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Another Free Agent Swallows Hefty Paycut

Right-hander Jon Garland, certainly one of the top half-dozen or so starting pitchers on this free agent market (off the top of my head, he's below CC Sabathia, A.J. Burnett, Derek Lowe, Ben Sheets and Oliver Perez), has reportedly agreed to a one-year $6 million deal with the Arizona Diamondbacks. Even a math-challenged hack like myself can figure out that's a 50 percent paycut from his $12 million salary in 2008, when all he did was go 14-8 (albeit with an unsightly 4.90 ERA) and throw 196 2/3 innings. Is this what baseball's free agent system was set up to do?

You can blame it on the recession or the rising value of draft-pick compensation, or chalk it up to a simple "market correction," or haul out the "C" word (that would be "collusion") -- whatever it is, something is out of whack. In Garland's case, he clearly made a mistake in declining the Los Angeles Angels' offer of arbitration, which, had he accepted, likely would have resulted in a salary of $14 million or so in 2009. Call it an $8 million mistake.

But free agency is supposed to be a player's reward after six years of being under a single club's control, and Garland, 29, would be justified in wondering where his reward disappeared to. And he's not alone. Thirty-two-year-old left fielder Pat Burrell, coming off four straight seasons of at least 29 homers and a .500 slugging percentage, already accepted a 43 percent paycut (from $14 million in 2008 to $8 million in 2009, as part of a two-year $16 million deal) to sign with Tampa Bay.

And in the coming days, a whole wave of players is going to be staring at similar scenarios. Adam Dunn, 29, is going to go from $13 million in 2008 to perhaps half that much in 2009, despite five straight seasons of at least 40 homers. Bobby Abreu ($16 million in 2008) will be forced to take a similarly hefty paycut. And other players, such as Orlando Hudson ($6.25 million in 2008), will have to come to grips with the fact they won't be getting the huge, multi-year deals they might have once envisioned.

Though it goes against the very essence of baseball's talent-compensation structure, the arbitration system -- by which younger players with between three and five years of service time have their salaries set -- in some ways has become a more lucrative path than free agency.

Ryan Howard's case with the Phillies -- if he wins, he will get an 80 percent pay increase over his 2008 salary of $10 million; if he loses, he will get a 40 percent pay increase -- is only the most visible example. Last year, according to the website, the average pay increase of the 110 arbitration-eligible players was 106 percent.

Increasingly, the way to make the big money in baseball is not through free agency, but through arbitration.

By Dave Sheinin  |  January 28, 2009; 2:25 PM ET
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Which simply fires up the Nats fan base, all 48 of us, as this demonstrates, again, that a modest investment would serve to both make the on field product more entertaining and provide support, guidance and the incentive of competition for playing time to our valued prospects.

Isn't this our market? Quality fill ins available at bargain rates and no need to sign them past their utility/our need. It's gonna be ugly if we don't get a taste of that.

Posted by: advocate2 | January 28, 2009 3:51 PM | Report abuse

1 year/$6M, with a mutual option for the second year places the guaranteed money to Garland to about $8M or so. No thanks. Garland is a league-average pitcher with declining numbers. He is basically now a Steve Trachsel-type pitcher. $6 or $8M for a Trachsel is not what I would call a good investment. I'd rather see if Balester or Zimmermann or Martis can pitch and grow this season for a fraction of that cost. I'd bet one of these three will post similar numbers to Garland by years end.

Now, if the Nats want to take a flier on a pitcher that was injured last season (a la Mark Mulder, Freddy Garcia or Kris Benson) and hope to catch lightning in a bottle, then I'm for that. Also, I'd rather they sign someone like Pedro for one year to see if he has anything left than to plunk down $6-8M for one year of Garland.

