Arbitration And The Mets

Arbitration: it happens every baseball offseason.  I’ll be the first two admit that in my younger days I had no idea what this process was all about.  But recently I’ve come to realize the importance of this annual process.  For the Mets, arbitration eligible players will play a large role in the next couple of years.

To quote from the MLBPA website,

"A player with three or more years of service, but less than six years, may file for salary arbitration. In addition, a player can be classified as a “Super Two” and be eligible for arbitration with less than three years of service.  A player with at least two but less than three years of Major League service shall be eligible for salary arbitration if he has accumulated at least 86 days of service during the immediately preceding season and he ranks in the top 17 percent in total service in the class of Players who have at least two but less than three years of Major League service, however accumulated, but with at least 86 days of service accumulated during the immediately preceding season."

So that’s who is eligible.  As for what goes on, The Biz of Baseball has a terrific summary of how the negotiations play out.  Basically, once a player is offered arbitraiton and he accepts, both sides present a salary figure.  The team and player can continue to negotiate until the arbitration hearing is scheduled.  If the sides go to arbitration, they present facts based on the player’s prior performance, comparable players and salaries, and even intangibles, with the panel deciding which contract figure is the most appropriate.

Last offseason, RA. Dickey, Mike Pelfrey and Angel Pagan were all offered arbitration, but worked out deals to avoid going before the panel of arbitrators.  Pelfrey and Pagan got one year contracts while Dickey received an extension.  From a team payroll point of view, arbitration eligible players often seek a fairly substantial salary increase.  For example, Pagan requested $4.2 million, an increase from the $1.45 he received in 2010.  The Mets offered $3.06 million, and the two sides met close to the middle, agreeing on a $3.5 million contract.  Not that Angel didn’t deserve the raise (he did), but with the Mets financial future in question, the Mets will have some decisions regarding arbitration eligible players in the future.

The Mets feature five arbitration eligible players this coming offseason: Pelfey (second time) and Pagan (fourth and final time) again, Ronny Paulino (third and final), Taylor Buccholz (fourth and final) and Bobby Parnell (first).  Of those five, Buccholz and Parnell currently earn less than one million dollars, and given Buccholz’s injury history and Parnell’s so-so season thus far, it’s hard to see either middle reliever earning a substantial increase.  Paulino also won’t see a large raise given his platoon role; he might see his current $1.35 million salary increase by a few hundred thousand.  It’s Pelfrey and Pagan who might pose problems.

Big Pelf is making $3.925 million this season and, even though he has struggled at times this season, has also looked like the guy from last year at other points.  ZiPS, a projection system developed by Dan Szymborski of the Baseball Think Factory, currently has Pelfrey finishing the season with a 9-12 record and 4.78 ERA.  I think Pelfrey will exceed those numbers and probably finish with double digit wins and an ERA closer to 4.50.  Either way, I imagine Pelfrey’s side will request a salary in the neighborhood of $5 million.

In terms of Pagan he’s a little harder to predict because he started off slowly and then got hurt.  However, since returning from the DL, Pagan is 18-52 (.346) with six RBI and five steals.  If he continues to play this way, he will likely succeed his current ZiPS batting line of .256/.311/.366.  Pagan may also ask for somewhere in the neighborhood of $4.5-$5 million.

If those predictions are accurate, Pelfrey and Pagan will cost the Mets around $10 million next season.  That might not sound like a lot, but for a team struggling financially and potentially trying to sign Jose Reyes, that amount of money is suddenly significant.  If the Mets fall out of contention, Pagan and Pelfrey could both be appealing trade chips, given that they are under control for next season (and Pelfrey is through 2013).  They could also simply not be offered arbitration and become non-tendered free agents, although then the Mets would come away with nothing for these players except more salary flexibility (which is worth something).  With the emergence of Dillon Gee in the rotation and prospect Matt Harvey dominating in the minors, and the coming of outfield prospects Kirk Nieuwenhuis and Fernando Martinez, it is possible Pelfrey and Pagan will not be Mets next season due to their comparatively high costs.

Looking further down the road, the Mets will have more important arbitration decisions heading onto the 2013 season.  In addition to Parnell being eligible again (and Pelfrey if he sticks around), Jon Niese, Ike Davis, Daniel Murphy and Josh Thole will all be eligible for the first time-four players who currently play an integral role in the team (in Ike’s case, he will when he returns).  Given that these players are all earning somewhere in the $400K range right now, none of them will command huge salaries in terms of dollar figures, but they should all receive significant increases, especially Niese and Davis if they continue to perform at their current levels (or improve).  In these two cases specifically, it might be wise to explore long term contracts, such as the ones Wright and Reyes received following the ’06 season, to lock them up for their arbitration and a couple of free agent years at a lower price.

Not only will the Mets finances impact the team’s ability to sign free agents, it will have an effect on those players still under team control but who are eligible for arbitration.  This coming and next offseason, the Mets will have some important decisions to make regarding their arbitration eligible players-not just whether to keep them, but whether to ink them to long term deals as well.  Sandy Alderon’s decisions about these players will have some important ripple effects on the future of the franchise.