Talking Baseball

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Posted by Dave on Friday, February 13, 2004

Salary Arbitration Revisited

Truth be told, I've been waiting about 3 solid weeks to write about arbitration again. I couldn't write about it again, however, because no arbitration cases had occurred yet. Unsurprisingly, a host of players agreed to contracts prior to their arbitration date. The most recent case, Kevin Millwood (1 year, 11 million), has been discussed to death on this board (I also think he is highly undeserving of that contract - I'm not even sure he is worth 7). Looking back on my previous discussion regarding salary arbitration, I'm pleased with my hypothesis. I felt that players and teams sometimes inexplicably (seemingly) agree to a bad contract prior to arbitration for one main reason: Risk aversion. Neither side wants to enter arbitration because either side could potentially take it on the chin. Albert Pujols, for example, could receive as much as 10.5 million or as little as 7 million. That's a pretty risky proposition for both sides - the Cardinals payroll becomes a lot tighter (too tight, perhaps, forcing a salary dump) if they end up paying 10.5 and Pujols loses a lot of money if he only gets 7.

Omar Minaya confirmed this fact when he spoke about the Expos' win in Nick Johnson's arbitration case: "Despite the risky nature arbitration presents, we know Nick's professionalism will not deter him from achieving his full potential this year." Omar and Nick were both concerned about the risk entering the case, surely. Omar was certainly glad to know that the arbitors felt that Nick was only worth the 1.25 million the Expos asked for rather than the 1.68 million Johnson asked for. The latter part of his quote touches on something which I failed to expound on (I did mention it, I believe) in my article. "We know Nick's professionalism will not deter him from achieving his full potential this year." That could be said about most any player at any time, so why mention it following an arbitration hearing? My hypothesis, reinforced by the following case, is that both sides desire to not hurt the relations it has with the other. This is because the side driving the hard bargain may worsen that side's chances at a future resigning.

Jack Wilson alludes to this in the press conference following the Pirates' loss in his arbitration hearing. Jack Wilson: "'It’s unfortunate it had to go this far,' said Wilson. 'It’s something I never intended to do. The whole point of the offseason that I had concentrated on was just getting tendered and being in a Pirates uniform. That’s all that really mattered to me.'" Jack's trying to comfort the Pirates by stating that the arbitration wasn't personal. He just wanted a fair deal and to stay in a Pirates uniform. He wants to make sure the Pirates understand have not damaged their relationship so that when it comes time to renegotiate a contract again, the Pirates will be a willing negotiator. Going to arbitration could offend or embitter the side that's trying to accomodate the opposing side that's trying to drive a hard bargain. Jack wants to make sure the Pirates aren't embittered. I failed to mention the potential embitterment as a possible reason to avoid arbitration in my previous article. This is because I believe that in agreeing to the average of the two proposed salaries made by the team and the player (this seems to be somewhat common) still embitters the side that didn't want to budge in the first place. That's just my opinion, however. Oh, and in case you were wondering (or didn't click the link, you uninquisitive insolents), Jack Wilson got the 1.85 million he asked for; the Pirates felt he was only worth 1.4 million.

This is all terribly interesting, I'm sure (a bit of sarcasm, because the following discussion will be far more intriguing (in my view, certainly)), but that's not the real motivation for this post. You may have noticed something peculiar about the arbitration rulings (it took me awhile to compare two indispuatble facts): Jack Wilson received 1.85 million from arbitration and, as a result of the objective, fair, knowledgable, and unbiased process known as arbitration, Nick Johnson will only receive 1.25 million. You have got to be kidding me. It would seem to me, and any reasonably informed or knowledgable baseball player, that not only is Nick Johnson better than Jack Wilson, he's significantly better. Take a look at their side-by-side offensive comparison on MLB.com. Nick played in 54 fewer games (about 1/3 less than Jack) and still managed to best him in most every offensive categories - even the non-averaged statistics! Nick had more HRs, walks, runs, and a better average, OBP, and slugging percentage. Remember, this is in 54 fewer games - just imagine what he could do in Jack Wilson's total of 150 games. Nick's OBP is also very indicative of a player with a very large ceiling - with that eye he could soon turn into Jason Giambi (how ironic it would be if he did, considering they signed one to a now illegitimate contract only to have the one they were looking for walk away from pinstripes). Jack Wilson's offensive statistics are positively pedestrian. To play in major leagues with these kind of offensive statistics (300 OBP, 350 SLG? That's awful) you need serious defensive capabilities - and most would claim that Jack Wilson has those capabilities.

