Saturday, December 02, 2006

Let's Make A Deal

Last night was the deadline for offering arbitration to your free agent players, and the Nats made two surprising moves. They offered arbitration to Loco Jose Guillen, and declined arbitration for the Ramon Ortiz Cy Young Express. Both are a little headscratching.

First, a bit of an explanation for those who aren't transaction junkies (And if you are, just jump down to the first bullet). After 6 full years of major-league service, players whose contracts expire have the right to become free agents, and are able to shop their services around. Teams, though, have the right to offer salary arbitration to their departing free agents. If arbitration isn't offered, nothing really changes. They player can just walk away.

But if it is offered a few things happen. First, it puts the next move into the player's court. He has until 12/7 to decide whether to accept or reject the offer. If he accepts, he takes himself off the market and essentially signs a one-year deal with his original team. The player and team will later meet at a salary arbitration hearing, where each side makes a case for a salary based on what other players of similar type are making. The arbiter picks one number or the other. In most cases, though, the player and team come to a compromise before the hearing, frequently splitting the difference between there two figures. No player really wants to sit in a board room while listening to their boss run through a litany of faults so they can nickel and dime their salary. I'd say that no team does either, but other than the resulting salary, I can see Mr. Kasten rather enjoying that part of the process.

If he rejects the offer, nothing really changes. He stays a free agent, and can still re-sign with the original team. (It used to be that there was a silly rule that prevented the player from returning 'til May, but that was one of the casualties of the latest CBA.)

But his decline means one important thing; the team can receive draft pick compensation if he signs elsewhere. As we saw with Soriano, free agents are ranked by a crazy Elias formula nobody's ever seen, and which really doesn't work. For compensation purposes, they're lumped into a few categories, but the only ones that draw compensation are Type A and B.

A team that loses a Type A, you'll recall, loses their first-round draft pick, plus the original team gains an additional pick sandwiched between the first and second rounds. (The exception, we saw with the Cubs signing Soriano, is that a team with one of the first 15 draft picks can't lose their first-rounder; they lose a second-rounder instead). Signing a Type B has no real 'cost' to the signing team. The losing team only gets a sandwich pick. (Prior to the latest CBA, Type Bs gave up a first-rounder)

With that in mind....

  • What the hell does this mean for the Nats?

    Declining arbitration to Tony "4.2 Innings" Armas and Robert "@#$#@$" Fick are no-brainers. Armas was a C, which merits no compensation. Fick wasn't even ranked that highly. There's no benefit to offering them arbitration, especially as there's a chance that the arb process would award them more money than they'd make as Free Agents.

    But declining arbitration to Ramon Ortiz? I don't understand why. I can't really see what the downside to offering it to him would be. Think back to the process. If they offer and he accepts, the worst that would happen is that he comes back on a one-year deal. He'd likely make something like 4-5 million (I'm pulling that out of my butt). That's more than I'd like to pay for him, but not by much. It's certainly not going to crush the team or hurt the long-term future of the team. But if he declines and ends up signing elsewhere, the Nats would get one of those first-round sandwich picks, something created out of thin air.

    They'd either get a likely draft pick or one year of a crappy pitcher who, if anything, can eat innings. I don't see what the downside to either option is. But by declining, they get nothing. No benefit at all.

    If they were so giddy and eager to get picks for Soriano, why weren't they in this case? Where's the consistency of their decision? The cynic in me would point out that they don't want to spend the money on either 1) the active roster or 2) the extra first-round draft pick signing bonus, but I'm not that cynical. ;)

    I'm sure there's a rational explanation for this, right? Right?

    The other mystifying decision is the offer of arbitration to Jose Guillen. Coming off a season of injury and with his many attitude problems, is there really going to be a hot market for him in free agency? Especially since it's likely that he won't be back til the All-Star break? There's a very slim chance that someone else would sign him, meaning there's little chance they'll get a draft pick.

    Plus, in Guillen's case, a reading of the tea leaves is likely to show that the 4-6 million he could make in arbitration is going to be higher than the deal he'd get on the open market. He'd be crazy not to accept.

