Discussion: To Offer Jeter Arbitration or Not

In his column today Joel Sherman of the NY Post discusses the pros and cons of offering Derek Jeter arbitration. More than likely the Yankees will reach a deal with him and this won’t matter, but there are reasons to both offer and not offer it to him.

If the Yankees don’t offer him arbitration and Jeter does end up leaving and playing somewhere else then they are left with no Jeter and no draft picks. It’s certainly not a situation they want.

Offering him arbitration is not so simple. The first reason to do it is so that way if he rejects and the unlikely situation arises where he leaves the team then they would be able to get two draft picks as compensation for losing him.

Again there are both upsides and downsides to offering him arbitration.

The upside is that he could accept and the Yankees could keep him on a one-year deal. He got paid $21 million in 2010 so the least he could make in arbitration is $16.8 million in 2011. If the Yankees thought they had a chance to keep Jeter on a one-year deal at that price tag they would likely jump at the offer.

The downside is a little more complicated. Jeter has already taken the Yankees to arbitration in 1998 and kicked their butts. As Sherman notes in his column, he could end up earning $25 million or more in 2011 through arbitration.

Personally, I have no problem with the downside of arbitration. Signing Jeter to a one-year deal at any price tag is worth it to me. Jeter’s drop off from 2009 to 2010 was pretty big. Having him on a one-year deal gives him time to show if you want him back in 2012 at all. Meanwhile there is an extra year where Eduardo Nunez can get an opportunity to show if he can hit well enough at the major league level to take over the shortstop position.

This way the Yankees can give Jeter’s potential replacement more time to show if he’s ready for the job. It also gives the Yankees more time to judge exactly how steep his decline is and if they want to keep him around past 2011.

In the end it could end up costing them a lot more money, but it could end up saving them a huge sum if the drop from 2010 to 2011 is as bad as the 2009 to 2010 drop was. It also gives them valuable roster flexibility for the future.

If it were up to me, I’m definitely offering Jeter arbitration. Even at the risk that he could top A-Rod’s $27 million salary. What would your choice be?

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4 Responses to Discussion: To Offer Jeter Arbitration or Not

  1. Bronx Knight says:

    Maybe push hard to try to conclude a deal before the Nov. 23 arbitration deadline, and if no deal emerges, then offer arbitration.

    FWIW, I think that Jeet would get very close to the minimum $16.8 M in arbitration. His FMV is maybe $10 or 11 M tops. A good arbitration panel would see this.

  2. The thing with arbitration is that the players have a huge advantage because these panels don't seem too statistically savvy. Supposedly they really like personal achievements of which Jeter has a ton. His agent could also look at A-Rod's historical achievement clauses and give Jeter more money because of that. It isn't unrealistic to think he could get $25 million. Not that he will, but you are taking that chance if you go to arbitration with him.

  3. Jaremy says:

    The other thing to note is that it will make it so that other teams are less likely to bid on Jeter. Would you pay a late-30s SS $10 million AND give up 2 draft picks (value around 5 mill)? Makes it a much more daunting position. I think the upsides far outweigh the downsides.

  4. That's a good point Jaremy, I hadn't thought of that. Offering Jeter arbitration almost guarantees that he won't go somewhere else because they would both have to overpay and give up a draft pick (teams only lose 1 pick even though the Yankees would get 2). Things would have to get pretty ugly between the Yankees and Jeter for them to not be able to beat any offer at that point. I doubt that will happen.