Arbitration vs. Long Term Contract?

GoodOlKevin · 08-07-2013, 05:40 PM

Heres the scenario....you have a lights out 21 year old player already on the all Star team putting up huge numbers. What is the benefit of signing him to a deal early as opposed to keeping him on arbitration for the 6 years?

(like what the SF Giants did with Buster Posey)

Bluenoser · 08-07-2013, 05:57 PM

You've got 6 yrs to see if he's a one hit wonder or the real deal before you tie up serious $$$ for a long period.

There are benefits too though, as sometimes you can get a stud for a lot less on a long term deal.

Like real life, many transactions involve some risk and chance taking on the GM's part. Every GM has different limits on what he's willing to do and how far he's willing to go.

JMDurron · 08-07-2013, 07:58 PM

Well, let's keep in mind that you're presenting a binary choice where you really have 7 different options.

1) Long-term extension after 1st year
2) Same 2nd year*
3) Same 3rd year*
4) Same 4th year
5) Same 5th year
6) Extend just before FA in 6th year
7) Let go/bid as a FA

Personally, I always let the studs play out their minimum salary seasons. Once they hit arb 1 (Option 3 or Option 2 if a "Super 2" player), I extend them through age 30, or the end of their 6 years of control, whichever comes first. I do this because each year of arbitration will generally escalate that player's salary, and *MOST* players I've found will accept deals that cover all of their arb years (and maybe some FA years) at or near their arb1 rate. That's a huge savings for arb years 2-4, even if the player doesn't completely maintain their production for that time. Doing it for every player balances out the salary risk, with individual flameouts being balanced out by having some cheap young studs under contract.

I don't see nearly as much upside in extensions before the minimum salary years are done. Those are your years to get to know the player, once arb1 comes around, it's time to pay the piper. I'd rather pay less sooner than pay more later.

r0nster · 08-08-2013, 01:29 PM

What I like to that seems to work well for me is if I have a good rookie keep him on auto pay then do one year arbitration then go long but I will not sign him past age 35 unless I include team option. I do this to keep the core players together and hopefully a winner and does work well for me.

08-07-2013, 05:40 PM	#1
GoodOlKevin Minors (Single A) Join Date: Oct 2011 Posts: 63	Arbitration vs. Long Term Contract? Heres the scenario....you have a lights out 21 year old player already on the all Star team putting up huge numbers. What is the benefit of signing him to a deal early as opposed to keeping him on arbitration for the 6 years? (like what the SF Giants did with Buster Posey)

08-07-2013, 05:57 PM	#2
Bluenoser Hall Of Famer Join Date: Mar 2002 Location: In The Moment Posts: 14,494	You've got 6 yrs to see if he's a one hit wonder or the real deal before you tie up serious $$$ for a long period. There are benefits too though, as sometimes you can get a stud for a lot less on a long term deal. Like real life, many transactions involve some risk and chance taking on the GM's part. Every GM has different limits on what he's willing to do and how far he's willing to go.

08-07-2013, 07:58 PM	#3
JMDurron All Star Starter Join Date: Mar 2011 Posts: 1,260	Well, let's keep in mind that you're presenting a binary choice where you really have 7 different options. 1) Long-term extension after 1st year 2) Same 2nd year* 3) Same 3rd year* 4) Same 4th year 5) Same 5th year 6) Extend just before FA in 6th year 7) Let go/bid as a FA Personally, I always let the studs play out their minimum salary seasons. Once they hit arb 1 (Option 3 or Option 2 if a "Super 2" player), I extend them through age 30, or the end of their 6 years of control, whichever comes first. I do this because each year of arbitration will generally escalate that player's salary, and MOST players I've found will accept deals that cover all of their arb years (and maybe some FA years) at or near their arb1 rate. That's a huge savings for arb years 2-4, even if the player doesn't completely maintain their production for that time. Doing it for every player balances out the salary risk, with individual flameouts being balanced out by having some cheap young studs under contract. I don't see nearly as much upside in extensions before the minimum salary years are done. Those are your years to get to know the player, once arb1 comes around, it's time to pay the piper. I'd rather pay less sooner than pay more later.

08-08-2013, 01:29 PM	#4
r0nster Hall Of Famer Join Date: May 2006 Location: Michigan Posts: 3,082	What I like to that seems to work well for me is if I have a good rookie keep him on auto pay then do one year arbitration then go long but I will not sign him past age 35 unless I include team option. I do this to keep the core players together and hopefully a winner and does work well for me.