    So the Nats will be dealing from a position of weakness. If they really wanted Guillen back, (and with Kearns, Logan, Church, Casto, Restovich and Escobar already filling the outfield, I can't see a spot for him) they could've just negotiated a regular deal with him -- one that's incentive-laden and likely worth less than he'll make in arbitration. Now they certainly can still negotiate and sign something with him before the arb hearings, but they'll be dealing from a position of weakness. If he doesn't like their 3/12 offer (or whatever), he can just take them to arbitration.

    Where's the upside for the Nats?

    I dunno. I don't see where either of those decisions makes too much sense for the Nats. I thought that the alternatives, in both cases, were no-brainers. I didn't even think to write about them prior to because I assumed they were automatic decisions.

    Am I missing the boat? Is there some decent explanation for these two moves?

  • 7 Comments:

    • I can see not offering arbitration to Ortiz. I don't know about $8 MILLION!!!!, but I would think he'd make more through arbitration than as a FA. I think he'll be similarly situated as he was last season, not seeing very many good offers and looking for a shot at a bounce-back season. He could come back to the Nats for a lower price than arbitration would have brought him, even in this market. You lose the draft pick if he doesn't, but as useful as Ortiz could be (to the extent he is, as a durable guy), there's a limit to how much I'd pay cannon fodder.

      By Blogger Basil, at 12/02/2006 6:15 PM  

    • That's entirely possible, I guess.

      If that's the case, then the calculus comes down to whether the chance of getting a draft pick is more valuable than that 2-3 million bucks more Ortiz might make via arbitration than the FA process. It'd be (in a convoluted sort of way) like buying a sandwich pick.

      By Blogger Chris Needham, at 12/02/2006 6:40 PM  

    • Despite how much of a favorite that Jose Guillen is in Section 320, offering him arbitration is good move. If he comes back healthy and strong--there is no doubt he can be a strong presence in the lineup. And, maybe tradeable. If he does sign elsewhere, they at least get something for him in the sandwich pick. With the low payroll this team may well have in 2007, he's not going to make much of a dent, if he accepts arbitration. Ramon Ortiz just isn't worth the trouble of going through arbitration. If he doesn't resign at a lower salary, then I am sure they will come up with Ortiz 2, in some other lost soul looking for redemption.

      Guillen the better play, to get something free out of in the draft pick--or maybe something far better--if healthy.

      By Blogger Screech's Best Friend, at 12/02/2006 6:59 PM  

    • Chris, that's certainly a way of looking at it. And also, as this past June's draft showed, just because you've got a pick doesn't mean you sign the guy picked.

      SBF, Ortiz 2 is a very, very good way of putting it.

      By Blogger Basil, at 12/02/2006 7:02 PM  

    • Is it possible that Ortiz is injured (or potentially injured) and they know it? That would certainly be a reason not to offer arb.

      By Blogger Yuda, at 12/03/2006 10:27 AM  

    • Im a UK Nationals fan, from the Expo days, isn't this all beginning to get very Loria-ish? Hernandez being traded for two cant miss prospects - Chico and Mock. Chico may make the rotation and Mock has disappeared? Surely we can afford a Redman, Chacon or even a cheap Ortiz back?

      Having a starting front five of Patterson, Redman, Rauch, Perez and Chico actually looks like one that may go .500. Everybody says Redman is floundering in a bad team, but so was Jeff Suppan in Tampa and lok what happened there. He's only 33 next month and offers a credible lefty option and experience, both of which the rotation lacks.

      The logic would dictate that some of the $13m we've saved after passing on Soriano and Guillan should indeed go on the not-quite-as-dry-as-Kasten-would-have-us- believe farm system, but a Redman or a Chacon would come in at under $5m a season.

      this makes sense doesn't it? Or am I being an asinine Brit who doesn't know my ass/elbow?

      By Anonymous Neil B, at 12/06/2006 8:23 AM  

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