It has been a decade since the Red Sox have gone to an arbitration hearing with a player. In 2002, the process taking place between the team and pitcher Rolando Arrojo received little notice. This year, however, the stakes will be a bit higher if the Sox end up in front of a panel of three arbitrators.
The Sox and DH David Ortiz are scheduled to have an arbitration hearing in the Vinoy Hotel in St. Petersburg, Fla., Monday. Regardless of the outcome, Ortiz is under contract to the club for 2012. All that arbitration will determine -- if the two sides are not able to find common ground and reach an agreement before the hearing -- is how much he costs the club.
But that matter could be significant for a Sox team that is limiting its expenditures and trying to maximize its financial flexibility this offseason. While general manager Ben Cherington recently said that the team does not feel that the outcome of its arbitration cases would represent a "significant" swing in potential resources, the $3.85 million difference between the salary that Ortiz is requesting ($16.5 million) and the one that the team is offering ($12.65 million) could, in theory, represent the cost of acquiring a player like Matt Garza near the trade deadline.
That being the case, if the Sox and Ortiz end up in an arbitration hearing next week, it would represent a development with meaningful ramifications for the 2012 Red Sox.
Figuring out what's at stake is the easy part. But the opaque world of salary arbitration (a process that is open to neither media nor the public) has all manner of fascinating subplots. Here are a few notable considerations about the potential hearing between Ortiz and the Sox.
THIS DOESN'T HAPPEN
Every year, a few free agents accept offers of salary arbitration and thereby pass on the opportunity to take their services to market for the highest bidder. But rarely do players of Ortiz's pedigree take part in the process.
A case can be made that Ortiz is the most prominent free agent to accept an offer of arbitration since Greg Maddux stunned the Braves by accepting such an overture after the 2002 season, a decision that yielded a one-year, $14.75 million deal.
This winter, Ortiz was one of three players to accept an offer of arbitration, joining reliever Francisco Rodriguez and infielder Kelly Johnson. But Rodriguez settled with the Brewers on a one-year, $8 million deal, while Johnson agreed to a one-year, $6.375 million deal with the Blue Jays.
Ortiz, meanwhile, stands as a potential rarity in the arbitration process. Free agents almost never go to hearings. Since 2007, the only ones to do so were Todd Walker (who won his case and then was summarily cut by the Padres in 2007) and Mark Loretta (who lost his case to the Astros prior to the 2008 season). Both were infielders; both were complementary players rather than elite free agents.
Top free agents almost never go the arbitration route. Free agent designated hitters who have gone to hearings? Good luck finding those. (There aren't any instances of such players in at least the last 15 years.)
Suffice it to say that there isn't a lot of precedent for how players like Ortiz might fare in an arbitration hearing.
WHAT'S AT ISSUE? THE MIDPOINT
Ortiz asked for $16.5 million for 2012. The Red Sox made an offer of $12.65 million. In the context of a hearing, those numbers would become only secondary concerns.
If the case goes in front of an arbitration panel, the number to keep in mind is $14.575 million -- the midpoint of the offer by the Sox and the figure requested by Ortiz. The panel will be ruling on whether Ortiz is worth more or less than the midpoint, a decision that is an all-or-nothing proposition.
If the case makes it to a hearing and the arbitrators feel that Ortiz is worth one dollar more than $14.575 million, he would win the case and get the full $16.5 million he's requesting. If the Sox can prove that $14.575 million is too much -- even by a penny -- for the designated hitter's services, then the team would win the case and he would get $12.65 million.
There can be a lot of gamesmanship involved in establishing the midpoint. Indeed, one of the most fascinating parts of the arbitration process comes in the offer stage by the player and the club, since the two sides are trying to anticipate what the other will offer and to build their own offers in an effort that will keep them on the correct side of the midpoint.
