D-backs Should Become “File and Trial” Team in Arbitration

The D-backs have a great young team of position players, and the makings of a pitching staff that could be at least solid. With the team on the upswing and organizational memory of .500 seasons in both 2013 and 2014, it’s easy to focus on how high the team can go. That’s important, and maybe the most important thing. Still — a close second is how long the team can stay up there, if they indeed stay in contention all season next year. In terms of the team’s ceiling, we’re looking for a shrewd acquisition or three. But worrying about the length of the team’s contention window is compatible with gearing up for 2016 — and with all due respect to A.J. Pollock extension talks, how the team handles its arbitration cases this offseason really could affect whether or not the team’s window stretches just to 2017 or at least one year more.

We don’t have to look very far for an illustration of what I mean. Last offseason, the D-backs had two arbitration-eligible players go unsigned up through the date on which teams and players exchanged arbitration figures. The arbitration projections at MLB Trade Rumors are cited frequently within the industry for a reason: they take what appears to be most of the factors that actually have mattered in the recent past, and spit out a number. Matt Swartz has calibrated it over time, and it’s stunningly accurate (maybe to the point of being self-fulfilling prophecy, to a degree). If you’re a team, maybe you use your own projection system, but it shouldn’t be wildly off (and if it is, time to re-evaluate your method).

You have to use a projection, and if you deviate from that, you better have a good reason. Before the 2014 season, the D-backs broke with convention and gave Gerardo Parra a figure a hair higher than the MLBTR projection (which is normally a good stand-in for a midpoint), but Parra had turned himself into a strange asset — a defense-first corner outfielder — and there wasn’t a lot of precedent for that kind of thing. Neither Mark Trumbo nor Addison Reed presented that kind of case.

Screwing up an early year of arbitration isn’t like losing cash — it’s like losing your wallet, and leaving your PIN number written on your ATM card. The error stacks in subsequent years, even if you made a strong course correction and handled everything perfectly from there on out. After the Touki Toussaint sale, the Mark Trumbo trade looked like a salary dump. Trumbo won a $6.9M salary in arbitration with the D-backs, and at this point, whether a final year of club control over Trumbo is actually worth much of anything is open to debate. It’s possible that Jerry Dipoto will swing a trade before the non-tender deadline, or tender him a contract gambling that he can swing a trade in December or January (trading Trumbo a second time, though, might be like pulling a rabbit out of a hat after showing the world how the trick works).

It’s the Reed situation that should act as the alarm.  Few times in the last few seasons has a team proposed a figure above the MLB Trade Rumors projection for a salary of an arbitration player, and in Reed’s case, the team’s figure was above that mark by $900,000, nearly 20% above projection. It was a figure you might have seen Reed’s camp propose, not the D-backs — and perhaps because of the status of negotiations up until that point, Reed’s figure was him wanting the moon. In the end, the team settled much closer to its figure than Reed’s — but Reed had already won that battle, and if his agent was thrown off with the figure proposed, that was no feather in the team’s cap.

The fact that Reed is a non-tender candidate now with two years of club control remaining is flat-out ridiculous. He’s a good reliever, if not a great one — and having the luxury of going year to year with any kind of pitcher is worth something over and above any surplus value a player might have in terms of salary. Part of it is what happens when a reliever who soaks up saves goes to arbitration, but that was baked into the MLBTR projection. Part of it is the volatility of relievers, but again — baked into the projection, to a degree. It’s not like the way the situation was managed tanked the franchise, but scale doesn’t affect that the method and outcome were both poor.

File and Trial

There is a solution, and it’s highly related to another situation faced by the team this year. Dansby Swanson was widely rumored to be willing to sign at $4.5M even before the draft, and since pre-draft deals are against the rules, that’s as close to certain as we ever get. On The Pool Shot after the Touki Toussaint sale, though, I put on my lawyer hat and said Swanson and his advisor would probably change their tune, smelling blood and an unlikeliness that the D-backs would be willing to weather two storms that lost them a promising prospect in such a short span. Without being “in the room,” there’s no way to know exactly what happened, but it looks like Swanson did indeed change his mind about $4.5M, and attempted to get a better deal.

