Will Cubs Offer Wood & Howry Arbitration?

MLB clubs have until Monday (December 1st) to decide whether to offer salary arbitration to their Type "A" and Type"B" free-agents. 

If a club offers salary arbitration to a Type "A or Type "B" free-agent on 12/1, the player has until 12/7 to decide whether to accept the offer.

If the player accepts the offer of salary arbitration, the player is immediately and automatically returned to his club's 40-man roster and is considered a "signed player" for the following season, and the player and the club proceed onward to the arbtration process, just as would be the case for any player eligible for salary arbitration (the only differences being that a free-agent who is offered arbitration cannot be "non-tendered" on 12/12, and the club can offer a free-agent who accept salary arbitration any salary as long as it is at least the MLB minimum salary--that is, the club does NOT have to offer at least 80% of the player's previous year's salary).   

If the Type "A or Type"B " free-agent is offered salary arbitration on 12/1 and declines the offer, the player's old club can continue to negotiate with the player, and the club would receive two (if the player is a Type "A" FA) or one (if the player is a Type "B" FA) compensation draft pick(s) in next June's Rule 4 Draft (AKA "1st-Year Player Draft") if the player eventually signs with a new club.

If a Type "A" or Type"B" free-agent is not offered salary arbitration on December 1st (and if the FA has not signed with a new club prior to 12/1), the player's old club would receive no compensation draft picks in the 2009 Rule 4 Draft (although the club can continue to negotiate with the FA). 

The Cubs have two Type "A" free-agents who have not yet signed a contract for 2009: RHP Bob Howry and RHP Kerry Wood. (Ryan Dempster was also a Type "A" FA, but he re-signed with the Cubs earlier this month). In order to receive compensation draft picks in next June's Rule 4 Draft if Howry and/or Wood sign with a new club, the Cubs will have to offer the players salary arbitration on Monday. 

The problem with offering salary arbitration to a Type "A" or Type "B" FA is that the player might actually accept the offer, and it's possible that the club might not really want the player back, or at least would not want to take the risk that the player might win his case in arbitration and end up with a sizable 2009 salary that the club either doesn't want to pay or can't afford to pay. 

In the case of the Cubs, Kerry Wood apparently told GM Jim Hendry that he would prefer to remain with the Cubs, and that he would even be willing to accept a one-year deal for 2009, but Hendry supposedly told Woody that he should pursue a multi-year deal on the open market. Hendry then proceeded to acquire closer Kevin Gregg from the Florida Marlins, apparently seeing Gregg as a cheaper (but only slightly cheaper) version of Wood, although Gregg presumably could just as easily replace Howry as a "set-up man" if the Cubs were to bring Wood back.

Since the difference between what Wood would likely get in arbitration (probably about $9M) versus what Gregg will probably get (likely about $5-6M) is only about $3-4M, Hendry (apparently) must believe that the difference between the two salaries is critical as far as the Cubs being able to sign or acquire an established left-handed hitting middle-of-the-order type RF. So will Hendry risk offering Wood arbitration just to be sure of getting a couple of draft picks in next June's draft (players who will probably cost the Cubs upwards of $2M in signing bonuses), or will Hendry just let Wood sign elsewhere and get nothing back in return when he does? 

Or if he does offer arbitration to Wood, and if Wood accepts, will Hendry then be forced to non-tender or trade Michael Wuertz, Chad Gaudin, Neal Cotts, Ronny Cedeno, and Reed Johnson (all are arbitration-eligible) in order to find additional money (probably about $7.5M aggregate if all five are non-tendered) to pay Wood? Not too likely, but I guess it's possible. .

Bob Howry is even more-problematic, because if the Cubs offer Howry salary arbitration and he accepts, the Cubs could be stuck with a pitcher they don't want in 2009 (as an Article XX free-agent signed after the conclusion of the Free-Agency Filing Period, Howry would have automatic "no trade" rights through 6-15-2009), at least not at the salary Howry will likely get through arbitration (probably about $3.5M). So Iit's VERY unlikely that Hendry will offer Howry arbitration, even if it means not getting draft picks back as compensation if he signs elsewhere. There's just too much risk that Howry would accept the offer.

