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The arbitration clock and how teams use it to screw themselves

So Mike Lamb is back for 2009. Bill Hall will also be back, and Casey McGehee is also in the mix. All are considered primarily third basemen (although Hall is more versatile than Lamb or McGehee), and all will likely compete for a spot in a third base platoon in spring training, where the winners will likely hold the spot warm for Mat Gamel.

Gamel is one of three Brewer position player prospects (including Alcides Escobar and Angel Salome) who are considered pretty close to major league ready. Whether they are or they aren't actually ready is debatable. In that debate a variety of factors will come up, though, and one of them will usually be the player's service time. It shouldn't, and here's why:

Step 1: The arbitration process

For the first three seasons of a major leaguer's career, his salary is determined entirely by his team, and his contract can be renewed by the team if the two sides cannot reach an agreement on his salary (this happened to Prince Fielder in 2008). After the third season, the player becomes eligible for salary arbitration, which usually creates a large increase in salary. After three seasons of arbitration, the player is eligible for free agency.

The exception to the three-year rule listed above is a "Super 2" player. A player who has only played two full major league seasons and part of a third can qualify for arbitration if he:
  • Played in the majors for at least 86 days in the previous season
  • Is among the top 17 percent for cumulative playing time in the majors amongst others with at least 2 years, but less than 3 years experience
(via Wikipedia)

So a player called up in April of his first season could qualify for arbitration after his third season, despite not having played three full seasons. The rule protects a player from having a team hold him off the major league roster for one day to delay him from reaching arbitration.

So, a team can prevent a player from being arbitration eligible for one year by keeping them in the minors on Opening Day and not calling them up until after 17% of that season's in-season callup rookies have been added to their respective rosters. Feel free to skip this if you've already got it, but if you don't, here's an example:

Player A is on an MLB roster on Opening Day 2009, as a rookie.
Player B is called up on April 15, 2009.
Player C is called up on June 1, 2009.

Assuming all three players are not sent back down:

Player A will have three years of ML service time following the 2011 season, and will qualify for arbitration for 2012 and free agency for 2015.
Player B will likely qualify for abritration as a Super 2 following the 2011 season, and will qualify for free agency for the 2015 season.
Player C will not qualify for arbitration until completing his third full season in 2012, and will not be a free agent until the end of the 2015 season.

Step 2: Why it's not a good idea

The simplest answer is this one: If you have a player who is big league ready and a spot on your roster where they can consistently play and improve your chances of winning, you're hurting your chances of winning by keeping them in the minors.

Furthermore, a spot on the Opening Day roster in 2009 is no guarantee of a big payday in arbitration in 2012. Beware of counting your chickens before they've hatched, because any of the following could still happen:
  • The player could underperform and be sent back to the minors.
  • The player could have a career-altering injury that ends their big league time or dramatically alters their effectiveness.
  • The player could be traded and their arbitration clock could become someone else's problem.
  • The player could just turn out to be a disappointment, meaning their value when they hit arbitration won't be that high anyway.
  • If free agency is what you're afraid of, the player could sign a long-term deal that eliminates the cost uncertainty of arbitration or the possibility of free agency.
Here's the simplest economics lesson I've ever delivered: Presented with the possibility of improvement now or an unknown amount of possible financial gain six years from now, you should almost always choose the current option.

Step 3: The cautionary tale

In 2007, Ryan Braun was knocking on the door of the big leagues, but was left off the Opening Day roster. In his place, Craig Counsell and Tony Graffanino split time at third base, and posted the following lines:

Counsell: .231/.360/.308
Graffanino: .187/.261/.234
Combined: .207/.311/.268

On May 25, Braun was finally called up, and posted the following line over 113 games: .324/.370/.634. If you don't want to do the math for yourself, he outperformed Counsell and Graffanino by 431 OPS points.

Of course, we'd be missing something if we didn't factor in Braun's defense at third, which was abysmal at best. Braun cost the Brewers an estimated 37 runs in the field during his 113 games. Taking the average, let's assume he would have cost the Brewers an additional 15 runs in the field if he had played third base all season.

Using the Baseball Musings Lineup Analysis Tool, we can project that a Brewer lineup featuring Braun for the entire season would have scored a little over 5.2 runs per game. With Counsellino in his place, they projected for a little over 4.7. If we call the difference .5, then leaving Braun in AAA cost the Brewers 23.5 runs at the plate. Taking the difference, missing two months of Braun cost the Brewers 8.5 runs, or roughly .85 wins. The Brewers only missed the playoffs by two games, so the difference is significant.

Conclusion

None of the trio of Gamel, Escobar and Salome will likely have the 2009 impact that Ryan Braun could have had in 2007, even given a full season of playing time. And, for that matter, the trio of Hall, Lamb and McGehee would be hard pressed to be worse than Counsell and Graffanino were offensively. But with that said, if the Brewers have prospects that are ready and the team would be better off by having them on the roster, then they should be here and the team can cross 2012's arbitration bridge when they come to it.

0 recs  |  Comment 13 comments |

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It'd be useful

If we created a section on the home page to stash information like this. This is good to have handy, especially when 3 months from now we start wondering about how arbitration works again. :)

"I will agree that the attitude [at BCB] is ridiculous and they have done so much to instigate animosity and then block us from responding. Real mature!"

by roguejim on Dec 10, 2008 3:48 PM CST reply actions   0 recs

I think categories are createable in the left sidebar

Jeff made “Interviews” this year. I’d imagine KL could make an “Information” or “Reference” one

And neck size to baby eating ratio.

by Jordan M on Dec 10, 2008 5:52 PM CST up reply actions   0 recs

Also

I know some of this repeats your points, but bear with me.

