How important is it to delay service time?
by, 03-27-2013 at 03:23 PM (393 Views)
In the wake of Aaron Hicks being named the Twins starting centerfielder, many fans have expressed disappointment that the team did not send him to the minors to further delay his major league service time. As little as two weeks in the minors would have delayed his potential free agency a full year; roughly three months in the minors could have also delayed his arbitration eligibility an additional year too. But how important is that?
The value of an extra year of team control, before free agency, is probably best supported by the case of JJ Hardy. When Hardy was struggling for the Brewers in 2009, the team sent him to the minors briefly, ostensibly to work things out, but more likely to delay his free agency from after 2010 until after 2011. This demotion came despite Hardy having already been a MLB all-star and multi-year starter. Had the Brewers retained the services of Hardy, the direct dollar value of that extra year of control would have been minimal: final-year arbitration players are generally paid very close to market value for that season. However, when they sought to trade him after the 2009 season, the additional year of team control certainly appealed to potential trade partners. The Brewers parlayed that into reasonable return from the Twins in Carlos Gomez. The extra value to be gained in trade was quite a short window, though; had the Brewers tried to trade him earlier in his career, his performance in the potential extra year would have been more difficult to predict and thus worth less. And trading him just one year later, the Twins certainly did not fare as well as the Brewers.
The value of that extra year of control is also challenged by the career of the Twins' own Joe Mauer. In 2004, Mauer, like Hicks this year, skipped over AAA and opened the season with the Twins. Barring a demotion, this meant Mauer projected to be a free agent after the 2009 season; had the Twins given him two weeks at AAA, that free agency could have been delayed a full year, until after 2010. On first glance this seems to be a costly mistake by the Twins in the handling of a future $23 million per season player. But because Mauer proved to be a very good player early, the Twins agreed to a multi-year contract after his third season anyway, avoiding arbitration entirely and buying out his first free agency season of 2010 for a very reasonable amount. It's doubtful that two more weeks in the minors would have affected the terms of this contract. Had Mauer taken longer to establish himself in the majors, though, it could have given the Twins an extra year to decide whether to keep him long-term.
And Mauer's example further highlights how Hardy's extra year of control came at some cost to the Brewers. Aside from obviously upsetting Hardy and likely ruining any chance of negotiating a good deal with him later, the Brewers went year-to-year on one-year arbitration contracts with Hardy. This means they likely paid Hardy closer to maximum value in those seasons, as compared to the Twins who probably got a slight discount over this method in their multi-year contract with Mauer. Going year-to-year also exposed them to the risk that Hardy would have a "breakout" or "career" year and get an inflated arbitration award above his "true talent" or "market value" salaries -- just imagine what the Twins would have had to pay in arbitration after a season like Mauer's 2009! (Probably something like... his current annual salary. Oh well!)
So while two weeks in the minors for an extra year of control is of little cost to a team like the 2013 Twins, it seems to also provide relatively little and very speculative future benefit. But what about three months in the minors, to delay the player's arbitration eligibility? A Tampa Bay Rays blog recently discussed this very topic, in regards to Wil Myers:
Wil Myers and Super Two - DRaysBay
They concluded that delaying the service time of a projected 4 WAR player (like Myers) for 3 months would save the team $15 million over those 7 seasons of team control. Obviously, this number would be much lower for a player with a lower projected contribution (arguably Hicks), and also lower if a multi-year contract is sought to cover arbitration seasons, like Mauer. And it doesn't include the major league value the player could provide over those 3 months (admittedly not too significant to an unlikely contender like the Twins) as well as the potential player alienation factor and how that affects future contract negotiations. Even if Hicks turns out to be a good MLB player, the hard cost savings may be as little as a few million dollars over the course of his first 7 seasons, while also inviting the alienation and year-to-year arbitration salary spik risks as dicussed above.
Finally, all of this is moot if the player does not develop into and remain a quality major league regular for seven seasons. Even recent Twins like Jason Bartlett, Lew Ford , and Juan Rincon, who all looked quite promising at the beginning of their respective careers, wound up providing little major league value beyond seasons four and five anyway. And Hicks has yet to establish himself in the majors (or above AA) at all.
While his performance and development track are always worthy of debate, starting Hicks in the major leagues this season should be of little concern to Twins fans from a long-term financial perspective.
* While researching this post, I compiled a list of "significant" (2+ WAR season), mostly "homegrown" Twins of the recent era (1998-present), and how the Twins approached their 6 years service time of team control. The list wasn't terribly useful for this post, but is presented below because, hey, I took the time to write it.
- Lawton - year to year, traded during year 5 (age 29)
- Koskie - signed through year 6 (age 31)
- Hunter - signed through year 8 (age 31)
- Guzman - team declined option on year 7 (age 27)
- Mientkiewicz - traded during year 5 (age 30)
- Jones - left after year 6 (age 30)
- Pierzynski - traded after year 3 (age 26)
- Ford - released after year 4 (age 30)
- Mauer - signed through year 7
- Morneau - signed through year 9
- Punto - signed through year 6 (age 30)
- Bartlett - traded after year 2 (age 27)
- Cuddyer - signed through year 8 (age 32)
- Kubel - signed through year 7 (age 29)
- Span - signed through year 7 (age 31), traded after year 4 (age 28)
- Radke - signed through year 10 (age 31) in middle of year 6 (age 27)
- Guardado - signed through year 9 (age 32)
- Hawkins - signed through year 7 (age 30)
- Milton - signed through year 7 (age 28), traded before that year
- Mays - team declined option for year 8 (age 30)
- Santana - signed through year 8 (age 29), traded before that year
- Lohse - year to year, traded during year 5 (age 27)
- Rincon - year to year, released during year 6 (age 29)
- Silva - signed through year 6 (age 28)
- Crain - signed through year 6 (age 28)
- Guerrier - signed through year 6 (age 31)
- Baker - team declined option for year 7 (age 30)
- Nathan - signed through year 7 (age 33)
- Liriano - year to year, traded during year 6 (age 28)
- Slowey - year to year, traded after year 4 (age 27)
- Blackburn - club option on anticipated year 7 (age 32)
- Perkins - club option on year 9 (age 33)