Three years ago, the White Sox signed Cuban slugger Jose Abreu to a franchise-record six-year, $68MM contract. Abreu kicked off his MLB career with a monster 2014 campaign, winning Rookie of the Year and finishing fourth in the MVP voting. His offensive production has declined steadily since then, but still remains above average. Now, Abreu is presented with an important decision that will impact his future earnings. Within five days of the conclusion of the World Series, Abreu and his agents must decide whether he will opt out of his existing contract and into MLB’s arbitration system — a right that is afforded to him via a clause in that six-year pact. (Note: Dodgers outfielder Yasiel Puig finds himself in a similar situation, albeit coming off a weaker year. His situation will be addressed separately from Abreu here at MLBTR.)
If Abreu keeps his current contract, he will earn $34MM from 2017-19. That includes salaries of $10.5MM in 2017, $11.5MM in 2018, and $12MM in 2019. Abreu’s agents must determine whether their client can do better in arbitration, without the luxury of a precedent for a situation like this.
Abreu’s baseline 2016 salary, for the purposes of arbitration, appears to be $11.66MM. That figure is calculated by taking his $10MM signing bonus, dividing it by his six-year term, and adding it to his $10MM salary from 2016. That’s a critical difference, as arbitration paydays are based largely off of the previous year’s salary. However, there is some gray area in this all-important baseline figure, and the Collective Bargaining Agreement does not provide clarity. First, does it make sense to divide the signing bonus by six years, even when Abreu is opting out of the last three? An agent could argue for dividing the bonus by three years, setting Abreu’s 2016 salary at $13.33MM. Second, even if the six-year term is used, the Players Union tends to calculate net present value on the signing bonus, which could put Abreu’s 2016 salary around $11.88MM.
The White Sox will surely argue against interpretations that assign Abreu a higher number for his 2016 salary. I think they would agree that for the purposes of establishing an arbitration baseline, he earned $11.66MM this year, unless there is something in the contract that calls for the exclusion of the signing bonus in determining his 2016 salary.
Is there any argument to be made that based purely on statistical merit, and not prior salary, Abreu should earn more than $11.66MM in 2017 through arbitration? Nope. Abreu seems to be in the range of Giancarlo Stanton‘s first three years, which earned him $6.5MM for his first arbitration year in 2014. Even with inflation, Abreu wouldn’t get past $11.66MM.
Since Abreu “deserves” a salary well below $11.66MM through arbitration, can the White Sox argue for cutting his salary? Using the maximum allowable cut of 20 percent, the team could theoretically argue for a $9.33MM salary for Abreu for 2017. However, salary cuts are extremely rare in the arbitration process, so much so that MLBTR’s automated model doesn’t even consider them. Ian Stewart‘s pay cut in 2012, after an awful season, is not relevant here. So I think the worst case scenario for Abreu if he opts into arbitration is getting a repeat of that $11.66MM salary for 2017. That would be a win for him, since his contract would otherwise pay him $10.5MM in 2017.
Can Abreu actually score a raise for 2017, beyond the $11.66MM baseline, though? It’s possible, especially once appearances come into play. It would look bad for the White Sox to try to cut Abreu’s salary for 2017, but it also might not look great to the public if they suggest he does not deserve a raise. Do you think Rick Hahn would try to explain all of the above to White Sox fans, in justifying an argument against giving Abreu a raise? Abreu’s agent, on the other hand, can feign mock outrage to the media that the White Sox don’t think a cornerstone player such as Abreu, with a .299 average, 91 home runs, and 308 RBI in three seasons, deserves a raise. The White Sox could consider giving Abreu $12MM or more to save face.
Abreu gains upside by opting into arbitration. He’s still in his prime, and he plays in a hitters’ ballpark. Abreu could put up strong baseball card numbers in the coming seasons, maybe even reversing his declining power trend. Even just normal Abreu performance, combined with token arbitration raises each year, could earn him $40-45MM from 2017-19, instead of the $34MM his contract would have paid.
Abreu’s downside, on the other hand, is limited. I don’t think a salary cut at any point is likely, so he could simply get repeat salaries three times and still come out with $35MM for 2017-19. The one risk factor would be in the White Sox non-tendering him after the 2017 or ’18 season, in which case he’d become a free agent. The White Sox would only do so if his performance truly cratered, and even then, Abreu would make back most or all of the lost earnings in free agency.
Ultimately, I do expect Abreu to opt into MLB’s arbitration system, and I believe he’ll get a salary of about $12MM for 2017.
