What Ruthless GMs Should Do

Today is the last day for baseball teams to offer arbitration to the former members of their team who are now free agents. With the sweeping changes that the new CBA has brought to free agent compensation, it’s unlikely that we’ll ever attach the same level of importance to such a deadline again.

This is the very last year in which players eligible for free agency will have a Type A or Type B status attached to their names.  This status has been important for the last several years because it dictates the level of compensation awarded to the team who loses the player to free agency. However, before that compensation is awarded, the team must first offer arbitration to the free agent as a signal of intent that this is a player whose services they’d be interested in retaining if not for his relative value on the open market which is now his right to collect.

If this theoretical team offers arbitration to a player who filed for free agency, and that player signs a contract with another team, the team who offered him arbitration will receive compensation in the form of draft picks, possibly from the signing team if the player reached Type A status. Next year, no such complications will exist and an offer of arbitration will carry far less meaning.

However, there’s always a chance that a player offered arbitration, even a Type A or Type B, will accept the arbitration if they believe the open market won’t be as kind as a one year deal with at least a slight raise over the salary that they earned last season. So, in making a decision whether or not to offer arbitration to a player, the front office must weigh the likelihood of the player accepting or rejecting arbitration.

The Toronto Blue Jays are in this exact position with Type B free agent Jon Rauch. The reliever didn’t live up to the team’s expectations in 2011, but based largely on a successful 2010, he still acquired Type B status and would bring back a supplemental round draft pick if he’s offered arbitration and he signs elsewhere. However, it’s questionable as to whether another team would offer Rauch anything near what arbitration would give him after he made $3.5 million last season.

Here’s where it gets interesting: contracts awarded in arbitration are for one year and aren’t guaranteed. In fact, the team who signs a deal with a player who agreed to arbitration has until 16 days before the start of the season to release him, at which time the player is entitled to 30 days termination pay. If the player is released between then and the start of the season, he’s entitled to 45 days termination pay.

I’m surprised there’s so much humming and hawing when it comes to arbitration offers. It makes perfect sense from a cold, hard business perspective to offer every eligible player arbitration. If the player is concerned about the non-guaranteed contract that comes out of arbitration, he will be motivated to reject the offer and attempt to sign with a team during the off season while his services are more in demand than they would be nearing the conclusion of Spring Training.

Of course, this type of transaction rarely plays out because it’s largely seen as something of an underhanded move that could have repercussions down the road for ruthless front offices. However, no one thinks it’s ruthless when a player continues to expect his contract to be honoured even if his play doesn’t meet the expectations assigned to him when he first signed the deal. It’s all a part of the rules and if I’m a baseball GM I’d be attempting to take advantage of such rules while I still can.