Posted by: erocks33 | January 28, 2009 4:09 PM | Report abuse

This isn't necessarily good news for the Nats, with regard to Dunn. The reason is, while it is clear they can afford him, it is also true that they could always afford him. What this now does is increase the uncertainty in what the market is for a player like Dunn... and thus makes it more difficult to structure an offer. Of course, you could make a pre-emptive offer, but there are some good reasons not to do that.

It also makes Dunn and other free agents affordable for smaller-market teams, too... so where it might have been the Nats and one other suitor, now anyone can afford him.

Posted by: wigi | January 28, 2009 4:24 PM | Report abuse

Garland is still a better pitcher than Trachsel, but I see your point. He'd have had a .500 W/L record (or worse) with just about any other team in MLB.

I'd bet we see a lot more players accept Arbitration next year for a one-year deal.

Posted by: BinM | January 28, 2009 6:08 PM | Report abuse

Good point Dave, but it's also about which free agents are being allowed to hit the market. As you know, teams are increasingly focused on locking up their own young talent (buying out arb and FA years), so the talent that's hitting the FA market is older, average and/or flawed (even Dunn and Burrell, as attractive as their bats may be, give back so many runs in the field that their value is diminished accordingly -- the reign of the sabermetricians has begun!)

Wigi, agreed -- and if you're one of those guys staring at a one-year deal, you probably take the money from a contender rather than the Nats if at all possible.

Posted by: BobLHead | January 28, 2009 6:10 PM | Report abuse

Below really does not have much to do with Garland, but it is interesting to see how even the most successfully marketed and lucrative teams are feeling the pinch of the recession. Guess which one I'm gonna post about and where the story comes from? But still, it is a decent data point for when the Insiders do a post about economics of MLB or the Nats or the TTMNBN.

Red Sox ticket sales off 2% from last year and new corporate sponsorships have dropped off significantly from the 8 - 10 a year pace. Focus is on retaining old sponsorships. Even have to advertise to say "tickets still available." I can only imagine what it's like in OPACY or LernerStan Park, where there is no need to buy a seat in advance for more than 10 or so games a year.

Posted by: jca-CrystalCity | January 29, 2009 11:03 AM | Report abuse

Bob, I think the point being made above is that in a market constricted by as much uncertainty as this one, the Lerners--reputed to be worth more than any other ownership group at $4 billion before the depression--have the ability to take advantage of the market. If and when Manny makes his move, Dunn will have the suitors he is going to have lined up. The Lerners should be able to best whatever offer is on the table is they so desire. If Dunn is looking at $6 million and one year to play for a contender or $8 for the Nats, I think he takes the Nats. That is what is meant above by this being the perfect marketplace for the Lerners. They can outbid the opposition for both Dunn and Hudson and not have to spend a whole lot of money to do it, or commit to inordinately long contracts in the bargain--so to speak.

Posted by: Juliasdad | January 29, 2009 1:29 PM | Report abuse

Re the Red Sox corporate revenue -- How are they feeling the pinch?

The team refuses to discuss the actual numbers (and I'm not suggesting they should, it's just impossible to make a determination without the actual numbers), so how do we know if it's any less than last year?

While I wouldn't necessarily say there's collusion I do think teams are using the economy as an excuse for being cheap (others may say "careful") this off-season.

The last time the owners said they were losing money and needed to contract two teams though they were proven to be liars when the financial statements were released.

And the real money is no longer coming from ticket sales or sponsors. It's coming from MLB Network and

Shawn Hoffman of Baseball Prospectus writes, "So while baseball might not be recession-proof, it does seem to be recession-resistant. The key has been finding new, robust growth engines to feed off of, even if traditional revenue streams (like gate receipts) stagnate. This is why MLB Advance Media and, to a lesser extent, the MLB Network are so crucial to the sport's short-term financial future. Even if attendance dips a bit due to the economy, those two companies could go a long way toward canceling out the losses. Bud will no doubt continue to be cautious, but his business actually looks to be in a very solid position heading into 2009."

Posted by: noahthek | January 29, 2009 3:12 PM | Report abuse

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