The Pros and Cons of Offering Arbitration

The first Fall Out Boy song I ever heard was “The Pros and Cons of Breathing around this time about or six years ago. Anyway, in tribute to that, I’ll be discussing the pros and cons of offering outfielder Johnny Damon arbitration.
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First, let’s review Damon’s season. By many measures, especially power, Damon had a career year. Johnny’s .489 SLG was the second highest of his career, and highest since his .495 mark with the Royals way back in 2000. His 24 home runs matched his career high that he set in 2006, his first season with the New York Yankees. The .206 IsoP that Johnny sported this year was a career high as well, and his .376 wOBA was his second highest (.385 in 2000 is the highest of his career).

A lefty swinger, Damon was definitely helped by the new Yankee Stadium. He hit 17 of his 24 homers there, and slugged .533 at home as opposed to .446 on the road. Overall, Damon OPS’d .915 at home and .795 on the road.

The year ended on a very sour note for Johnny, as he went homerless in the Yankees’ September and October regular season games. His line for that time span was a paltry .247/.350/.315/.644. Despite still taking his walks, Damon hit for absolutely no power. Perhaps a full season of playing left field was catching up to Johnny. His 132 games in the outfield were his most since 2006, when he played 131 games in center field for the Yankees.

In 2009, Johnny Damon made $13MM, and as a player, especially one with Scott Boras for an agent, Johnny will be looking to increase that salary for 2010. Given the market, Johnny Damon probably isn’t worth $13MM or more. So, why would the Yankees bother offering him arbitration? Let’s, finally, run down the pros and cons of doing so.

The list of pros may not be long, but it is a list nonetheless.

  • It essentially guarantees a one year deal if Damon and the Yankees go to arbitration. While the price may be a little higher than the Yankees want–let’s say they offer $11MM and Damon submits $15MM, it’s better to overpay for one year than for multiple years.
  • It could clear up the DH/OF situation if Damon accepts. His acceptance of arbitration could mean the Yankees will let Hideki Matsui walk and use Damon as the DH while signing someone else, maybe Mike Cameron, to fill in the outfield spot.
  • If Damon rejects arbitration, it could strengthen the Yankees’ position in two ways. The first is that Damon is a Type A Free Agent, so if he signed with another team, the Yankees would receive a first round draft pick in 2010. The second reason is exactly the same as the first. Because a signing of Damon would require draft pick compensation, a team would probably be less likely to sign Johnny. I’d be willing to bet that many teams do not want to give up a draft pick for an outfielder on the wrong side of 35. This could lead to Damon coming back to the Yankees and taking a reduced deal.

There is, of course, a con side to this coin. The one big con is that Johnny Damon could always accept arbitration. Even though I just said that overpaying Damon for one year isn’t awful, it is still simply the lesser of two evils. No matter what, it’s an evil. The money that could go to Damon if he accepts arbitration could be better used elsewhere in the organization, either on another, cheaper player or perhaps some pitching depth.

Either way, arbitration offer or not, I’ll trust the Yankees’ decision making. They obviously have a better read on the market and more information about it than I do, so I trust them to make the right decision.

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