Dodgers outfielder Yasiel Puig has elected to keep his guarantee over the following two seasons rather than opting into arbitration, Ken Rosenthal of FOX Sports reports on Twitter. That’s the opposite choice from that made yesterday by White Sox slugger Jose Abreu, who faced a similar — but hardly identical — situation.
In both cases, the decision was fundamentally one of risk and reward in earnings. Neither player had the right to take action that would have shortened the control rights of their respective teams. But both had to weigh whether to retain the multi-year guarantees in their contracts, or instead seek potentially higher paydays in arbitration.
MLBTR’s Tim Dierkes laid out the essential factors in this post, pertaining to Abreu, and you’ll want to read that post to understand them. In Puig’s case, his original free agent deal provides that he’ll earn $6.5MM this year and $7.5MM next. He remains controllable via arbitration so long as he lacks the service time for traditional free agency — unlike some international players, whose deals provide for early releases — so he was set to be arb-eligible for the 2019 season regardless.
The question, then, was whether he was better off taking that two-year, $13MM guarantee or entering the wilds of arbitration. With his numbers on the decline over the last two seasons, there’s no chance he’d rate as a $6.5MM first-year arb earner. But because players typically don’t have their salaries trimmed in arbitration, his already-high earning level gives him a big earning minimum for 2017 — which also would have provided a nice base from which to work in playing his way toward a raise for 2018.
So, what might Puig have earned? If you divide his $12MM signing bonus over the seven seasons of his deal, and add it to his $5.5MM salary from 2016, he’d have a baseline of just over $7.2MM. With a net-present-value adjustment on the bonus, that could go to approximately $7.5MM, with the potential to argue for even more by pushing a theory that the arb opt-in reduces the length of the deal (thus boosting the share of the signing bonus assignable to his 2016 salary, increasing the floor).
That all sounds like gravy, but there are risks, too. The CBA is not clear on precisely how to make these calculations, so that’d all have to be argued over in arb. And there are examples of players — most recently, Leonys Martin — who suffered salary drops in arbitration from their prior years’ marks. And then there’s the fact that parting with the guarantee would’ve left Puig’s salary for 2018 dependent upon his performance in the year to come, with a non-tender a possibility if things go poorly.
All told, taking the sure $13MM isn’t the upside play. But many players accept two or three-year, arb-only extensions that sacrifice some earning ceiling in exchange for security. It’s arguable that Puig didn’t have much to lose, but his mediocre 2016 season may have left him unsure of taking the risks of trying to maximize his earning power through the arbitration process.