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Clayton Kershaw Avoids Arbitration With 2-Year, $19 Million Deal
Joe Beimel remains the last Dodger to have a salary arbitration hearing. Clayton Kershaw avoided his next two hearings today, signing a two-year deal worth $19 million.
Kershaw will receive a $500,000 signing bonus, $7.5 million in 2012, and $11 million in 2013, per Dylan Hernandez of the LA Times. Kershaw submitted a salary of $10 million in arbitration while the Dodgers countered at $6.5 million. The $8 million Kershaw receives this year is slightly less than the midpoint, but also the second highest salary ever for a pitcher in his first year of arbitration eligibility, trailing only Tim Lincecum.
UPDATE: Tony Jackson of ESPN LA reports that $2 million of Kershaw's 2012 salary is deferred to January 2013.
Kershaw follows a similar path to that of Matt Kemp and Andre Ethier, both of whom signed a two-year deal during arbitration that left them with one year left before free agency once the contract expires.
In a quick and dirty estimate of what it would take to get Kershaw to sign a long-term contract, I was thinking something like $7m/$12m/$17m for the three arb-eligible seasons. Since this contract matches the total for those first two years, this seems like a win for the Dodgers at first glance, with the caveat that signing Kershaw to a long-term deal is still of the highest priority at Chavez Ravine.
The Dodgers have 18 players under contract for 2012 for a total of $85,975,000.
Dodgers Contract Incentives
Now that Andre Ethier and James Loney have avoided arbitration, the Dodgers have 16 players under contract in 2012, with Clayton Kershaw soon to be number 17 at some point in the next month. Both Ethier and Loney have performance bonuses built into their contracts, as do several Dodgers.
Here is a look at the performance bonuses on the books that we know of for the 2012 Dodgers:
| 2012 Dodgers Contract Incentives | ||
| Player | Maximum Bonus | Comment |
| James Loney | $125,000 | for between 585-650 PA |
| Mark Ellis | $125,000 | for between 500-600 PA |
| Juan Rivera | $500,000 | for between 400-600 PA |
| Andre Ethier | $50,000 | for between 600-625 PA |
| Adam Kennedy | $150,000 | for between 325-450 PA |
| Chris Capuano | $375,000 | for between 160-195 IP* |
| Totals | $1,325,000 | |
Capuano also has a cumulative bonus of $250,000 if he pitches 360 innings combined in 2012-2013. Aaron Harang doesn't have performance bonuses directly, but his vesting option for 2014 fluctuates in value depending on his innings total the next two seasons.
In case you were wondering, the Dodgers paid $1 million in incentives last season: $500,000 to Hiroki Kuroda, $400,000 to Jamey Carroll, and $100,000 to Aaron Miles. That was out of a possible $6.925 million had everyone achieved their maximum incentives.
For complete details on performance bonuses like these, or any other news relating to the Dodgers' payroll, you can view our payroll worksheet, which is always linked on the right sidebar of the site as well.
Clayton Kershaw, Dodgers Far Apart Now, But Settlement Seems Likely
The Dodgers took care of two of their three arbitration-eligible players on Tuesday, but one big fish remains. Andre Ethier and James Loney signed one-year deals, but the Dodgers were unable to work out a contract with reigning Cy Young winner Clayton Kershaw.
The pitcher and the team exchanged salary arbitration figures on Tuesday, with Kershaw seeking $10 million in 2012 while the Dodgers offered $6.5 million, per Jon Heyman of CBS Sports. The numbers represent the core of the interpretation of this case, similar to what we discussed last week.
The normal record for salary for a first-year arbitration-eligible pitcher is $4.35 million, set by Dontrelle Willis in 2006 and matched by Cole Hamels in 2009 (the first year of a three-year contract) and David Price today (the fine folks at DRaysBay have the details on their southpaw's new deal). The Dodgers have offered a salary that represents a 49.4% raise over this, so even they recognize the value of Kershaw's Cy Young award.
Kershaw, meanwhile, has submitted a number that reflects his outlier status, more in line with that of Tim Lincecum, who signed a two-year, $23 million contract in 2010 that paid the Giants' hurler a $2 million signing bonus, $8 million in 2010, and $13 million in 2011. Lincecum has his own arbitration fight this winter, as he will set a new record whether at $17 million or $21.5 million.
