Tuesday, January 18, 2011

Cody Ross and the Giants' arbitration eligibles

The Giants settled on contacts for four of the six players they have that are arbitration eligible today, and are optimistic the remaining two won't go to a hearing. I wanted to break them down a bit here, and provide a few thoughts.

Just as a quick primer: the market value for a win* is about $5 million dollars in the current market, which is up quite a bit from 2009 and 2010. Also, it’s worth noting that players who are arbitration eligible – this is for players who have more than three years of MLB service, but fewer than six -- typically get 40 percent of their free agent value in year one, 60 percent in year two and 80 percent in year three. A lucky few players are awarded Super Two status – this is for only those in the top 17 percent of players with at least two but less than three years of MLB service, who also accumulated at least 86 days in the previous season -- which means they go to arbitration one year earlier and thus get to go through four years of arbitration. Giants fans should recall that Tim Lincecum was the benefactor (and the Giants the victim) of this caveat last season.

*Whenever I say a “win” in terms of a player’s value, what I mean is a Win above Replacement, or 1.0 WAR. A replacement player should not be mistaken with a league average player. A replacement player is a four-A type player, one that can easily be plugged in at a position at league minimum cost, usually plucked from the minor league system, waivers, or perhaps via trade for a minimum cost if depth is an issue. An average player is above replacement.

NOTE: Instead of just choosing to go with either Baseball-reference or Fangraphs, I’ve chosen to take each player’s WAR from each site and give each a weight of 50 percent; this is in the hopes to come up with a decent idea of their consensus value.

Let us begin with Jonathan Sanchez: he is arbitration eligible for the second time (ARB 2), and signed with the Giants for a sum of $4.8 mil or $3.7 mil plus incentives for the coming 2011 season, depending which source you believe. Either way, I wanted to get a feel for what he’d actually be worth on the open market – meaning, if her were free agent – and also whether or not this is a good deal relative what other players get via arbitration.

Over the last two seasons he’s been worth about 2.33 wins and over the last three: 2.13. His free agent value at $5 mil per win would be $10.67 on average over the past three seasons, and $11.63 over the past two. If we trim those to around 60 percent, which is about what he should expect to get in his second year of arbitration, we get $6.40 mil and $6.98 mil. In my assessment, the Giants are probably getting a discount – which is on top of the already considerable arbitration discount which allows Major League Baseball to not pay its young players – of about $2 to $2.5 mil. Of course, this doesn’t erode the surplus they are giving Barry Zito, but it’s a start. And let’s not go feeling sorry for Jonathan, his “just” $4.8 mil is a sizable raise from the $2.1 he made in 2010.

The Giants also settled with Cody Ross: he is arbitration eligible for the third and final time (ARB 3), and will make $6.3 mil in 2011. How did the Giants do?

Unlike Sanchez, Ross has been worth more if we use a three year average than a two year, because he had a really nice season in 2008. If we use three years, he’s been worth 2.2 wins whereas he’s only been worth 1.55 wins over the past two. That converts his free agent value to $7.75 mil over the past two seasons and $11 mil over the past three. If we take that down to the 80 percent a player typically earns in arbitration, we find that he should probably expect to be worth $6.2 mil if he continues to play as he has the past two seasons, or $8.8 if we want to still give him credit for 2008. I think this deal is almost exactly right: he’s a useful player but probably worth fewer than 2 wins. If he does elevate his game to that Rosstober level, or to his 2008 campaign, it will become a win-win situation: the Giants will have paid him at least a few million dollars less than he’s worth, and Ross will likely have earned himself a decent contract in his first crack at free agency.

The Giants also signed Ramon Ramirez for $1.65 mil in his second year of arbitration and Santiago Casilla for $1.3 mil with incentives in what I believe is his first shot at the process. I wouldn’t say either is a steal, but as long as the Giants aren’t relenting first or second round draft picks for relievers (like the Yankees did for Rafael Soriano in a ridiculously player-friendly contract and the Angels foolishly did for Scott Downs after missing out on Carl Crawford), I’m fine with it. Also, the Giants submitted a figure of $2 mil for Javier Lopez, and he countered with $2.875 in his third case (ARB 3). In terms of the bullpen, this puts their committed salary at about $18 million or about 16 percent of their entire roster ($110 mil). Ideally, you’d prefer they allocate more money to non-pitchers and less to the bullpen. But it helps they’ll be paying Wilson $6.5 mil when, if he continues to pitch similarly as his past two seasons, he’ll be worth about $12.5 mil. Which is to say: the Giants have a pretty stacked ‘pen.

The Giants’ sixth and final arbitration case will be Andres Torres: this is his first crack at arbitration (ARB 1) and he’s requested a salary of $2.6 mil to the Giants’ $1.8. Now, we can’t exactly go back to his previous two or three seasons to come up with a consensus value because before 2010 he was a part time player at best, and more often a minor league journeyman. And his value of upwards of 5 WAR in 2010 seems undoubtedly to be a career high. Thus is it becomes very difficult to determine what he’ll do in 2011, or what he’ll be worth. Quite honestly, I don’t think the Giants would be devastated if he was worth 2.5 to 3.0 wins in 2011, and nor would I. It’ll be his first arbitration case, and so even at those win values he could arguably expect to be compensated $5 or $6 mil. If the Giants win the case, if Andres does, or they settle in the middle, they’ll be way ahead. And if he should god forbid come way back down to earth offensively but at least stay healthy, his plus-plus defense in center field should be plenty to make him worth the roughly $2 million in salary, especially when compared to the $60 million dollar man he replaced: Aaron Rowand.

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