Translation: Suppose that the Sox thought that Ortiz had a legitimate case -- not a certainty, but at least a case -- for winning a midpoint of $14 million, but not much more than that. Suppose further that they'd guessed that Ortiz would submit an arbitration request of, say, $15.5 million. The team would want to make an offer that would move the midpoint of its offer and Ortiz's request above $14 million so that it would be on the right side of a verdict.
If the team thought that Ortiz would request $15.5 million, an offer of $12.5 million would establish a $14 million midpoint. Bumping up that offer to $12.65 million -- which happens to be the total earnings that Ortiz made in 2011 between his base salary ($12.5 million) and bonuses for making the All-Star team ($50,000) and winning the Silver Slugger ($100,000) -- would nudge the midpoint north, and thus make the midpoint more winnable for the Sox.
In the end, the two proposals placed the midpoint at $14.575 million. If there's a hearing, while both sides will go into detail about why their proposed salaries are fair, they also will spend time addressing the midpoint, and why Ortiz is worth either more or less than that figure.
Arbitration hearings are based on salaries for comparable players.
In order to win the midpoint, Ortiz will have to prove that he deserves more for the coming year than any DH has ever received for an average annual salary. Here are the biggest contracts ever conferred upon designated hitters:
Travis Hafner, Indians: 4 years, $57 million ($14.25 million AAV) -- a complicated extension signed mid-2007 (at a time when Hafner was amidst a run that suggested he was as impactful a hitter as there was in the game) that covers 2009-12; could also be viewed as a six-year, $66.1 million deal ($11.02 million AAV), since it restructured Hafner’s salary for 2007 and his option for 2008
Gary Sheffield, Tigers: 2 years, $28 million extension ($14 million AAV) -- signed prior to 2007 season, covering 2008-09; at the time he signed that contract, Sheffield was still primarily a position player
Adam Dunn, White Sox: 4 years, $56 million ($14 million AAV) -- signed after 2010 season; Dunn had been a first baseman/left fielder to that point in his career, and the White Sox viewed him as primarily a DH but someone who would also see time in the field
David Ortiz, Red Sox: 4 years, $52 million ($13 million AAV) -- signed in 2006 season, covering 2007-10
Victor Martinez, Tigers: 4 years, $50 million ($12.5 million AAV) -- signed after 2010 season by the Tigers, with the initial intention of having him be a DH and backup catcher
David Ortiz, Red Sox: 1 year, $12.5 million ($12.5 million AAV) -- option exercised by Red Sox after 2010 season
Ortiz could try to compare himself (favorably, as it were) to Michael Young of the Rangers, who became the Texas DH last year in the middle of a five-year, $80 million deal ($16 million AAV) that runs from 2009-13. However, Young signed his contract while he was still an everyday shortstop. For the first two years of the deal, he was still an everyday third baseman. Last year, he was a DH in 69 games; he played 90 games at the four infield positions.
In other words, there aren't a lot of good apples-to-apples contract comparisons for Ortiz as someone who is purely (rather than primarily) a DH save for a couple games of interleague. Indeed, one could suggest that Ortiz's contracts are the best points of comparison for Ortiz, since he was purely a DH both when he received his four-year, $52 million deal with the Sox and when the team exercised its option on his contract last winter.
That being the case, Ortiz would have to convince an arbitration panel why he deserves significantly more now than he received when he was amidst a run as a perennial top-five MVP candidate from 2003-07, or why he deserves a significant raise over what he was paid a year ago. After all, for 2011, the $12.65 million that Ortiz received reflected the fact that he was the best in baseball at his position, thanks to a handsome base salary and two different award bonuses (All-Star game, Silver Slugger) that served as a reflection of his status as the top DH in the land.
That said, Ortiz could make the case that he should be compared not just to the pure designated hitters (himself and Travis Hafner when he signed his deal) but also to the other primary designated hitters on that list (Dunn, Martinez, even Young) and even to other sluggers.