MLB defines a year of service time as 172 days, even though the season usually lasts a bit over 180 days (but players can’t earn more than one year of service time per season). For example, this season lasted 183 days (March 30 to September 28). That’s why the Rays waited two weeks into the season to call up Evan Longoria and delay his free agency by a year—any less time and he would’ve been on the roster for 172 days and thus a full service year even though he would have missed some games. By waiting, they made sure he would have finished the year with I think 169 days of service time. Signing him to a lengthy deal shortly thereafter made it moot, but no doubt his negotiating power was limited by the Rays holding him out of the majors.

The cutoff for Super Two arbitration is around roughly 2 years, 135 days of service time. So that’s already nearly forty days into the season before it’s “safe” to call up a guy to avoid Super Two arbitration — add in the extra two weeks or so between the length of a service year and the length of an actual MLB year and you’re looking at calling up guys during the eighth week of the season (the end of May) to avoid making him a Super Two player. As you said, that’s why the Brewers delayed calling up Braun and that’s the same thing the Reds did with Jay Bruce this year.

I said this in some other thread recently, but complicating things for Gamel, Salome, and Escobar is the fact that they were called up in September this year. It’s confusing to a lot of people because the BBWAA doesn’t count September service time for determining eligibility for the Rookie of the Year award, but time spent on the roster in September counts toward arbitration. So Gamel, Salome, and Escobar all have 28 days of major league service time under their belts heading into next season. To avoid Super Two arbitration with those three, then, the team would have to add 28 days to the 50-ish days I talked about in the previous paragraph, for a total of approximately eleven weeks before they can be called up. Thus Gamel, Salome, and/or Escobar would have to be held out of the majors until almost the end of June to save the team some money down the road.

Obscure baseball records and more at my blog, Recondite Baseball.

by TheJay on Dec 10, 2008 4:46 PM CST reply actions   1 recs

I meant to mention the September note.

Thanks for bringing it up.

I don't specifically articulate my motives, because that wouldn't travel as well as a boo does.

by KLSnow on Dec 10, 2008 4:52 PM CST up reply actions   0 recs

No problem

It’s good to get it out there as much as possible because so many people (in my experience) get confused by the BBWAA not counting September as service time and think that’s how MLB does it, too.

Obscure baseball records and more at my blog, Recondite Baseball.

by TheJay on Dec 10, 2008 5:00 PM CST up reply actions   0 recs

I was guilty of that.

Thanks for setting me straight!

Eric Gagne DL time: May 23-June 29 Brewers record in that span: 20-9

by NoahJ on Dec 10, 2008 5:57 PM CST up reply actions   0 recs

I love it

Great analysis… and we all some thought it was smart for the Brewers to not bring up Braun because of the cost later on

But as you point out it may have cost a playoff berth PLUS no arbitration will ever occur with Ryan since we “bought out” those years… so it really didn’t save the Brewers any money. I guess if he had more Major league service time he could have commanded more money, but the Brewers should start the best players this year, and not worry about 2012 salary cap if we ahve a chance to win this year.

The designated hitter rule is like letting someone else take Wilt Chamberlain's free throws.

by Kyguy922 on Dec 10, 2008 4:47 PM CST reply actions   0 recs

Well, that depends...

If Braun could have expected to be Super-2 eligible, the buyout would probably have been a few million more expensive as well.

In any case, while I’m more or less on board with KL’s argument regarding the arb clock, I fully approve of holding a player back at least long enough to delay his free agency by a season. Just look at JJ Hardy who’s matured into a pretty important piece of the Brewers puzzle as he approaches his prime – do you think there’d be so much trade speculation if he hadn’t been on the ‘04 opening day roster and was still three years away from FA instead of two? I’m going to be pretty pissed if Hardy’s traded simply because “the team had to act now”. Giving up a few weeks of early career production for another year of potentially prime production should be a no-brainer decision with almost any decent player.

by Zeyes on Dec 11, 2008 8:44 AM CST up reply actions   0 recs

Braun could have been a few million more expensive as a Super 2.

But the team also could have pocketed millions more in revenue in 2007 if they had made the playoffs.

The problem with the phrase “another year of potentially prime” is the word potentially. Sure, sometimes it works out that way. But sometimes the player turns out to be Melky Cabrera, and just gets worse as he ages. And sometimes having the player from the beginning creates an opportunity to win that would not have otherwise come up.

I don't specifically articulate my motives, because that wouldn't travel as well as a boo does.

by KLSnow on Dec 11, 2008 9:47 AM CST up reply actions   0 recs

I agree with the point/principle

but in this situation, I think Gamel could use some AAA time, considering he hasn’t played there much at all yet. If we could get a guarantee that Gamel is about -10 to -20 runs over the full year, I’d have him up to start the year for sure. But if he’s going to be -30 or worse like Braun was, it might be worth it to get him a bit more work and make sure he can stick at third.

That being said, I won’t get worked up about it if he’s on the opening day roster.

And neck size to baby eating ratio.

by Jordan M on Dec 10, 2008 5:57 PM CST reply actions   0 recs

I'm fine with Gamel getting AAA time

If he’s getting AAA time because he needs it. I’m not fine with him getting more time in AAA if the team is doing it just to delay his arbitration clock.

I don't specifically articulate my motives, because that wouldn't travel as well as a boo does.

by KLSnow on Dec 11, 2008 9:48 AM CST up reply actions   0 recs

That's exactly what I'm trying to say

And neck size to baby eating ratio.

by Jordan M on Dec 11, 2008 10:13 AM CST up reply actions   0 recs

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