Arbitration Conundrum: Jose Valverde

The deadline for teams to offer free agents salary arbitration is today, which means that some teams will have fascinating decisions to make. There is significant economic risk involved in offering a player salary arbitration, especially in a weak economy. For more information about arbitration, click here.

(Jose Valverde, Type A free agent)

Scenarios:

1. Astros offer Valverde arbitration and he accepts; Astros control his rights for at least 2010 and possibly longer if they come to terms on a new contract. Valverde's 2010 salary will be determined by either arbitration or through negotiation. Valverde earned $8 million in 2009 and would likely command somewhere between $10-12 million in salary arbitration.

2. Astros offer Valverde arbitration and he declines; the Astros will receive draft pick compensation if Valverde signs elsewhere; Valverde is still able to sign with the Astros as well

3. Astros refuse to offer Valverde salary arbitration; the Astros can still sign Valverde, but they would receive no draft pick compensation in return


VERDICT: Do Not Offer Valverde salary arbitration

Here's why:

RISK

-Lose one of the best closers in baseball

-Potential backlash from fans?

-No free agent compensation

REWARD

-Avoid spending $10 million+ on a closer when they are looking to cut payroll

-Potentially can re-sign Valverde to a team friendly contract if the closers market implodes


Even though it would seem that the risks outweigh the rewards here, financial flexibility is crucial to the Astros, who are in the process of slashing payroll. If their payroll is cut $15-$25 million in 2010, that would leave the Astros with a $80+ million dollar payroll. Can the Astros afford to commit at least $10 million of that to a closer? I don't think so, especially when you take into account that the 2010 Astros right now are locked into 4 players for a combined $54 million dollars. Adding another double digit salary would leave very little payroll to address the various needs of the team and arbitration raises.

In addition, with all the quality closers on the market this winter, there is a significant possibility that there will be good deals on the market for those teams that are patient.

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