In the last two years, Ortiz could suggest, Prince Fielder -- who just cashed in on a nine-year, $214 million deal ($23.78 million AAV) with the Tigers -- has hit .280 with a .408 OBP, .518 slugging mark, .925 OPS, 70 homers and 203 RBI. Ortiz over the last two years is hitting .290 with a .384 OBP, .542 slugging mark, .926 OPS, 61 homers and 198 RBI.
Fielder, Ortiz' side could contend, might have small advantages in terms of his ability to play a defensive position (even if not terribly well) and his recent consistency of performance (more on that in a bit). But, Ortiz' representatives could contend, if Fielder is worth $23.78 million a year, is he really worth roughly $9 million more than Ortiz?
THE STRUCTURE OF THE CASE AND ADMISSABLE EVIDENCE
Each side gets one hour to make an initial presentation and then 30 minutes for a rebuttal and closing arguments. The panel can extend the time if there is a particularly lengthy cross-examination.
The argument is structured around the following (per the terms of the last collective bargaining agreement):
-- The quality of the player’s contribution to his club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal);
On this front, Ortiz has a compelling case on multiple fronts. As one person familiar with the process from the agency side said, "It's David freaking Ortiz."
Ortiz can make an appeal that his value to the Red Sox exceeds that of comparable free agents on an open market. He is an iconic player the last link (assuming that neither Jason Varitek nor Tim Wakefield is brought back) to the Sox' two championships, a player whose standing as one of the most popular and successful players in franchise history is significant. That was true in 2011, just as it has been since Ortiz achieved stardom in 2003.
In terms of his on-field performance in 2011, Ortiz also played at a compelling level. Last year, he led all designated hitters in home runs (29), OBP (.398), slugging (.554) and OPS (.953) while finishing second in average (.309) and RBI (96). As to leadership and public appeal, he is obviously a very public face of the franchise, as well as an icon in the game, someone who was named the winner of the Roberto Clemente Award for contributions on and off the field.
Any statistics can be used. However, the panel is not necessarily comprised of baseball experts, and so it is unlikely that elements such as WAR (wins above replacement player) or even OPS+ (a player’s OPS relative to his league) would be used. Traditional counting stats like home runs and RBIs remain in vogue, as does batting average and, increasingly, OBP, slugging percentage and OPS.
-- The length and consistency of his career contribution;
Ortiz has had a remarkable career that has established him as one of the greatest designated hitters in baseball history. He has more homers and more RBI than any DH in history. Among the short list of players who spent at least 50 percent of their careers without a glove, Ortiz ranks third in OPS with a .922 mark, behind only Frank Thomas and Edgar Martinez.
However, whereas Ortiz in 2011 returned to perform at a level that was near his offensive output in his extraordinary peak of 2003-07, he was bouncing back from a three-year stretch from 2008-10 in which, while still an excellent player for much of the time (save for two atrocious months to start 2009 and one similarly horrible month to begin 2010), his numbers were clearly down from his peak. That fact is relevant when considering his consistency, and could play into the Sox making a case that Ortiz does not deserve to be compensated now as he was when he signed his last long-term deal in 2006.
Moreover, even though Ortiz continues to post significant power and run production numbers, his 29 homers and 96 RBI in 2011 (both marks that fell outside of the American League top 10) were not as impressive as the 47 homers and 141 RBI he averaged from 2004-06, in the seasons immediately preceding his last contract.
Indeed, the Sox can make the case that a player like Dunn had been more consistent in the years leading up to his four-year, $56 million deal than Ortiz had been leading up to a potential hearing. Dunn’s metronomic ability to slam at least 38 homers in seven straight years entering his free agency, along with his annual OPS of .892 or better for four straight years and in six out of seven seasons, not to mention the fact that he was not solely a DH when the White Sox signed him, offer a potential case for the Sox to make that Ortiz has been subject to some inconsistencies that diminish his market value.
-- The record of the player’s past compensation;
As mentioned, Ortiz had a four-year, $52 million deal that ran from 2007-10 and included a team option for $12.5 million for 2011. With awards bonuses, he received $12.65 million in 2011.
