The point of arbitration is to ensure players are paid a fair market value for their performance and service time. Most teams try to avoid arbitration like the plague, but when the contracts are doled out, the job gets done the same for the most part. Players are paid what they would likely make on the free agent market. The point of an early-in-the-career contract extension (or buying out the arbitration-eligible years) is to reach a mutually beneficial long-term deal for the player and the club. While if the player performs up to or exceeds expectations, he may be paid less than what the free agent market would have paid, that player gets up front security knowing that no matter what they have a long-term contract. No amount of injury or poor performance can take away that guaranteed money.
The Padres have failed to buy out Chase Headley‘s arbitration eligible years, and he may quickly become too expensive for the team. Before we delve into the numbers, let’s address the idea that the Padres are just going to bring Jedd Gyorko up, so it doesn’t matter. It does matter. Even with the prospect of Gyorko pushing Headley out, the Padres should have locked Headley into a long-term deal. Unless a no-trade clause was included in that deal, the long-term contract makes him a much more enticing trade chip than if he only had one year left before free agency. So whether the Padres intend to keep Headley long-term or trade him in the near future, a contract extension is beneficial.
Now, let’s consider the numbers. Assuming one win players are worth about $5 million, the Padres have received quite the bargain over the last two years. Headley was worth 3.6 wins in 2010 and 2 wins last season. All told, he was probably worth upwards of $10-$15 million on those numbers alone. The Padres paid him $427K in 2010 and $2.3 million last year. Avoiding arbitration this offseason, the Padres have agreed to pay Headley $3.475 million.
Still a bargain. But the problem is the years left. Headley becomes a free agent in 2015. Seems like a long way away, but it’s not. If Chase Headley signed a five-year, $25 million contract, it would likely still be a bargain for any team, and it guarantees any potential trade suitors five years of controlled cost until he hits free agency. As it stands now, Headley only has two more years of controlled cost after this season. An arbitrator could easily award him over $5 million in either of his last two arbitration eligible seasons also.
Headley will still attract a fair amount of trade interest regardless, but what the Padres could get in return diminishes with every year less of team control. If the Padres want to get the most bang for their buck, a contract extension needs to happen this season. Beyond that, Headley has already out paced his trade value. The Padres have no guarantees in Gyorko, so to have a proven third baseman locked up long-term is a luxury the team can ill-afford to pass up. If the ultimate goal, though, is to trade Headley, they will have lost a lot of value if they don’t get an extension done this season.
So aside from the simple monetary figures, Headley is becoming too expensive after this season if a contract extension isn’t worked out. It would be great if the Padres kept Headley long-term, but every sign points to him eventually being traded, and that means they need to get as much in return as possible. A long-term deal, worked out in the near future, makes Headley a much more marketable trade chip. But on the off chance the Padres choose to keep Headley at third, the same long-term deal makes him affordable for a club that’s ownership and future financial situation is still murky.