Today (or yesterday), the Twins signed 2004 AL Cy Young winner Johan Santana to a four-year contract. Essentially, Minnesota got Santana for two extra years, because he was eligible for free agency after the 2006 season. The specific details haven’t been released by the team, but several reports have the bulk of the money coming in years three and four of the deal, which makes sense; those are the years that the Twins essentially “bought out.” This contract is definitely risky for a team with a smaller payroll, but in my opinion it’s a risk you almost have to take. The Twins are never going to be able to sign a pitcher like Santana on the free agent market, and if Johan stays healthy, he’ll be well worth what he’s getting even in 2007 and 2008.
Of all the aspects of player-management bargaining, I think the arbitration process is the most useful part for both sides. Player and management swap salaries, and an arbitrator picks one number or the other; he can’t split the difference. Most often, though, deals get worked out before the hearing takes place because the arbitration hearing serves as a deadline for both sides. For the Indians, they haven’t had a player go to arbitration since 1991.One of the reasons for this streak was former GM John Hart’s tendency to lock players up before they became eligible. Hart’s strategy has been copied in the years since, but I’ve gradually come to see the upsides and downsides of it. Of course the upsides are readily apparent; the team obtains cost certainty, and if the player stays healthy and gets better, the deal’s an absolute bargain.
However, if you’ve read Outside the Lines’ account of the Manny Ramirez contract negotiations, the fact that the Indians had Manny locked up below market value played a part in his decision to leave the Indians. Yes, the Indians would have paid more in the short term, especially if the club had lost in arbitration. But at least the player has some sense of being paid what he’s worth. Sometimes these arbitration hearings lead to long-term deals like the one Johan Santana just signed. Ichiro signed a long-term contract with the Mariners in a similar circumstance, as did Albert Pujols with the Cardinals, as did Roy Halladay with the Blue Jays.
Another downside to the Hart-style contract is if the player gets hurt, a la Jaret Wright. You lose some degree of flexibility when you sign a player to a long-term deal, and if you pick the wrong guy to lock up, you’ll get burned. The Blue Jays are finding this out with Eric Hinske. Heck, the Twins have only to look at Joe Mays to remind them of what can happen when you sign a pitcher to a long-term deal.
Now I’m not categorically against long-term deals with young players, but I’m also less inclined the think they’re a magic bullet. Especially if you want to keep a player beyond six years. If a player is signed through his sixth season, there’s no leverage on the team’s part in contract negotiations. The Indians may run into this problem with CC Sabathia, who’s eligible for free agency in 2006 at the age of 26. My hope is that the two sides get together right after this season is complete and work out a long-term deal. However, there’s no reason for Sabathia to agree to an extension because the Indians are probably going to pay him $7M or so in 2006 (he has an option, but I believe it vests with a certain amount of innings pitched). Ironically, Sabathia’s agent was Jeff Moorad, who was Manny Ramirez’s agent. Fortunately, Moorad is now employed by the Arizona Diamondbacks, but the contract remains.