The D-backs sent a message in winning their game of chicken in the Swanson negotiations: no. No, we won’t renegotiate. No, the number we committed to is the number we’re sticking with. And also: take us seriously. When we draw a line, we draw a line.

GM Dave Stewart knows better than most just how valuable it is to have that reputation, especially so early in his tenure, and in a baseball operations department where both of the top-ranked officials have so little front office experience. He should run with that. None of the agents of the players facing arbitration with the team this winter should be tempted to try to follow the Reed model. All on its own, the Swanson negotiation might do that. To truly get a mulligan for last February, though, it would be very helpful if this winter were conducted on a totally different model.

That model is file and trial: telling agents that if there’s no negotiated salary before figures are exchanged, the team will proceed to a hearing, hell or high water. The teams that employ that strategy — Blue Jays, Braves, Brewers, Dodgers, Indians, Marlins, Pirates, Rays and White Sox, and maybe others — do so because agents are forced to be realistic both before figures are exchanged and in landing on the player’s figure. With no deadline, you might as well ask for the moon. It almost always pays off, because teams are risk-averse for reasons illustrated by the Trumbo and Reed situations. Teams often still settle (with the player’s figure helping to frame a particular range). It almost always pays off because for a team, the nightmare scenario is not so much paying an extra million dollars or two — it’s doing so with years of arbitration remaining, such that the subsequent years of control are no longer as significant an asset.

Without file and trial, an agent has every incentive to go high. Exchanging a figure isn’t just an arbitration event — it’s a negotiation event. File and trial makes it an arbitration event. As Alex Anthopolous of the Jays and Andrew Friedman now of the Dodgers have noted, that also helps the team in negotiation. If an agent has an incentive to be high in exchanging a figure and after exchanging a figure, he has no incentive to go low before then.

It’s not foolproof, in part because arbitration itself is tricky. Both sides may or may not have the same midpoint in mind. If they do, then it becomes a contest of how far from that point you can get while still being closer than the other party. If they don’t, then it becomes a contest of who was more correct about that point — with the added complication that if the other party hewed closer to what they thought was the midpoint, they could still end up closer to the point you’ve identified than you do.

I’m not a scout and I don’t play baseball, and that doesn’t stop me from writing about all kinds of stuff on this site. But this is the thing I know — my area of the law involves frequent negotiations on three different levels instead of one, and working through the ins and outs is what I do on a near-daily basis. I also happen to be pretty damned good at it. We all have our things. But thinking with that hat on is why I was so certain about Swanson, and why I was confident that the Trumbo negotiation would go to a hearing last spring, even though the team hadn’t done that for a decade. I stand by my evaluation of the Trumbo and Reed situations once figures were exchanged last spring. I don’t often say “trust me,” here. But trust me. File and trial is the way through for the team. Losing the Trumbo arbitration hurts, and the team needs to do a better job at future hearings, because objectively speaking, they had the better case and they lost. But the answer is not to act afraid of losing again — it’s doubling down and holding a line, exactly as the team did so well with Swanson.

Setting the Stage

The team will grab headlines with trade and free agent rumors this offseason, but the boatload of Going with a list so you see what I mean, with figures from the MLBTR projections:

Third or final arb year:

• Daniel Hudson (MLBTR: $2M). This one is fascinating, because of the double Tommy John and change in role, and because his rehab spit out and ate his previous arbitration seasons (he was non-tendered and then re-signed with an option that covered Year Two). Stakes are not that high; this one is more just flat out fascinating.
• Jhoulys Chacin (MLBTR: $1.8). We dove in on this a bit in the last episode, and this is another one that is unusual and hard to read, as Chacin already had his supposedly-final arb salary. The stakes are not very high here, either, but this is money the team wouldn’t pay to two guys.
• Jeremy Hellickson (MLBTR: $6.6M). Even in a last year of arbitration with no chance of stacking salaries in future years, the stakes here are higher. Hellickson is probably worth this figure or something in that range, and unless a pitcher just doesn’t fit your team, normally you take any chance to pay a pitcher a market rate on a deal that’s only one year. At the same time, this is money that the D-backs might need if they take a run at a better starter this offseason. This one is more of a non-tender question than an arbitration one, and yet there’s a decent chance that if they keep him, they’ll kind of need to keep him below a certain salary.

