Orioles Rumors

Over the next few months, I will be discussing some of the higher profile upcoming arbitration cases. I will rely partly on my arbitration model developed exclusively for MLB Trade Rumors, but will also break out some interesting comparables and determine where the model might be wrong.

Chris Davis had a fantastic 2013 campaign, which will earn him a large raise on his $3.3MM salary. As a hitter reaching arbitration for the second time, the primary determinants of Davis’ 2014 salary will be his 2013 statistics, which will be used as a basis to determine his raise. Unlike first-year arbitration eligible players whose entire history is generally discussed, players who reach arbitration eligibility in subsequent years have their raises determined by their platform year statistics, and their previous salary serves as the only relevant summary of their historical performance.

This benefits Davis immensely, who had a career year in 2013. He led the American League in home runs (53) and runs batted in (138), while putting up a solid average of .286. Playing time is very important to arbitration panels too, which also will be an argument in favor of a big raise for Davis. He played in 160 games, coming to the plate 673 times last year.

Few other sluggers have matched this performance going into their second years of arbitration eligibility. In the last seven years, the largest raise went to Jacoby Ellsbury, who got a $5.65MM raise from $2.4MM to $8.05MM in 2012, after hitting .321 with 32 home runs and 105 runs batted in, while swiping 39 bags. Ellsbury also helped his case with 729 plate appearances that year.

In most other cases where an elite slugger reached arbitration eligibility for the second time, clubs have elected to sign multi-year deals. While we are able to use multi-year deals with adjustments to fill in the some of the gaps this leaves in our analysis, it makes it difficult to find precisely comparable players for teams and agents to use in negotiations. In some of these cases, we can look at the first year salary in the multi-year deal, but take it with a grain of salt. In some of these cases though, a more valuable piece of evidence is what the salary figures were when the player and team exchange numbers in advance of a potential hearing.

For instance, Ryan Howard is a decent comparable for Davis. Howard signed a three-year deal going into his second year of arbitration eligibility in 2009. He was coming off a $10MM salary, and hit .251 (much worse than Davis’ .286) but his 48 home runs and 146 RBI are the only thing remotely similar in recent memory (among second-year arbitration eligible players) to Davis’ 53 home runs and 138 RBI. Howard got a $5MM raise his second year as part of that deal, but this came after exchanging numbers with the Phillies. He had requested an $8MM raise and the Phillies proposed just a $4MM. Given that Davis had a much better average and five more home runs, plus the fact that Howard’s raise is five years old, Davis should easily clear $4MM.

Matt Holliday’s raise of $5.1MM in 2008 (including his pro-rated signing bonus) as part of a multi-year deal is also relatively comparable. While he only hit 36 home runs, he hit .340 and knocked in 137 runs, while stealing 11 bags. Again, the fact that six years has passed since this deal, plus the fact that it was a multi-year deal, suggest that this will not be a great comparison. However, given the similarity of Holliday’s and Howard’s effective raises, it stands to reason that adding a few years of inflation should get Davis a solid gain beyond this amount, especially since he hit more home runs (which is the most important stat in arbitration outside of playing time).

Somewhat more recently, Josh Hamilton hit .359 with 32 home runs and 100 runs batted in going into 2011, which earned him a $5.5MM raise as part of a multi-year deal. He had been offered a $5.45MM raise already and had countered with a request for a $8.75MM raise, even larger than Howard’s $8MM request two years earlier.

Putting all these together, it is pretty clear that Davis is in his own territory and seems very likely to break Ellsbury’s record Arb-2 raise of $5.65MM. The model actually predicts that Davis would get $10.8MM, but given the new limits of “The Kimbrel Rule,” we are only letting him break Ellsbury’s record by $1MM, giving him a $6.65MM raise to $9.95MM.