The Arbitration Gamble

Major-league baseball teams operate on an uneven playing field. Some have a great deal of money to work with, while others have relatively little. With their new stadium, the Twins have moved into the upper echelon of team payrolls, but they still operate on a somewhat restricted budget that keeps them from being able to retain all of the free agents they'd like to.

Fortunately, baseball has a system in place to soften the blow for clubs losing valuable contributors to free agency. If a player amasses statistics sufficient to qualify him for Type A or Type B status, he can be offered arbitration that -- if declined -- puts his erstwhile employer in line for draft pick compensation once he signs with a new team.

The Twins have a slew of players with expiring contracts this year, and a number of those players qualify as Type A or Type B free agents. Here's the breakdown:

TYPE A: Matt Guerrier, Carl Pavano

TYPE B: Jesse Crain, Brian Fuentes, Orlando Hudson, Jon Rauch

Acquiring additional high draft picks is key for the Twins, who have done an excellent job of maximizing the value of their top selections in recent years. Their first-rounders from 2007 through 2009 -- Ben Revere, Aaron Hicks and Kyle Gibson, respectively -- arguably rank as the organization's top three prospects. Revere and Gibson could make an impact as soon as next year.

But offering arbitration in these situations can be a gamble. When the player is a marquee free agent in the vein of Carl Crawford or Cliff Lee the decision is a no-brainer, but in some cases a player will opt to accept the guaranteed one-year contract rather than testing the open market. With several of the players listed above, offering arbitration is a risk the Twins cannot afford.

Guerrier is one good example. He's a Type A free agent, so if he declined arbitration and signed with another team the Twins would get back two high draft picks, including a possible first-rounder. However, if offered arbitration Guerrier would almost certainly accept it, knowing that in spite of his quality work over the past several years he'd have a hard time finding a suitor, given that the team signing him would have to relinquish a draft pick. If he accepted arbitration, Guerrier would stand to make around $5 million next year -- a price the Twins probably cannot afford with their current commitments.

Fuentes is another player whose status won't likely yield any benefits. He qualifies as a Type B free agent, meaning the Twins would be compensated with a supplemental pick if he declined arbitration and signed elsewhere. The upside is that Fuentes would not cost the team that signed him a draft pick (only Type A's do) but he'd be a lock to accept arbitration anyway; Fuentes earned $9 million last season as part of the contract he signed to become the Angels' closer a few years ago, and through arbitration he'd make at least that much in 2011. It's not reasonable to pay that kind of money for a guy who would figure to serve mostly as a lefty specialist, accumulating only 50 or 60 innings.

It's less clear what path the Twins will take with their other Type B's. Hudson will surely decline arbitration to test the weak second base market and should net the Twins a pick. Conversely, with the deep free agent market for relievers this year, both Crain and Rauch would likely accept arbitration offers, realizing that they'll earn more in 2011 through that avenue than in free agency. Those earnings are probably more than the Twins are willing to pay with significant bullpen money tied up in Joe Nathan and Matt Capps. (Yes, it sounds like Capps is a lock to return. Ugh.) It's quite possible that the Twins could lose all four of their qualifying relievers without any compensation.

The final arbitration decision might be the most intriguing to discuss, and that's Pavano. He's a Type A, meaning that if he declined an arbitration offer he'd cost the team signing him a draft pick, but he carries more leverage in free agency than his relief counterparts. The market for starting pitching is not very strong this winter, as Pavano would stand out as perhaps the best option behind Lee. Having largely buried the injury concerns that once haunted him, Pavano's outstanding command and workmanlike approach make him a very attractive option for clubs looking to infuse some veteran leadership into their pitching staff.

Pavano is 34 and coming off a very good season. This likely represents his last chance to cash in with a lucrative multi-year deal. Ted Lilly, also 34, set the market for inning-eating vets when he inked a three-year, $33 million pact with the Dodgers earlier this offseason. Pavano's Type A status would be an added burden in free agency, but there are still many teams who would be interested in his services and several of those teams could deal with the loss of a draft pick (like, for instance, the Rangers, who would be getting extra picks back if they lose Lee).

There's always the chance that Pavano accepts an arbitration offer and comes back to play for the Twins next year for around $10 million. It wouldn't be the worst thing in the world; the veteran's 221 quality innings this season were invaluable and would be difficult to replace. However, the Twins have the pitching depth to get by without Pavano next year (especially if they took a flier on a low-cost reclamation project like Brandon Webb or Chris Young), and committing that kind of money to him would likely eliminate any payroll flexibility while perhaps preventing them from being able to bring back someone like J.J. Hardy.

The deadline for offering arbitration to free agents is November 23 -- next Tuesday. By then, we might know a lot more about the Twins' true payroll situation moving forward. The amount of money they have on the table could be evident in the gambles they're willing to take.