon (via the Tacoma News Tribune's Bob Dutton on Twitter): "This guy, we’re not just talking about 2014. Hopefully, we’re talking about the next 15 years." The injury doesn't appear major for the Mariners right now, but it's another reason for some concern in the wake of a finger injury to Hisashi Iwakuma. The Mariners will learn the results of his tests on that injury tomorrow. Here's more on the Mariners and the AL West…

  • Jim Bowden of ESPN and MLB Network Radio feels that the Mariners should sign both Ervin Santana and Kendrys Morales (ESPN Insider required). Bowden feels that the competitive nature of the AL East will make it too difficult for two Wild Card teams to come from that division. Assuming one Wild Card from the East, the Mariners could compete with the Rangers, Angels, Indians and Royals for the second spot, in Bowden's opinion. Adding that pair would also allow the club to hang onto Nick Franklin for the time being, allowing him to serve as a strong fallback option in the event of an infield injury.
  • The Angels aren't committed to carrying a long reliever in their bullpen, and as such they could trade or release Joe Blanton prior to Opening Day, writes Bill Shaikin of the L.A. Times. Blanton could slot into the rotation in the event of an injury or should Tyler Skaggs need further minor league time, but his contract doesn't make him a lock for the roster in Shaikin's mind.
  • Jon Paul Morosi of FOX Sports discusses Prince Fielder's impact on the Rangers' lineup as he analyzes the merit of lineup protection. Morosi also acknowledges the statistical evidence that it may be somewhat of a myth. Morosi spoke with several executives and players in his in-depth piece, with Rangers backstop J.P. Arencibia specifically stating: "Robinson Cano  is a guy that, hey, we’re going to pitch around him, bottom line," when referring to the division-rival Mariners.

NL Central Notes: Morel, Samardzija, Cubs, Lorenzen

The Pirates claimed Brent Morel off waivers because they felt they needed a better "Plan B" in the event of an injury to Pedro Alvarez, manager Clint Hurdle told Bill Brink of the Pittsburgh Post-Gazette. Pittsburgh has been following Morel since 2011 and had interest in him when he was placed on waivers in December, writes Brink. Toronto claimed him then, but Pittsburgh got their second chance this week and claimed him based on his solid defense, hands and power, said Hurdle. Morel told Brink that he's thankful for the opportunity and that, as a Steelers fan, he's excited to play in Pittsburgh.

A few more NL Central links as we await the start of the weekend…

  • Cubs ace Jeff Samardzija told Gordon Wittenmyer of the Chicago Sun-Times that trade talks don't bother him, but instead simply put a chip on his shoulder when he pitches. Wittenmyer writes that the Blue Jays and D'Backs have shown interest in Samardzija this winter, and an executive from a third team called the 29-year-old a "monster in the making." Samardzija is used to pitching in front of scouts for numerous other clubs and simply smiled as he told Wittenmyer, "You want to put on a good show for them."
  • ESPNChicago.com's Jesse Rogers took a look at the scenarios to watch in Cubs camp during Spring Training yesterday, most notably wondering if February pickup Emilio Bonifacio can supplant Darwin Barney at second base. He also examined whether or not July 2013 acquisition Mike Olt can recover from his vision issues and take the third base job from Luis Valbuena and Donnie Murphy.
  • Michael Lorenzen was a two-way player when the Reds selected him 38th overall in last year's draft, having served as an outfielder and closer for Cal State Fullerton. In a piece for Baseball America, C. Trent Rosencrans reported that the Reds have told Lorenzen he will focus on pitching, and not only that, but they value him as a starting pitcher. Lorenzen sounded pleased with the decision and has already been talking with college-closer-turned-starter Tony Cingrani in Spring Training. "I’m picking his brain," Lorenzen told Rosencrans. "We’ve been in the same situation as a college guy moving quick. He’s been really good with me."

Orioles Release Chris Jones

FRIDAY: The Orioles have released Jones, according to the team's transactions page.

MONDAY: The Orioles announced that they have designated left-hander Chris Jones for assignment in order to clear a spot on the 40-man roster for Nelson Cruz, whose one-year deal is now official.

Jones, 25, was acquired from the Braves last April in exchange for right-hander Luis Ayala. The former 15th-round pick (Indians) posted a solid 2.85 ERA in 79 innings between Double-A and Triple-A last season, though his 6.2 K/9 rate and 4.1 BB/9 rate were less impressive. Jones would make an intriguing pick-up for a team in need of left-handed relief, as he held opposing lefties to a minuscule .196/.291/.268 batting line in 128 plate appearances last season.

Jones has a 3.42 ERA with 7.9 K/9 and 3.4 BB/9 in 434 1/3 career innings in the minors.


Poll: Will Justin Masterson Sign An Extension?

Earlier today, Justin Masterson told reporters that he believes that "somehow, some way" he'll be in Cleveland for a few more years after this one. That statement can serve as a beacon of optimism for Masterson/Indians fans, but there have been plenty of instances of a player going on record to say he thinks he will/wants to/hopes to stay with a team, only to sign elsewhere in the future.

Masterson isn't likely to give the Indians a hefty discount with just seven to eight months sitting between him and free agency, and the price for extending players has seemed to trend upward recently. Masterson is one year older than fellow right-hander Homer Bailey, who signed a six-year, $105MM extension with a comparable amount of service time. The similarities don't stop there, either. As that comparison shows, fWAR assigns Masterson the higher value due to his higher innings total, but in terms of ERA, FIP and xFIP, the two have accumulate very, very similar results over the past three seasons. Masterson relies more on ground-balls, while Bailey's leaned more heavily on superior command and a few more whiffs.

Regardless, Bailey signed away five free agent seasons for roughly $95MM. That figure, as noted by Paul Hoynes of the Cleveland Plain Dealer in an updated piece on Masterson's comments, simply isn't going to be on the table from the Indians.

Masterson currently faces a decision: he's experienced his ups and downs in recent seasons (2010 and 2012 were not pretty), but he's a talented pitcher in the midst of his prime who is months away from being one of the best pitchers on the free agent market alongside James Shields, Max Scherzer and Jon Lester (Lester, of course, is widely expected to sign an extension this spring). Another strong season would give Masterson three years of an ERA well under 4.00 with 193-plus innings and one of the league's best ground-ball rates. However, his comments today also hinted that he'd like to stay in Cleveland, and an extension would eliminate the risk of a poor season or injury sapping his potential earnings.

It would be beneficial to the Indians' long-term outlook to keep Masterson around and pair him with the likes of Danny Salazar for years to come, but the team could also look to fill the void internally (or with cheaper free agent/trade options) and recoup a draft pick via qualifying offer next offseason in letting Masterson walk.