Arbitration Values Part 1: Paul Maholm
The Pirates reached an agreement this week with four of their six arbitration eligible players, leaving only Paul Maholm and Nate McLouth unsigned. Going in to the off-season, Pittsburgh wanted to sign each player to a long term extension, but talks broke down quickly for McLouth, and have been quiet for Maholm. All sides have now submitted offers for the 2009 season, with each player about a million dollars off what the Pirates are offering.
Each player has requested $3.8 M, while the Pirates have offered $2.75 M to McLouth, and $2.65 M to Maholm. If you are unfamiliar with the arbitration process, here are the options going forward:
1. One side could accept the other sides’ offer (unlikely)
2. The two sides could negotiate and meet in the middle (common)
3. The two sides could go to an arbitration hearing, argue the case for their offer, and let the arbiter decide which offer is more appropriate (teams don’t usually like to do this because it can lead to ill-feelings from the player when the team makes their case)
The arbitration process is guaranteed, unless the two sides work out a deal beforehand. One could argue that the Pirates are foolish to potentially hurt the relationships with two of their top players, but that assumes that the players offers are fair value. To determine which side has the fairest offer, let’s take a look at each player’s stats to date, plus the first year arbitration totals of some other players around the league. We will start with Paul Maholm, and cover Nate McLouth in a later post.
2005: 3-1, with a 2.19 ERA and a 1.17 WHIP in 41.1 IP
2006: 8-10, with a 4.76 ERA and a 1.61 WHIP in 176 IP
2007: 10-15, with a 5.03 ERA and a 1.43 WHIP in 177.2 IP
2008: 9-9, with a 3.71 ERA and a 1.28 WHIP in 206.1 IP
Total: 30-35, with a 4.30 ERA and a 1.41 WHIP in 601.1 IP
Maholm did well in his debut in 2005, although those numbers can be chalked up to his first time through the league. In 2006 he struggled with a 4.76 ERA, which probably should have been worse considering the 1.61 WHIP. He did even worse in 2007 with a 5.03 ERA, although the WHIP improved.
Last year Maholm had a breakthrough season, posting a 3.71 ERA and a 1.41 WHIP. This performance is enough to make him the “ace” of the staff going in to the 2009 season (although I use the term “ace” loosely, because I don’t think Maholm ranks up there with other aces like Tim Lincecum and Cole Hamels).
I’ve seen the argument made that if Zach Duke can get $2.2 M for his 4.82 ERA and 1.50 WHIP in 2008, then Maholm should get much more than $2.65 M. The important thing to consider is that this process doesn’t take in to consideration one season, but the entire body of work leading up to now. Comparing the two players:
Duke: 26-39, with a 4.40 ERA and a 1.50 WHIP in 592.1 IP
Maholm: 30-35, with a 4.30 ERA and a 1.41 WHIP in 601.1 IP
Those career numbers are very similar, and each player took a similar career path (called up in 2005, remained in the rotation since) so the players are about even. Maholm has slightly better numbers, which makes sense why the Pirates offered him about half a million more. The major difference between the two players is that Duke has struggled the last two years (5.08 ERA, 1.59 WHIP), while Maholm is coming off a great 2008 season.
Even if we were going to discount his other seasons and only count Maholm’s one good season, how does that compare to other arbitration decisions over the last few years?
James Shields: Signed a contract extension after two full seasons where he combined for an 18-16 record, a 4.22 ERA, and a 1.23 WHIP. Will make $2.5 M in his fourth year.
Scott Kazmir: Received $3.785 M in his first season of arbitration last year, which is right below what Maholm is asking. However, Kazmir posted a 35-29 record with a 3.65 ERA, and a 1.40 WHIP in 570.2 IP before getting this deal.
Brandon Webb: After going 10-9 with a 2.85 ERA his rookie season, Webb signed an extension that would pay him $2 M in his fourth season. Before the 2006 season (his fourth year), he signed another extension that changed that contract to $2.5 M, after posting a 31-37 record, with a 3.35 ERA and a 1.31 WHIP in 617.2 IP.
Felix Hernandez: Hernandez recently agreed to a $3.8 M deal for the 2009 season, his first season of arbitration. Like Maholm, Hernandez was called up in 2005, and has remained in the rotation since that point. Unlike Maholm, Hernandez has gone 39-36, with a 3.80 ERA, and a 1.32 WHIP in 666.1 IP.
When comparing these pitchers to Maholm, I’d have to say that the best match would be Shields. Hernandez and Kazmir had a much better track record before getting about what Maholm is asking for, and that wasn’t the product of one good season. Shields had a 4.86 ERA in 2006, then bounced back with a 3.85 ERA in 2007, before getting his contract that paid him $2.5 M for his first year of arbitration.
I would guess that at this point, if the Pirates and Maholm went to arbitration, the Pirates would win, simply because Maholm has not done enough over his 3+ year career to warrant a similar salary as guys like Scott Kazmir and Felix Hernandez. His stats to date are similar to James Shields, who got $2.5 M, and slightly better than his teammate Zach Duke, who just got $2.2 M. Thus, I’d say the $2.65 M is an appropriate value for what Maholm has done so far in his career.