Closer Awards in Arbitration

You may have noticed a couple of trends over the past couple of seasons where closers are concerned… The first is that we have been seeing definite signs of salary compression between closers and non-closers. Whatever premium once attached itself to “saves” as a stat (or even “closing experience”) has been evaporating. That means that pay is going up rapidly for non-closers and also that pay has been falling a bit for closers. No one has even been considering something like a $14 million AAV for a closer this offseason, which is a change. The second trend is that teams have been desperate to unload team-controlled young “closers” like Joel Hanrahan or Baltimore’s Jim Johnson. The one and only reason has been that arbitration has been awarding them lucrative contracts.

July 12, 2013; Detroit, MI, USA; Detroit Tigers relief pitcher

(43) pitches in the seventh inning against the Texas Rangers at Comerica Park. Mandatory Credit: Rick Osentoski-USA TODAY Sports

Part of that is baked in: since arbitration salaries cannot be lower than the previous year, a guy who had a bad season is going to be overpaid if he isn’t cut. Part of that is not: a large part of their “value” to an arbitrator is in saves and that makes their value fluctuate more than most players (akin to moving a guy around in the lineup rather than on and off the bench). As things have played out, if you give a guy a bunch of saves opportunities prior to his first arbitration hearing, you’re going to pay a lot to keep him in those three arbitration years whether or not you decide that he’s going to stick in the closer role long-term.

That’s unpleasant for a GM: it means that your youngsters become extremely expensive extremely quickly if you use them to close games – and there’s nothing you can do to avoid it (other than not let them close games) other than cut talented players. There are similar incentives for position players in that keeping a guy down in the lineup will reduce his RBI opportunities (and probably arbitration awards) and holding him up on the basepaths will keep his SB total down (and his arbitration awards) but there are two important differences: arbitration awards for position players don’t seem to be flying far beyond free agent contract values and position players production isn’t as inherently variable as relievers – who are likely to be up one year and down the next as well as being injury-prone.

If the arbitration system could catch up with the times and stop giving young closers money teams would be loth to pay them on the free agent market (and pay closers and non-closers based on performance independent of context and situation) then the situation would be back to normal. Will it? When?

For the Detroit Tigers, this will be an important piece of financial information in the near future: we expect that Bruce Rondon will ultimately be closing games barring injuries or a loss of control with a timeline determined by Joe Nathan‘s health and effectiveness. If arbitration is going to work as it has been working for relievers then the financial “best strategy” for the Tigers organization would be to keep him as a setup man through his arbitration years OR sign him to a contract extension on setup man terms that would at the very least cover the whole of his arbitration years (then use him in a closer role). This is the smart move now, but one few teams have been using – since if your young relief ace already has a bundle of saves under his belt he has every incentive to avoid an extension.

A big signal will be sent when the arbitrator rules on Craig Kimbrel of the Atlanta Braves – where the two parties expectations are far, far apart. Kimbrel is 1st-year eligible, and first year awards aren’t usually exceptionally high, but Kimbrel is no ordinary closer. Kimbrel was the NL RoY in 2011, has a career 1.39 ERA and has led the NL in saves in each of the past 3 seasons. He wants $9 million and if he gets it, he may be the highest-paid reliever in baseball by his 3rd arbitration year simply through the inertia in the process. The Braves want to pay him $6.5 million – and if they win (no doubt arguing that free agent contracts for elite closers are not what they once were) Kimbrel is more likely to be earning (and I do mean earning) Joe Nathan money in 2016 and the ship will have been righted.