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Arbitration Conversation

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Oliver Perez is all set to appear before an arbitration panel today to plead his case that he is worth $6.5 million in 2008, his third year of arbitration eligibility and his last before hitting free agency next offseason. The Mets will counter that Perez, who still walks a lot of batters, had pitched himself out of the big leagues two years ago before the Mets swept in on their gallant steed and whisked him away to New York and into the waiting arms of Rick Peterson. For that, they will say, Perez is only entitled to $4.75 million.

Barring some last-minute miracle, the Mets will approach the arbitration table for the first time in fifteen years. Back in 1992, the Mets couldn't come to terms on a contract with David Cone, so the decision went before arbitration which ultimately ruled in favor of the player. Cone was awarded $4.25 million for the 1992 season, not the $3 million the Mets had countered with.

The Phillies are anxiously awaiting their own arbitration decision, as they were unable to bridge the $3 million gap between theirs and Ryan Howard's figures ($7 million for the Phillies, $10 for Howard). They went to arbitration yesterday morning and a decision is expected today. Despite what this guy thinks, the Phillies weren't going to intentionally tank the hearing. Keith Law explains why spending an extra $3 million on Howard this year would be stupid, even if it bought the team some perceived good will.

Not including Howard's hearing, teams have won all five cases brought to arbitration this year. The job of the arbitrator(s) is to consider all of the evidence and then choose one of the monetary figures presented. There is no middle ground here, no room for negotiation. The haggling took place prior to the hearing; now it's all or nothing. From 1974 through 2006, 468 cases have gone before arbitration and the ballclubs are 269-199, a solid .575 winning percentage. If we include the five known results from this year, the teams are 274-199, a .579 winning percentage). Their Pythagorean record is unknown, but assumed to be pretty solid.

If you ever wondered what an arbitration hearing is like, Jim Salisbury had a nice writeup yesterday at Philly.com about the process. He spoke with a handful of agents and players to find out what happens behind those closed conference room doors.

"It's a very sophisticated baseball debate," the executive said. "From a distance, people believe there is a lot of theatrics. But that's not the case. It's a serious debate."

In the debate, both sides use relative data - statistics, service time, comparable player salaries, special accomplishments - to fuel their arguments. Some agents will argue that their players increase team revenues. Some teams will criticize players about off-field habits.

*snip*

Arbitration hearings last about four hours. Each side gets an hour to present its case and a 30-minute rebuttal. Each hearing has a life of its own.

The Mets obviously hope to retain Perez after this season, though he is represented by Scott Boras so there are no guarantees that anything will be worked out. The likeliest outcome is that Perez will hit free agency and will align himself with the highest bidder. If that team is the Mets so be it, but if Perez turns in a decent season this year I don't think a five-year, $70 million contract is out of the question. Would the Mets go so far? Probably not.

Demoralizing for baseball update: Howard won his case and will earn a first-year arbitration record $10 million in 2008. Barring injuries or a long-term deal, he could make $13 million and $16 million in the next two years, which is basically absurd for someone shy of free agency. Happy day for the Howards.