This process can be confusing, and since I'd have a hard time explaining it to those of you who aren't so familiar with how it works, I'll share something that was posted on the MLB Trade Rumors website tonight, by Ben Nicholson-Smith and Tim Dierkes:
Teams can choose to offer arbitration to their free agents after each season. If the player accepts, the team will get the player on a one-year deal at a figure determined by the arbitration process. Typically, players who accept arbitration get raises. If a player rejects arbitration, his former team gets nothing but compensation picks.
A player can either be classified as Type A, Type B, or nothing based on his stats from the previous two seasons in certain categories, depending on his position. For example, first basemen, outfielders and DHs are rated based on the following categories: plate appearances, average, on base percentage, homers, and RBI.
If a team signs a Type A free agent, they have to surrender a draft pick to that player’s former team. If the signing team placed in the bottom half of MLB teams, their first round draft pick is protected and they surrender a second round pick instead.
Sometimes, teams sign more than one Type A free agent who declined arbitration from his former team. In that case, one team gets a top compensation pick and other teams lose out. The team losing the highest-ranked free agent obtains the best pick the signing team can offer and other teams fall in line behind the team that loses the top-ranked player. In extreme cases, a team hoping to snag another club's first round pick can be stuck with their third rounder. The Blue Jays might have hoped to get a pick in the #15-20 range from another team for A.J. Burnett after the 2008 season, but since the Yankees had already signed C.C. Sabathia and Mark Teixeira, the Jays received the #104 overall pick from the Yankees.
Regardless of where Type A free agents sign, their teams obtain a supplementary round pick in the following year’s draft (plus the aforementioned pick from the team that signed the player).
A free agent can also be classified as a Type B based on his stats. Teams don’t have to give picks up to sign Type B free agents, but teams that lose Type Bs obtain supplementary round picks in the next year’s draft.
Another rule to consider for Type As and Type Bs: the "losing" team receives draft pick compensation without offering arbitration if their free agent signs before the deadline for teams to offer arbitration to departing free agents (now November 23rd). For example, the Blue Jays didn't have to decide whether to offer John Buck arbitration; he signed early with the Marlins, so Toronto gets a supplementary rounder in 2011.
There’s also a third possibility - the free agent is not classified as Type A or B, and there is no draft pick compensation.So, yeah, lots of words. I'll try to simplify it from a Texas Rangers point of view.
Of the crop of players eligible for free agency from the Rangers, only four were classified as Type A or B players. Actually, Cliff Lee, Vladimir Guerrero, Frank Francisco, and Bengie Molina were all classified as Type A players. The Rangers offered arbitration to Lee and Francisco, and declined to do so for Guerrero or Molina.
It was never a question that the Rangers would offer arbitration to Lee. Either he comes back to Texas on a multi-year contract, or he leaves. Lee will turn down the arbitration offer, because he's not interested in working out a one year contract with the Rangers through the salary arbitration process. If he leaves, the Rangers will get a compensation draft pick between the first and second round of the 2011 draft, and in addition to that they will receive either a first or second round pick from the team that signs him. So if he leaves, the Rangers will get two high draft choices next year as a parting gift.
Frank Francisco was offered arbitration, and there is already a report out that he is likely to accept sometime before next week's deadline for players to decide. That would mean he would be under contract for 2011, and his salary would be determined through the arbitration process, or he and the Rangers could work out a contract before that. However, if Francisco gets an offer he likes from another team and takes it, the Rangers would again receive two compensation picks. From the Rangers point of view, offering arbitration to Frankie likely cools interest from other teams since they probably would not want to give up their draft choices for a late reliever who was injured most of the final third of 2010. So it works as a deterrent for the Rangers saying 'keep your hands off our guy.'
Vladimir Guerrero was not offered arbitration, though the Rangers would be happy to have him back on a one year deal. The Rangers declined to make the offer to Vlad because players usually get a raise when they go to arbitration, and the team was thinking the potential amount that would come through arbitration would be a greater price than they would be willing to pay. This does not close the door on Guerrero coming back for 2011. However, now other teams can negotiate with Guerrero and know that they do not have to give up a draft pick to sign him. And if he signs elsewhere, the Rangers receive no compensation picks.
Lastly, Bengie Molina was not offered arbitration, and his story is similar to Guerrero's. Bengie was coming off of a multi-year contract that paid him quite well, and if he got a one year contract with a raise, the Rangers would be overpaying him for what he's worth at this point in his career.
I know this is a lot to absorb, so I'm going to break this up into two posts. In part two, we'll look at which players were and were not offered arbitration around the league, and how that affects who the Rangers might be interested in to fill the holes in their roster.
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