The number to watch in Kershaw's case is $8.25 million, the midpoint of both submitted salaries and the number both sides will argue against. If Kershaw's camp can convince the three-person arbitration panel that he is worth $8,250,001 then he will win the case; conversely Alex Tamin and the Dodger crew will fight for $8,249,999 and below (Just to be clear, if this goes to a hearing, there are only two options for the panel to decide: Kershaw will either be awarded $6.5 million or $10 million, but both sides will argue for their side of the midpoint to sway the arbitration panel).
The $8.25 million midpoint isn't too far off from my guess last week of an $8.5 million salary for Kershaw. It really wouldn't surprise me if either side won an arbitration hearing, as there are solid arguments on both sides. But I think eventually, even though both sides are pretty far apart now, Kershaw and the Dodgers will eventually settle. There is too much to lose on each side to risk going to a hearing.
Besides, I contend that Kershaw and the Dodgers have already agreed to a contract for 2012. Kershaw has just been so busy signing copies of his new book that his left hand has been too tired to sign said contract.
James Loney Signs For $6.375 Million, Avoids Arbitration
The Dodgers avoided arbitration with James Loney today, signing him to a one-year deal worth $6.375 million plus performance bonuses, per his agency CAA. Last week I guessed a 2012 salary of $7.25 million for Loney, and now I'm kicking myself for not sticking with my original guess of $6 million. Oh well. Loney gets a 30.8% raise over his $4.875 million 2011 salary.
Loney has performance bonuses of up to $125,000 per Tony Jackson of ESPN LA: $25,000 for 585 plate appearances, and $50,000 each for 625 and 650 plate appearances.
That just leaves Clayton Kershaw, the Minotaur in the room, seemingly ready to challenge arbitration records. We will find out soon what salary figures were filed by both Kershaw and the team, unless the two sides agree to a deal soon.
Even if they don't agree to a deal with Kershaw, it is still likely he signs a deal before seeing the inside of an arbitration hearing. The Dodgers' last arbitration case was in 2007, when relief pitcher Joe Beimel asked for $1.25 million and the Dodgers countered with a salary of $912,500. The Dodgers won that case, with the help of current team director of baseball contracts Alex Tamin, who at the time worked for the law firm of Jeffer Mangels Butler & Mitchell.
The Dodgers now have $78.975 million committed to 16 players for 2012, with another $22.2 million (roughly) in dead money.
Dodgers Avoid Arbitration With Andre Ethier
The Dodgers avoided arbitration with Andre Ethier, signing him to a one-year deal worth $10.95 million, plus performance bonuses per his agency, CAA. Ethier made $9.25 million 2011 in the final year of a two-year, $15.25 million contract signed before the 2010 season.
Those performance bonuses for Ethier can total up to $50,000, per Tony Jackson of ESPN LA. Ethier gets $25,000 for 600 plate appearances, and $25,000 more for 625 plate appearances. Last week I guessed a 2012 salary of $13 million for Ethier. I was way off. It looks like Ted Lilly will be the highest paid Dodger in 2012.
Ethier's $10.95 salary in 2012 is the ninth highest single season salary by a Dodgers outfielder.
| Highest Single Season Salary, Dodgers Outfielders | ||||
| Outfielder | Year | Base Salary | Incl. Bonus | Comment |
| Manny Ramirez | 2009 | $25 million | $25 million | reduced via suspension |
| Manny Ramirez | 2010 | $20 million | $20 million | |
| Andruw Jones | 2009 | $17.1 million | $19.6 million | spread out through 2014 |
| Andruw Jones | 2008 | $14.1 million | $16.6 million | |
| Shawn Green | 2003 | $15 million | $15.67 million | |
| Shawn Green | 2002 | $12.75 million | $13.42 million | |
| Shawn Green | 2001 | $11.5 million | $12.17 million | |
| J.D. Drew | 2006 | $11 million | $11.4 million | |
| Andre Ethier | 2012 | $10.95 million | ??? | |
Shawn Green also made $16 million in 2004 ($16.67 million if you prorate his $4 million signing bonus over his six-year contract), but he moved first base that season. Matt Kemp makes $10 million in 2012, but he joins the party in 2013, as the final seven years of his contract pay Kemp between $21 and $22 million each season.
The Dodgers have $72.6 million committed to 15 players in 2012, plus a little over $22.2 million in dead money, paid to players no longer on the roster. Don't be surprised if Ethier isn't the only settlement today. James Loney and Clayton Kershaw are also arbitration eligible.
Salary Arbitration Eligible Dodgers: Clayton Kershaw
Classify this one as a good problem to have: Clayton Kershaw is too good for salary arbitration.
