Tuesday, November 10, 2009

Twins Could Sign Type A Free Agents

Know how a pendulum works?

Me neither. It has something to do with gravity and Newton's Laws of Motion and the spin (or wobble?) of the earth. Any self-respecting geek should know this stuff, and I remember learning it at least three times, but I'll be darned if I can explain it now. I basically remember two things:

1) It goes back and then it goes back.
2) It repeats that pretty consistently forever.

Offseason markets can work like that, too. Things change. And then they change again. And that’s why the Twins might still be able to sign some Type A free agents.

Which would be nice, because these "Type A" free agents aren't exceptionally tense overacheivers who will die of a stroke before their daughter's wedding. They are some of the better free agents available, as decided by Elias Sports Bureau, based on a statistical formula. All free agents are categorized this way, with the best being “A”, the next being “B” and the rest getting no grade at all.

This is supposedly done so that teams that lose a free agent can get compensated with draft picks the following year. For instance, losing a Type B free agent gets a team an extra draft pick after the first round, as a gift from Major League Baseball for their pain and suffering. But losing a Type A free agent not only gets them the extra draft pick, they get another first or second round draft pick from the team that signed the Type A free agent.

Last offseason the pendulum swung and the market decided those draft picks were pretty valuable. As a result, Type A free agents got screwed. Some very good players who usually would have cashed in on multiple year contracts were forced to accept one-year, low-base salary contracts because no team wanted to sign them and give up their draft pick.

In part, it's those players (or their agents) fault, because there’s a catch for the teams that the players glossed over. In order to get the compensation picks, the team needs to give the player a chance to come back on a one-year basis at market price, which they do by offering him arbitration. If the player turns down the arbitration, he is a free agent and the team gets compensation when he signs with another team. But if the player accepts the arbitration, the player rejoins the team and they agree on a market level salary with the help of an arbitrator if necessary.

A really good example of a player who was screwed by this last year was the Twins own Orlando Cabrera. Cabrera had butted heads with White Sox manager Ozzie Guillen the year before in Chicago, so everyone knew he wanted to leave. When the White Sox offered him arbitration, he turned it down, since he was arguably the most sought after shortstop on the free agent market. But instead of getting a huge deal, his Type A status resulted in a one-year, $4 million contract with Oakland.

So last year, rejecting that arbitration offer was a major mistake. Had he accepted it, strained relationship or no, he likely would have made $10 million. If he had to do it over, you can be sure that his agent would have informed the White Sox that they would accept if Chicago offered him arbitration. Which likely would have meant that Chicago would NOT have offered him arbitration.

That summarizes the way the pendulum will swing back this year. Type A players are going to be a lot more willing to accept arbitration. Which means the pendulum might swing again, because then teams will likely be a lot less willing to offer it. And that means a lot of teams are going to be able to sign Type A players without having to give up any draft picks.

So how does it affect the Twins? Well, these two second baseman might just be available, despite their Type A status:

Placido Polanco – Like I wrote about a couple of weeks ago, if the Tigers offer Polanco arbitration, it’s a no-brainer for him – he accepts it. So there’s no guarantee he will be available. But if he is available, he’s not going to cost a draft pick. And given the Tigers already bloated payroll (and the fact that they're located in the most economically depressed city in major league baseball), one can afford to be optimistic he won't be offered arbitration.

Orlando Hudson – Hudson is the toughest arbitration call in this story, and he might be the toughest in the major leagues. He was hurt by this process last year when he rejected arbitration from the Diamondbacks. He didn't end up signing a contract until spring training, and it was a one-year, $4 million base contract with the Dodgers, though he made about $7.5 million with incentives. If the Dodgers offered arbitration this year, that experience should be fresh in his mind.

That's why I suspect he would accept arbitration, especially because the market is thick with free agent second baseman. So the Dodgers need to decide if they want to essentially offer Hudson a one-year contract worth $8-$10 million. That's not a bad value for them, but they also sat him towards the end of the year so he wouldn't make so much from his incentives. Financially, it seems like a risk they shouldn’t want to take. So like Polanco, Hudson could be available, and if he is, no draft picks will need to be given up.

But it's not all good news. There are some other guys that Twins fans might be dreaming of that probably won’t be options because the Twins would still need to give up a draft pick for them:

Chone Figgins – The speedy third baseman wasn’t a great option to begin with because he’s going to be expensive and want a multi-year deal. The Twins won’t want to block the route for third base prospects Danny Valencia or Luke Hughes. But Figgins will be offered arbitration, will reject it, and will sign someplace else for a lot of money and that team will need to give up a draft pick.

John Lackey and Randy Wolf – They’ll be two of the top starting pitchers on the market, and some team will give up the draft picks to sign them to a multi-year deal. It won't be the Twins, most likely.

So question the doomsayers who write-off Type A free agents. They're following where the pendulum was last year. And pendulums swing back and forth incessantly. This much I know.


David said...

I thoroughly enjoyed this. Really good point about how the arbitration process is actually dynamic and not just fixed in stone. It's too bad, b/c I was dreaming of a Span/Figgins/Mauer/Morneau/Cuddyer/Kubel/Hardy/Young/Punto lineup, even though Figgins' price tag was always going to be too high. Oh well - Polanco wouldn't be a bad option either.

walter said...

Let me get this straight. Last year the Angels didn't offer Texeria arbritation, the Brewers didn't offer Sabithia arbritation, and the Blue Jays didn't offer Burnett arbritation.

How could the Yankees sign all three if they had just one first round pick to give up.

This might be a secret way to stop the Yankees from buying free agents. Once they sign an arbritration player they can't sign another because they don't have the draft pick to pay for the second player.

Walter Hanson
Minneapolis, MN

Jack Ungerleider said...

FYI your picture is most likely of a Foucault Pendulum. Follow the link for Wikipedia's description. They are pretty cool. Some of the concepts illustrated by a Foucault Pendulum can be applied to robots to help them understand their orientation.

TT said...

The way draft compensation works is that the first 15 first round draft choices are off-limits. If those teams sign a player, they give up their second round pick. The same is true if a team signs more than one Type-A free agent, they give up later draft picks. The order is determined by the free agents Elias ranking.

So the Yankees lost their first three draft choices in June and got a couple supplemental choices for players they lost.

The players union is not going to agree to something that prevents teams from bidding on free agents. If quality players continue to find themselves without offers, they are going to demand the system be changed.

Anonymous said...

Do you think the Twins will chase Brandon Phillips, who the Reds are willing to get rid of due to salary?

I believe that if the Twins offered Perkins/Liriano, Delaney, and Casilla, they could pry Phillips away. This gives the Reds some youth and talent while at the same time providing relief on their salary.

What do you think?

John said...

I think Phillips is enticing, and I wouldn't be shocked if Liriano, Delaney and Casilla actually would get the deal done. I'd do it.

The one thing that gives me pause is that while I like Phillips, I wonder if the Twins wouldn't be better off with a guy with less power and a higher OBP that would be a better fit for the #2 spot. Plus, he'll be more expensive.

Phillips is a lot like Hardy, except with the stolen bases.