Looking at the offensive statistics, it would seem there is no way Nick could be construed as a less valuable player than Wilson. But, there are two problems (that are alluded to in the above paragraph) with the belief that Nick is better than Jack (and therefore deserving of a better contract, seemingly). First, Nick is frequently injured, limiting him to the number of games he can participate in. Though some of the games he lost last year were as a result of playing behind Giambi (18 million soon? I'd hate to be paying that contract), the majority were as a result of his penchant for the Disabled List. So, in arguing to the arbitors, the Expos probably said something like this: "If this guy consistently gets injured, how can we depend on him for a full year? If he's not healthy, he's not worth the money he says he's worth - heck, he can't even play 100 games." The problem with this argument is that he's definitely worth it, especially if you look at his worth in relation to his arbitration buddy, the 1.8-million-dollar-man himself, Jack Wilson. Again, I'll be using win shares to approximate the value, in wins, that Wilson and Johnson were worth last year. Nick was worth 14.5 while Jack was worth only 11.3. In other words, Nick was worth nearly a full win ((14.5-11.3)/3) more than Jack Wilson. This seems rather odd, when you consider the fact that Wilson played nearly 54 more games, but Nick was worth a full win more. You could argue that you have to pay someone to play those games at first that Nick misses, but, even then the contracts are a wash and you're still left with an extra win created by Nick's burgeoning baseball brilliance.

Second, as anyone who watches SportsCenter can attest, Jack Wilson seems to play some sparkling defense at shortstop. It's a rare week during the baseball season where Baseball Tonight fails to sport a Web Gem by Jack Wilson. He has something of a reputation when it comes to making diving plays in the hole. It's this defense that may cause one to believe that Jack Wilson may be worth more than Nick Johnson. If we consult Defensive Win Shares (in a conversation earlier tonight, Aaron Gleeman assured me that these were reasonable estimates after I mistakenly relied on their cumulative values as a measure of defensive aptitude (I suspect that nearly all our readers are acquaintances or have travelled over from Aaron's blog, if you haven't seen it yet, do so, it's fantastic writing)), courtesy of Baseball Graphs, we'll see again that the difference between Nick Johnson and Jack Wilson is fairly minimal. Jack Wilson plays a decidedly mediocre shortstop if you view his value of 3.93 for WS/1000 innings defensively. This is right in the middle of the pack for National League shortstops; I've long suspected that Wilson's mediocre range was compensated for by his spectacular hands and flair, this statistic confirms that belief. Nicky's not too shabby, however. He sports a value of 2.24 WS/1000 innings defensively. This is actually better than nearly all of his peers at first, but the statistic seems unreliable (Jason Giambi's 2.20 is pretty high for a notoriously bad 1st-baseman), and it is still significantly below Wilson's 3.93. The problem with believing that Wilson's defense makes him better than Johnson is this: We already included that in our original analysis of total win shares. Maybe you believe that defense is undervalued by the Win Shares system. I won't argue with you, but ask yourself this question: Do you think Nick's propensity to get injured (remember, he's still more valuable even for only 96 games) and his questionably worse defensive credentials merit a salary that is 600,000 dollars less than Jack Wilson?

I don't even have to mull it over to realize that it's absurd to think that Nick Johnson isn't at least worth what Jack Wilson is. This brings us back full circle to the institution of salary arbitration. Arbitors "must consider the player’s contribution to his club during the past season (including but not limited to his overall performance, special qualities of leadership, and public appeal), the length and consistency of his career contribution, the record of the player’s past compensation, comparative baseball salaries, the existence of any physical or mental defects on the part of the player, and the recent performance record of the club including but not limited to its league standings and attendance as an indication of public acceptance. Arbitrators may not consider the financial position of the player and the club, press comments, testimonials, or similar material bearing on the player or the club, except for recognized annual awards, offers made by either the player or club prior to arbitration, the cost to the parties of their representatives, and salaries in other sports or occupations. Further, the neither party may present evidence related to the luxury tax." Basically, they need to be the experts on baseball and on the worths of players in baseball. It seems, however, that they're not. The group of arbitors that MLB has under contract mistakenly (in my opinion, certainly) gave Jack Wilson 1.85 million while giving a clearly better player, Nick Johnson, only 1.25 million. There are two reasons for this:
1. The criteria and rubric used by the arbitors is so out of whack that it could produce these results. Or,
2. The arbitors really don't know what they're doing.
Call me arrogant, but I don't think I'm wrong, and I don't think it's the former reason. This is because no set of reasonable criteria would cause me to believe that Nick Johnson is worth less than Jack Wilson - certainly not 600,000 dollars less. I've assured myself of this fact in the preceding discussion. So, I'm convinced that the arbitors really don't have as much expertise as they should. I don't doubt their objectivity, their fairness, or their intentions in general. Arbitors, I would expect, would protect their integrity to their death - it's career suicide and totally immoral to behave in a biased fashion. Since arbitors intend to decide what's fair they must not be using the correct tools or instruments to understand the value of a player. RBIs? Subjective evaluation of defense? These don't matter. You need to maintain objectivity, especially as an arbitor. The fact that these arbitors are evaluating players' worths so poorly signals to me that their instruments and rubric are poorly constructed. No wonder teams and players are so afraid to go to arbitration.

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