The salary arbitration process was built to create a system of compensation for players not yet eligible for free agency, a system built around finding comparable players, in performance and service time. The system wasn't built for truly unique players, the outliers, the incomparable ones. Players like Clayton Kershaw.
There is one truly comparable player to Kershaw, a fellow special circumstance. But we'll get to him in a second.
Kershaw has three years, 105 days of service time, and is eligible for salary arbitration the first time in his career. It's hard to imagine a better launch season than the one from Kershaw in 2011: He was 21-5 with a 2.28 ERA and 248 strikeouts, winning the pitching triple crown and the National League Cy Young Award, and added a Gold Glove for good measure. One way or another, Kershaw is going to make some serious coin in 2012. They only question is, how much?
There is a pretty solid set of five pitchers that I think are roughly comparable to Kershaw. Here are their career numbers heading into their first year of arbitration eligibility.
| Pitcher | Thru Year | Svc Time | IP | W-L | BB | K | ERA | ERA+ | WHIP | bWAR | fWAR | Salary |
| Clayton Kershaw | 2011 | 3.105 | 716 | 47-28 | 278 | 748 | 2.88 | 135 | 1.173 | 16.9 | 17.1 | ??? |
| Jered Weaver | 2009 | 3.127 | 672 | 51-27 | 198 | 546 | 3.73 | 120 | 1.249 | 14.6 | 12.9 | $4,265 |
| Cole Hamels | 2008 | 2.143 | 543 | 38-23 | 144 | 518 | 3.43 | 132 | 1.136 | 10.4 | 10.8 | $4,350 |
| Justin Verlander | 2008 | 3.002 | 600 | 46-34 | 219 | 477 | 4.11 | 111 | 1.328 | 8.9 | 10.7 | $3,675 |
| Felix Hernandez | 2008 | 3.060 | 666 | 39-36 | 216 | 593 | 3.80 | 114 | 1.319 | 12.4 | 14.2 | $3,800 |
| Dontrelle Willis | 2005 | 2.143 | 594 | 46-27 | 174 | 451 | 3.27 | 125 | 1.254 | 11.4 | 12.3 | $4,350 |
King Felix and Verlander were pitchers on similar paths at this point in their careers, accomplished with the promise of something more ahead. Each would win 19 games the very next year - Hernandez finished second in AL Cy Young balloting, with Verlander third - and each would cash in with five-year contracts worth $78 million and $80 million, respectively, in the following offseason. Hernandez would win the Cy Young Award in 2010, Verlander would win the award in 2011.
Kershaw already has a Cy Young Award.
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Salary Arbitration Eligible Dodgers: James Loney
Our next look at Dodgers eligible for salary arbitration brings us to James Loney, the first baseman who forged an interesting path in 2011. In the first half of the season, Loney looked like he was following the Casey Kotchman path to a tee:
- Kotchman was drafted in the first round (13th overall) in 2001, never developed the power he was once thought to have, and hit .217/.280/.336 with nine home runs in 125 games in roughly his fifth year of service time, in 2010.
- Loney was drafted in the first round (19th overall) in 2002, never developed the power he was once thought to have, and hit .268/.311/.342 with four home runs in 91 games in his fifth year of service time, in 2011.
Kotchman, a year after making just over $3.5 million with Seattle, was forced to take a minor league deal in 2011 with Tampa Bay and had a nice bounceback year, hitting .306/.378/.422 in 146 games for a measly $750,000. Loney, making $4.875 million in 2011, was headed straight down that path to non-tenderville, but then something clicked.
Whether it was the change in hitting coaches from Jeff Pentland to Dave Hansen on July 20, or whether the looming reality of a massive paycut sparked a turnaround, or whether the occasional day off helped, Loney was a different hitter after the All-Star break. Loney hit .320/.380/.534 with 18 doubles and eight home runs in 67 games after the break, and ended with season numbers pretty much in line with his last three seasons, if not better.
So here we are, with Loney eligible for salary arbitration again, with five years, 12 days of service time. With first basemen, it's tough to find true comps for Loney because the best hitters at first base are among the best hitters in baseball, and many end up signing long-term extensions or are simply too productive and/or pricy to compare to Loney.