-- Comparative baseball salaries;
There are many instances in which the market has devalued the pure DH in recent years. A player like Vladimir Guerrero received a one-year, $8 million deal from the Orioles as a free agent last offseason on the heels of a season in which he won a Silver Slugger award as the top DH in the American League. Hideki Matsui, after a fine 2009 season in which he hit 29 homers, had an .876 OPS and ended up winning World Series MVP honors, could find only a one-year, $6 million deal on the open market.
That being the case, the battle for the midpoint also will be a battle for the set of comparables, as Ortiz will want to identify himself with a class that is as broad as possible while the Sox will try to make the case that he should be viewed in as narrow a class as possible.
The question for Ortiz is whether he can convince the panel to view him as comparable to players who have served solely as a DH (such as himself and Hafner), to designated hitters who also play in the field (such as Martinez, Dunn, Young, etc.) or to a class of power hitters at additional positions (most notably, prototypical slugging first basemen) -- with the contracts signed by Albert Pujols and Fielder and Mark Teixeira representing potential talking points for Ortiz).
Ortiz may also try to make the case that, by virtue of his iconic standing within the organization, he deserves a salary that reflects that. After all, the Yankees gave Derek Jeter a three-year, $51 million deal as a free agent after the 2010 season that was wildly out of line with his statistics in no small part because of what he represents in franchise lore.
-- The existence of any physical or mental defects on the part of the player;
Ortiz has played in 145 or more games in seven of the last eight years, so while he has suffered through some injuries over the years (a torn tendon sheath in his wrist in 2008, knee woes that he played through in 2007 and that required surgery after that season, right heel bursitis that cost him a bit more than a week in 2011), health should not play a major role in a hearing.
-- The recent performance record of the club including but not limited to its league standing and attendance as an indication of public acceptance.
Though the Sox have missed the playoffs the last two years, their sellout streak suggests that it will be difficult for the team to suggest that Ortiz has been part of a sinking ship.
The CBA also outlines elements that cannot be considered by an arbitration panel, including the financial position of the player or club; press comments or testimonials; offers by the player or club made prior to arbitration; salaries from other sports; and the luxury tax.
The arbitration panel is supposed to make an effort to submit a verdict within 24 hours of the hearing.
WILL IT HAPPEN?
If Ortiz’s case ends up in front of an arbitration panel, it would represent a startling development. Indeed, the fact that it has gotten this far remains surprising to multiple industry executives who have taken part in the arbitration process.
Ortiz recently told MLB.com that he wants to resolve the matter and avoid going through the arbitration process, but that he’s leaving the matter in the hands of his agents and team officials. Meanwhile, the Sox have a decade-long track record of avoiding arbitration hearings, even though general manager Ben Cherington has acknowledged that it his team is preparing for a hearing with Ortiz should the two sides not settle their differences.
There is still time for the two sides to find middle ground, though the $3.85 million gap between what the Sox offered and what Ortiz requested as well as the fact that the matter remains unresolved suggests that the midpoint is not viewed as a mutually agreeable option.
That, in turn, has brought the Sox closer to an arbitration hearing than they’ve been at any point since Kevin Youkilis and the team reached a late agreement on a one-year, $3 million deal (more than $100,000 below the midpoint) to avoid arbitration prior to the 2008 season.
AND IF IT DOES GO TO A HEARING ...
All bets are off if the case goes to a hearing. That said, here were the thoughts from a couple of veterans of the arbitration process who are not involved in this case:
“I don’t know where he’s arriving at that number,” said one team executive when informed that Ortiz had requested a $16.5 million salary. "I don’t think it’s in his benefit at all to go to a hearing. I just don’t know where he’s coming from.”
"It's hard when you don't have a comp. Maybe [Ortiz's side] thinks they do with Pujols and Fielder. We'll see," said a veteran from the agency side. "I think it's a strong case in that it's David Ortiz."