There is one way to get rid of a Type "A" or Type "B: free-agent who acceps salary arbitration, however. The club can proceed through the arbitration process and take their chances that the club wins its case and can get the player at a "reasonable" salary. But that can't be be certain, so if a player wins in arbitration and receives a salary for the following season that the club just doesn't want to pay, the club can release the player prior to Opening Day and pay the player only a percentage of his salary.

If the player is released at least 16 days prior to Opening Day, the club is responsible for only 1/6 of the player's salary, and then the player is free to sign with any club for any amount. If the player is released prior to Opening Day but not 16 days or more prior to the start of the regular season, the club is responsible for 1/4 of the player's salary, and the player is free to sign with any club for any amount.

However, the only way a club can safely release a player under these circumstances (that is, without risking the loss of a grievance, where the club ends up having to pay the player his entire season's salary) is if the player has a bad Spring Training and (after a "fair trial") is clearly outperformed (statistically) by another player (or several other players, in the case of a pitcher) and his slot on the 25-man Opening Day roster is taken by the player or players who outperformed him.

So if the Cubs do offer Howry salary arbitration on Monday and he accepts, the Cubs would have to hope that Howry has a clearly statistically-horrible Spring Training (because arbitrators ONLY look at statistics) where he is clearly outpitched by at least seven other relief pitchers, and where all seven make the Cubs Opening Day roster.  

The most-recent example of a free-agent being offered salary arbitration by his old club and then accepting, and then getting released prior to Opening Day, was ex-Cubs 2B Todd Walker.

Walker was a Type "A" FA post-2006, and Padres GM Kevin Towers offered Walk salary arbitration, just so the Padres could get two 2007 Rule Draft picks after Walker signed elsewhere (or at least so it would appear). But then Walker accepted the arbitration offer, won his arbitration case (being awarded a $3.95M salary for 2007 after the Padres offered $2.75M).

However, the Padres released Walker prior to Opening Day, such that they had to pay him $971K to go away. So ihe gamble cost them about $1M, and they didn't get any draft picks, either. 

But it didn't end there. Walker filed a grievance, charging that the Padres released him just to save $3M. If Walker had won the grievance, he would have received his entire $3.95M salary AND he would have been a totally unrestricted free-agent, too. But the Padres were able to show that Walker was (statistically) outplayed in Spring Training by another second-baseman (Marcus Giles) and by another back-up INF-LHPH (Geoff Blum), and so Walker lost his grievance and the Padres did not have to pay him his entire 2007 salary. The only problem is, MLB clubs never can be sure what an arbitration panel is going to do, And then what if Walker had had a really outstanding 2007 Spring Training? Kevin Towers just lucked-out.  

So if a GM offers salary arbitration to a Type "A or Type "B" free-agent on 12/1 just to get a compensation draft pick or two, he better know that he won't t get any draft picks if the player accepts the salary arbitration offer, and it could cost the club millions of dollars in additional unplanned payroll.  .

Of course, Wood saying he would accept a one-year deal to return to the Cubs in 2009 could just be a ploy concocted by Wood and his agent. If he had said "I absolutely, positively have to get a three year deal or I'm not coming back," Hendry could have probably offered salary arbitration to Wood and not thought twice about doing so. But by planting the seed that he might accept a one-year deal (which actually sounded plausible, because he's done it before), Wood has put Hendry in a tough spot as far offering salary arbitration, especially if Hendry has some financial restrictions on his 2009 payroll that make bringing Wood back at $9-10M somewhat difficult. .  

My guess is that Jim Hendry will not take any chances and will not offer salary arbitration to either Kerry Wood or Bob Howry on Monday, and so the Cubs will not receive any compensation draft picks in next June's Rule 4 Draft if (as expected) Wood and Howry sign elsewhere.  

That is... unless some secret "agreement" has been worked out between Hendry and Wood and/or Howry, where one or both will be offered arbitration, but have agreed in advance (for some inexplicable reason) to decline the offer (which would be stupid for the player, because doing so would diminish the player's value on the open market since any club that signs the player would know that it would have give up a 1st or 2nd round draft pick).