Very thorough article describing Jose Abreu’s contract and the potential for opting into arbitration this off-season. I agree with the article’s summary that he will in fact opt into arbitration. Another possibility remains: Abreu could be traded this off-season leaving the decision to negotiate a likely arbitration salary to another ball club.
They won’t be able to get what they need out of it so I doubt they move him. Of course I’m not privy to their thoughts
If Abreu would opt-out and go for arbitration, couldn’t the White Sox non-tender him? Or does that not apply to a case like this?
They could, sure, but then he’d just be a free agent. There’s no reason to do that coming off the type of season he had.
There probably isn’t much risk in opting in and giving up guaranteed money in 2018/2019, as the likelihood he has an awful 2017 and gets non-tendered is remote.
This is another perfect example of how lawyers and baseball players are slowly taking themselves out of the everyday fans budget.
It’s true that their salaries seem ridiculous to us, and this contract situation in particular gets kind of lawyerly.
That said, the money is already there, so an argument against Abreu earning this is generally an argument for more dollars in Reinsdorf’s pocket.
The problem I have is with these types of opt out clauses in the first place. My opinion ( not that it matters) is that players not subject to a draft should not be allowed arbitration opt-ins when there are players that are subject to drafts that have to play by a different set of rules and likely won’t make the same $10mm- $12mm after 3 years of service time. Hopefully the talk of an international draft comes to fruition and the problem is addressed.
Jose Abreu is a different case altogether. He was an older, more experienced international free agent and not subject to the same restrictions that apply to younger players and the teams that sign them.
Every MLB club had a crack at signing Abreu back in the 2013 off-season just as they did with other veteran free agents, domestic or international, that also include Japanese and Korean players who typically get posted. Veteran international FA’s usually spend minimal time if any being developed in the minor leagues. However, they do have to accrue MLB service time like any other member of the MLBPA which is where the option of arbitration opt-ins come into play during contract negotiations.
Agree
MLB is a billion dollar industry, its not a “game of the people”. There’s nothing that can be done about it other than add a salary cap, but then the money would just go to the owners, and I’d rather pay the players as they very very rarely can play this game past 40, owners can own forever.
Also I feel like people see these big numbers but never consider how much is lost to taxes, not to mention the costs of property taxes, insurance, retirement funds, paying for their entire extended families etc. Sure all the superstars are still millionaires at the end of the day, but the journeymen and relievers are oftentimes not.
Something could be done to make it a game of the people again. Simply put a cap on the Ticket and Concession prices. It would have to be a formula based on the area and demand. (A family of 4 in NYC will always have to pay more than a family of 4 in the Twin Cities). If every game isn’t a sell out (once school is out), the prices are too high. If they make the game affordable, more fans will be created. More fans means that other sources of revenue will increase, such as licensing, ad revenues, tv rights, jersey sales, etc… It would bring fan interest back, while building a stronger product. A seat doesn’t have to cost $50, or a hot dog $8. Empty seats don’t buy eats, drinks, or ride the Ferris Wheel. Raise attendance by lowering prices. It will only help the game.
Fan interest is as high as its ever been, that’s an incorrect statement. It’s a worldwide game now, and fans all over the planet pay money to watch their team, be it live or on mlb.tv.
Like I said, its a billion dollar industry and grows every year. Its always about the money. Honestly, every team could play to an empty stadium and they’d all still make massive profits. I would agree with anyone who said the game is too big though, which is I think what you mean. But as an owner, why would you want less profits? They are 100% of the time do what makes the most money, and that means going to games is going to be expensive. I think to your point, teams should offer sections of prime seats at low prices on certain games and have cheap seats that are always a set price, like $20. The food problem is due to each team having different vendors, who charge differently. In NYC literally everything is more expensive than every other city, so that’s a moot point to single out baseball. There’s just very little that can be done here that’s feasible, sorry.
And charities benefit as well. Many of these guys give more than we know
I’m not quite sure his offensive production is “declining steadily”, he just had a bad 1st half in 2016 but was really great in the second half, with that first half really dragging down his overall numbers. I’d like to see what he does next year before committing to a comment like that, as his 2016 looks like it could be a little bit of an outlier year. Could be wrong though.
Not sure I see a clear first half/second half trend; more like a huge August. That came right after he hit zero HR in July, so you could find meaning in either or neither.
Anyway, the wRC+ trend has gone 167, 129, 118, so I view that as a steady decline in performance each year.