Second arb year:

• Josh Collmenter (MLBTR: $2.8M). Nothing to see here. Exercising Collmenter’s $1.825 option is a no-brainer, in part because the option the next year is also a valuable thing.
• Welington Castillo (MLBTR: $3.6M). This is a less extreme version of the Hudson situation, very interesting but mainly because it’s an odd case and it’ll be harder to get on the same page for a theoretical midpoint. Not a lot of guys go from forgotten man to staple like Castillo has. And the stakes are not insignificant here; mismanagement could make him as expensive in 2017 as Miguel Montero was slated to be for the team this season. Could be a three year deal to make here, to keep Castillo as an important not-quite-full-time piece through the whole window.
• Matt Reynolds (MLBTR: $800k). Nothing to see here. With Andrew Chafin‘s job secure, it’s hard to see the team keeping Reynolds, Will Locante, and Keith Hessler all on the 40 man by the time it’s set for Rule 5 draft purposes. I like Reynolds, but I like flexibility, too. Could be moved in early November, and I mean more like Mike Bolsinger for cash, not Will Harris for nothing.

But this is where the magic happens, with first year arbitration guys. None of these salaries will break the bank in 2016, but whether the team reaps surplus value in 2017 and 2018 could make all the difference in terms of whether the contention window ends after 2017.

• A.J. Pollock (MLBTR: $4.3M). Kind of his own category. Stakes are franchise-altering. A first-year salary of $6M could mean a third-year salary of $16M+; start at $4M, and maybe the last year is more like $12M. This might be one you solve with a multi-year deal, and yet if the team gets out ahead of this and declares file and trial, it could change the attractiveness to Pollock and his agent of going year to year, trying to get a great foothold this February and negotiate a better deal later.
• Patrick Corbin (MLBTR: $2.3M). This one might the most important of all. On the one hand, going year to year with Corbin is attractive because of injury risk (which is true to a large degree with any starting pitcher). On the other, the team may need Corbin as much as it needs Paul Goldschmidt for its contention window, and if Corbin’s salaries climb… I like a number of the team’s rising players, but leaving room in the payroll for additions is close to completely necessary for planning for contention.
• Rubby De La Rosa (MLBTR: $3.2M). RDLR may never make “the leap” to being an above average starting pitcher. If he becomes a reliever, he’s still going to carry a Mack Truck worth of counting stats with him into arbitration. Maybe RDLR becomes a very good reliever, but not one of the game’s greatest; if so, we can tell from where things stand right now that he’s probably a non-tender candidate for 2018 due to a high likely salary. The battleground is whether RDLR would have surplus value in 2017, as well. If he’s a good, helpful pitcher, it matters whether he’s in the fold that season.
• Randall Delgado (MLBTR: $1M). We talked on that last episode of The Pool Shot about the compatibility of keeping Delgado, Collmenter and Chacin. $1M is kind of a no-brainer; Delgado has been helpful, and if the team needed to replace him, they’d have to spend more than that to get someone of similar quality (and lock themselves into a multi-year contract to boot). This situation might be ripe for a multi-year deal, if the team can get near-Collmenter terms.

We’ll give plenty of attention to arbitration cases this offseason, but the “file and trial” subject is a preliminary step. It would be natural for an agent to infer that the team would be reluctant to go to trial again after losing with Trumbo. It would be natural for an agent to go even higher than his comfort level, after that paid off so well for Reed even without trial. To an agent right now, the risk of going high looks almost non-existent.

So now is the time to set the stage, time for the D-backs to get out the word that they don’t view arbitration as a bad outcome. Time to turn a perceived weakness into a proffered strength. And as if that weren’t enough, there’s the fact of the limited contention window; and the boatload of arb-eligible guys the D-backs have this winter and next. The team doesn’t have a group of departing free agents, and no one of note beyond David Hernandez. Right now, arbitration is where the team lives, and the stakes are high.