The Psychological Price of Arbitration

The Dodgers pulled some late-inning hustle to reach agreements with their remaining arbitration-eligible players yesterday, signing deals with Jonathan Broxton and Andre Ethier for two years, and one-year deals with Russell Martin, James Loney, George Sherrill, and Hong-Chih Kuo. Coupled with the news earlier this month that Matt Kemp and Chad Billingsley also signed agreements with the Dodgers (two years and one year, respectively), and Jason Repko was signed ages ago, the Dodgers avoided arbitration with all nine players whose salary fates would have been left to an independent panel.

All of them got a big step up in salary, most notably Kemp (jumping from $467K in 2009 to $4M in 2010 and almost $7M in 2011), Billingsley ($475K in 2009 to $3.85M in 2010), and Loney ($437K in 2009 to $3.1M in 2011). Broxton's two-year deal for $11M total is also notable (he earned $1.825M in 2009). Sherrill and Martin got pay increases of $1-2M each, Hong-Chih Kuo doubled his salary to come in around the $1M level, and Repko treaded water at $500K plus some performance bonuses. (Thanks to Eric Stephen over at TBLA and Cot's Baseball Contracts for the data.)

No player got more than two years. Neither Broxton nor Ethier got the salary levels which they submitted to arbitration for their first year, but surpassed that level for their second year. So I have to think that most of these nine players are pretty happy, considering the general ranges of the salary increases, the job and income security (particularly amidst a precarious financial situation with ownership), and the prospect of keeping together a core group of talent with playoff experience and (IMHO) unrealized potential.

Ownership has to be happy, given the short duration of the deals and the relatively conservative salary increases. Management has to be happy that they're getting some continuity and stability. Dodger fans are happy that we'll be seeing most of the players we've watched grow up and take our team to October baseball.

Vin Scully is happy he doesn't have to learn a set of new names. The guy who sews the letters on the backs of jerseys is happy that we're retaining players like Kemp and Kuo rather than going after Jarrod Saltalamacchia. Bill Plaschke is happy he gets to recycle his "Chad Billingsley Is Not An Ace" article at least two, maybe three, more times next year. In fact, the only person around the Dodgers who might not be happy right now is Jamie McCourt, because she can't get her morning swim in anymore.

So this huge aura of happiness surrounds the Dodgers, which is great. Meanwhile, a second-tier team up north gives word that they can't reach agreement with their star player, who has just submitted a request for the largest salary ever awarded in arbitration. And that Lincecum's $13M ask is a country-mile apart from the $8M team offer. And that if the teams don't settle, this goes off to an arbitration panel next month to pick one of the offers, without the prospect of compromise.

I haven't been able to find anything on the psychological impact of the arbitration process (in fact, if you search, you end up finding horrific tales of employment arbitration contracts like the second story here, or ridiculous term papers like this which are peppered with scholarly phrases like "So why does salary arbitration take the rap for all the problems in modern day baseball?" (emphasis mine)). But I have to think that the alternative of not reaching agreement with the players has to sow bad seeds of resentment either way.

If Lincecum wins, the franchise is (in theory) pissed, skyrocketing Lincecum a lot closer to Barry Zito salary levels (and even ahead of the questionable contract given to Aaron Rowand (5 years / $60M)). If Lincecum loses, one has to think that the two-time Cy Young Award winner feels grossly underpaid (who would be earning $10M less than Zito in 2010), and takes that frustration to work each day.

In fact, Lincecum may be dissatisfied even with his $13M offer in the first place; Keith Law over at ESPN.com (no link; insider only) wrote, "I'd like to see the arbitration brief that argues that Lincecum, a first-time-eligible, super-two free agent with two Cy Young Awards, should be paid less than Ryan Howard was as a first-time-eligible free agent with one MVP award. Not just less -- $2 million less. If anything, Lincecum's agents underfiled; his case was unprecedented and a number of $15-18 million would have been defensible." McCovey Chronicles breathed a sigh of relief that Timmah's offer wasn't in the $25M range that some had expected.

The San Jose Mercury News speculated that the $13M offer reflects that Lincecum's agent, Rick Thurman, expects the case will go to a hearing. Or perhaps this is all part of the big dance for Lincecum, who is seeking a long-term contract extension anyway (and would give the Giants the change to avoid three more arbitration opportunities with Lincecum). Irrespective, his future, long-term and immediate, with the Giants remains unresolved. And this could fester for another month.

From a comparative perspective, Ryan Howard got his (current record) $10M ask awarded by arbitration in 2008; he then finished second in the MVP race despite posting the lowest offensive numbers (BA, SLG, OPS) since his rookie year. The Phillies avoided arbitration with Howard next year, (he had asked $18M, the Phillies offered $14M) by signing him to a three-year, $54M deal and preventing salary negotiations from happening again until 2012. And in 2009 he posted much more solid numbers than in 2008. Coincidence?

I understand that the arbitration process is designed to avoid this very standoff; it is structured to encourage teams to reach agreement and settle (which happens the majority of the time), rather than duke it out in front of the panel. But I wonder if the intangible detriment of not reaching agreement--or even getting to this stage in the first place and letting wide monetary gaps in expectations become a public referendum--breeds a discontent with the player, the team, and the fans. Is there a psychological cost to not resolving uncertainty, particularly with your team's best player?

But that's the Giants' cross to bear for now. We Dodgers, and Dodgers fans, went nine-for-nine and have every reason to be settled and happy. Right?