Jose Abreu’s rejuvenation at the plate this past season coincided with news that he would be reunited with his 5-year-old son Dariel for just the second time since he defected from Cuba in 2013.
Since signing a six-year contract with the White Sox in the fall of 2013, Abreu had seen his son in person once, during Major League Baseball’s goodwill trip to Cuba last December. On a White Sox off day in August, Abreu went to Miami to greet his son upon his arrival in the U.S. before heading to Kansas City for a series.
Abreu, whose parents joined him in the U.S. in 2014, said Dariel now has a five-year visa that will allow him to visit more often.
Abreu’s improving family situation alone might be enough of a guarantee to the White Sox as they deal with his likely status as an arbitration eligible in 2017, as well as for two more additional seasons beyond that. The possibility of a contract extension also remains in play that could keep him a White Sox past 2019.
Wow, that is amazing that he started mashing as soon as he got his kid back. Analysts usually never take personal life stress like that into consideration, it absolutely can cause problems. I feel like somethings going on with Jason Heyward in that same way. If your head isn’t in the game the numbers won’t be there. I’m going to bet Abreu has a massive 2017 now.
That’s a very good point…happens often with foreign players…would affect me too probably…
Wish I could thumbs up this comment. Abreu finally had his son here to see him play in Miami this past season. That was huge and you could see in his approach becasue he started tearing the cover off of the ball. A lot of folks do not realize that Abreu is really big on his family, and it obviously impacted him for him to not see his son, especially earlier in the season. I’m not saying Abreu will have a monster season next season, but it should be at least on par with his first season with the Sox. Besides it is not like the Sox have anyone else waiting to play first to have that kind of production.
The only psychological issue I see is his inability to adjust his swing. He has the worst batting mechanics and stance I have ever seen.
If he hits the ball and drives in run, who cares? IMO Sammy Sosa and Julio Franco both had lousy stances, same with Sheffield, but they seemed to do well (even though Sammy likely had chemical assistance). Abreu also had to adjust to trying to drive in runs even though almost every pitch he saw was out of the zone because teams were pitching around him for the past two seasons. Again who would the Sox get that would be better than Abreu at this point?
I think if the Sox can get Frazier’s average a bit higher, or keep Morneau to hit behind Abreu, he will be fine.
Good Stuff Tim, good article, detailed and explained well
I agree, he had a nice second half
Does the guesstimated salary of about $12mm include $1.66 from his pro-rated signing bonus?
No…Abreu’s signing bonus was paid out as $6MM by Nov 2013 and the other $4MM by Nov 2014, so he’s already collected all of that. Still figures into the 2016 salary calculation, mostly likely.
I think one avenue that hasn’t been mentioned yet is the possibility of using the opt-in clause as a ploy to negotiate an extension. Maybe he’d agree to not opt-in to arbitration in exchange for a player opt-out after two years and substantial raises in the 3rd year and an added 4th? Gives both sides a little more insurance.
I am confused by this being approached as “how much will he get” rather than “how big will his raise be,” as the latter is how articles on this site typically frame arbitration.
I understand the first year of arbitration is slightly different and could be considered more of an amount thing (since every first year arb player typically made around the minimum the previous year) but even first year arb boils down to a raise off previous year’s salary, whether that raise is $100k or $6m.
That being said, and without checking all Abreu’s totals, I would peg him to get around $16m-$17m next year.
Wasnt Jose Iglesias under contract and then filed for arbitration once his contract expired (not yet eligible for FA). As I recall, he took a pay cut.
Also, by going the arbitration route Abreu loses financial security. A major injury gets him non tendered. His next 3 years are guaranteed dollars under the original deal.
Have to wonder if the cartel that got him out of Cuba still has its hooks in him as he really should not be taking this risk amidst all that uncertainty. Maybe his new agent ISE wants a bigger commission since his original deal was negotiated by others. I dunno. They are probably the only ones not minding the pay cut since they get the commission for the 4th year and not the previous agent (cartel). Hmmm, I think I am on to something.
Iglesias was a pre arb guy after his initial IFA deal was signed and he got pay cuts, because the pay is up to the team who can pay whatever they want as long as it’s at least minimum and no more than a 20% pay cut. Last year was his first year of arbitration and he received about a 700k increase.
Never give up sure money, especially $30MM worth over the course of three years. Abreu is guaranteed that money regards of performance or injuries. I wouldn’t entertain opting out.
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