Finally the most exciting part of the offseason, salary arbitration, has arrived. Teams and agents get to place values on cost-controlled players too young to get free agency, and if they can’t reach an agreement, submit their offers to an objective panel of arbitrators. The Yankees recently have reached agreements with several of their important young players, including David Robertson, Joba Chamberlain, Phil Hughes, and Brett Gardner, for reasonably affordable contracts (1.6 million, 1.675 million, 3.2 million, and 2.8 million respectively).
The arbitration process has been critiqued for not adequately rewarding the true value of the involved players, relying too much on stats such as wins, saves, and RBI instead of numbers more closely correlated with runs produced (or prevented, in the case of pitching). Since the arbitration system is strongly based on previous precedents, it is unlikely that this will change anytime soon. As such, a players who don’t necessarily rank highly on traditional metrics but provide value in other ways (such as defense and OBP) are often undervalued by the arbitration process.
In Brett Gardner, the Yankees may have one such player. For a player who produced 13.6 fWAR over the last 3 seasons, signing for $2.8 million in his first arbitration year seems to be an incredible bargain. This in part illustrates how the arbitration process restricts the earning potential of young players. On the free agent market, Gardner would presumably earn much more money on a multiyear deal. But it also illustrates how the value of somebody with his skill-set can be underestimated using the existing arbitration system.
Adam Jones is an interesting comparison to Gardner. Both are young outfielders who reached arbitration within the last year (Jones in 2011, Gardner this year). Jones made about $500,000 more than Gardner did in his first arbitration year, despite never putting up a performance anywhere close to Gardner’s 2010 and 2011 WAR totals (never exceeding 3 WAR in his career, in fact). He has much more power than Gardner and has hit for a higher average, but Gardner has advantages in speed, walk rate, and defense. Of course, it is important to make the caveat that defensive WAR (measured by UZR) is not always a reliable stat, so it is possible that Gardner’s advantage in production may be overstated (though his UZR has been consistently elite over the last few years). Presumably, if both players continued on their same trajectories, Jones would continue to out-earn Gardner even as he is out-produced by him.
With a roster full of aging players on big multi-year deals, Gardner represents an opportunity for the Yankees to get major surplus value relative to his salary. As a big-market team, the Yankees theoretically shouldn’t have too many concerns about a few million in salary. However, if the Yankees do in fact pursue the 2014 austerity plan, then having cost-controlled pieces like Gardner on the roster will be essential. As we have seen this offseason (setting a $1-2 million budget on a DH), even the Yankees have limits to their spending.
A relatively affordable Gardner could move into centerfield should the Yankees let Curtis Granderson walk, allowing them to pick up a cheaper corner outfield option without sacrificing too much production. Since Gardner does not look to be adding major power or hitting ability anytime soon, his salary will continue to be very affordable throughout arbitration. This could also help make him a valuable trade chip if the Yankees are in search of another power bat. Whether in pinstripes or playing for another team, MLB’s current valuation of Brett Gardner (and similar players) provides great value to teams who can recognize them as market inefficiencies.