I found three first baseman roughly comparable to Loney, and here are their career numbers at a similar service time to Loney:
| Player | Thru | Svc Time | G | PA | 2B | HR | Runs | RBI | BA/OBP/SLG | OPS | OPS+ | bWAR | fWAR | Salaryn-1 | Salaryn | % Inc. |
| James Loney | 2011 | 5.012 | 782 | 3018 | 155 | 67 | 323 | 418 | .288/.346/.432 | .778 | 108 | 5.6 | 8.6 | $4,875 | ???? | ?? |
| Jorge Cantu | 2009 | 5.036 | 663 | 2724 | 170 | 90 | 309 | 404 | .278/.323/.456 | .780 | 102 | 1.5 | 5.3 | $3,500 | $6,000 | 71.4% |
| Adam LaRoche | 2008 | 5.000 | 688 | 2601 | 167 | 111 | 324 | 386 | .273/.340/.492 | .832 | 114 | 5.4 | 6.0 | $5,000 | $7,050 | 41.0% |
| Lyle Overbay | 2007 | 5.026 | 694 | 2711 | 183 | 71 | 317 | 324 | .284/.362/.454 | .816 | 111 | 9.0 | 8.1 | $4,200 | $5,800 | 38.1% |
I cheated a bit with Overbay, as he signed a four-year deal before the 2007 season, and his salary for 2007 was only $400,000 so I added his $3.8 million signing bonus and counted that for 2007, too. Overbay is the only one of the three comparable players who signed a multi-year deal.
Here's a look at the four first basemen in their launch seasons:
| Player | Year | Svc Time | G | PA | 2B | HR | Runs | RBI | BA/OBP/SLG | OPS | OPS+ | bWAR | fWAR |
| James Loney | 2011 | 5.012 | 158 | 582 | 30 | 12 | 56 | 65 | .288/.339/.416 | .775 | 110 | 1.1 | 2.3 |
| Jorge Cantu | 2009 | 5.036 | 149 | 643 | 42 | 16 | 67 | 100 | .289/.345/.443 | .788 | 105 | 1.3 | 1.0 |
| Adam LaRoche | 2008 | 5.000 | 136 | 554 | 32 | 25 | 66 | 85 | .270/.341/.500 | .841 | 122 | 1.7 | 1.5 |
| Lyle Overbay | 2007 | 5.026 | 122 | 476 | 30 | 10 | 49 | 44 | .240/.315/.391 | .706 | 85 | 0.8 | -0.1 |
If we just look at these three comps for Loney and their percentage increase in salary, a 38.1% raise for Loney would be $6.75 million while a 71.4% increase would be about $8.35 million. Last year I guessed a 38.7% raise for Loney and that turned out to be far too low. Loney got a 57.3% raise in 2011 and followed that up with arguably a better season than he had in 2010.
I'm revising my guess for James Loney to make $7.25 million in 2012. What's your guess?
Special thanks to Maury Brown's Business of Baseball, and to Jeff Euston's Cot's Contracts, which is now housed at Baseball Prospectus.
Salary Arbitration Eligible Dodgers: Andre Ethier
The Dodgers entered the offseason with seven players eligible for salary arbitration. These players, with between three and six years of MLB service time, has been whittled down to three through a series of transactions. The Dodgers locked up Matt Kemp for eight years and $160 million back in November, traded Dana Eveland to the Baltimore Orioles for a pair of minor leaguers, signed Tony Gwynn Jr. to a two-year, $2 million contract, and did not tender a contract to Hong-Chih Kuo.
That leaves three Dodgers eligible for salary arbitration: Andre Ethier, James Loney, and Clayton Kershaw.
On Wednesday, January 18, salary figures will be exchanged, assuming both sides haven't worked out a deal by then. If the Dodgers and the player in question can't agree on a contract, both sides will submit one salary figure and prepare for an arbitration hearing that will be scheduled at some point between February 1-21. The two sides can continue to negotiate up to the hearing itself, and that is often what happens.
The Dodgers haven't gone to a hearing with any of their arbitration-eligible players since 2007 with Joe Beimel. In a hearing, both sides argue their case for their salary figure to a three-person panel, and the panel will ultimately decide one side or the other. Ethier and the Dodgers had a arbitration hearing scheduled in February 2009, but the two sides worked out a contract just minutes before the scheduled hearing was to begin.
For the most part, the arbitration system is all about trying to find comparable players, either via service time, position, or performance. We begin our look at the 2012 arbitration-eligible Dodgers with Ethier, who has one year before being eligible for free agency.
Ethier has five years, 153 days of service time. This is actually his fourth time being eligible for salary arbitration, as he was a "Super Two" after 2008, meaning he was in the top 17% in service time of players who had at least two years but not quite three years of service time. Ethier made $9.25 million last year in the second season of a two-year, $15.25 million contract signed before the 2010 season.
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