The Next Deadline

The next big choice facing the Yankees is which free agents they want to offer arbitration to.  What this really boils down to is compensation.  If you don’t offer arbitration, you won’t receive a draft pick if the player leaves. But, you only receive compensation if the player qualifies as a Type A or Type B free agent.  (And, for those of you who remember the old system, you can keep negotiating with a free agent no matter what you do.)

As I have mentioned, the Yankees have seven free agents.  Of those seven, Molina, Hairston, Hinske and Matsui (yes Matsui) didn’t qualify for compensation.  So, the Yankees don’t have to worry about offering them arbitration because there is no reason to do so.  That leaves three players, Damon, Pettitte and Nady who do qualify.  Damon is a Type A free agent which means the Yankees would get two picks (probably a first rounder depending on which club he signed with and a "sandwich" pick, which is one between the first two rounds).  Nady and Pettitte are Type B which means the Yankees would only get a sandwich pick.  The thing to remember about arbitration is if you offer it and the player accepts, he is signed to a one-year deal.  But, and this is important, he cannot earn less than 80% of his previous salary in the process.  So, if the Yankees offer it to Damon and he accepts, he will make at least $10,400,000 in 2010.  Arbitration has no middle ground, one side will win and one will lose.  They can work out a deal, but if a hearing is held there can only be a winner and a loser. 

That makes it a no-brainer to me for the Yankees to offer Damon arbitration.  Worse case, he accepts and you have to give him a big deal for one-year.  How much could he really make?  With Abreu just signing for two-years/$19 million it would be hard to see him earn much more than the $13 million he made this season. That’s a figure I think the Yankees could live with.  Plus, with Boras as his agent I think he declines in search of a longer-term deal.  That means the Yankees can wait and see what offers he gets, knowing they will probably get two top-50 draft picks if they decide to let him walk.

I would not offer arbitration to Andy Pettitte because I don’t believe he is a threat to sign anywhere else and with a top-25 ERA in the AL, he could probably ask for and receive a big raise in arbitration.  (Remember there is no limit to what a player can ask for)  Pettitte’s agents will compare his numbers to AJ Burnett. (not too far off and AJ earns $16 million.)  They will compare them to Dontrelle Willis (100x better in 2009 and Willis made $10 million)  In short, I think Pettitte might win whatever figure he asks for.  I would prefer to just talk to Pettitte and try and work out a deal. 

And that brings us to the last choice, Xavier Nady.  Nady made $6.55 million last year, so he would be eligible to make at least $5,240,000 if he was offered arbitration.  There is simply no way you can offer that to a player coming off of his second Tommy John surgery.   

We will learn what the Yankees think in the next week.