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Jacoby Ellsbury’s Arbitration Case

Tuesday, Ben took a look at the off-season budget crunch the Red Sox face after this season ends. Boston will need to make tough decisions on players like Jonathan Papelbon and David Ortiz over the winter, but one of the biggest expenses might be entirely out of their hands. Jacoby Ellsbury is entering his second year of arbitration and his case is a complete outlier in the history of the process. With Ells’ MVP-caliber performance, it is very possible that agent Scott Boras will take the team to the arbiter, seeking a major pay bump, possibly even a record setting one.

Looking back at arbitration cases, Tom Tango has shown that second year arbitration awards tend to be around 50-60% of a player’s expected free agent compensation price. What price would the free market assign Jacoby Ellsbury? Based soley on his fWAR, fangraphs puts Ellsbury’s 2011 dollar value at a ridiculous $36.5M. I doubt even Scott Boars would claim the centerfielder should be paid anything near that. Averaging his value over the past four seasons with the same dollar-win figures, gives us a far more reasonable price of $16.6M. That will be much closer to the salary Ells might land as a free agent and Boras will probably present the Red Sox with a very similar rate in justifying his price. Given Tango’s findings for second year arbitration, Ellsbury might expect to receive between $8.3M and $9.96M- both near record awards.

The arbitration board does not use fWAR or fangraph’s dollar-win pricing model, however, even if Boras would like them to. As baseball prospectus writer Jeff Euston put it, the process "considers the players performance and leadership, the clubs record and attendance, and salaries of comparable players in his service-time class and the class one year ahead of him," It also considers "special accomplishments," which will be a central issue in the case of Jacoby Ellsbury, especially if he wins the MVP award.

The first point of consideration is fairly easy- Ellsbury has been the lead-off man and offensive sparkplug for Boston all season. The Red Sox will almost certainly make the playoffs and likely finish with one of the best records in the baseball. Attendance at Fenway will also be among the best in game and Boston bumps up attendance on the road as well. All of that favors Ells’ case.

Among the arbitration eligible for next season, there is just one centerfielder, Adam Jones of the Baltimore Orioles. Jones is making $3.25M for 2011, more than Ellsbury’s base salary of $2.4M, but he is a poor comparison at this point. The only other centerfielder to be arbitration eligible this year would have been an excellent comparison- the Ranger’s Josh Hamilton. Hamilton will avoid arbitration with a two year deal signed in January that paid him $7.25M and will pay $13.75M next year. That deal will almost certainly factor into the negotiations this off-season and may set the market rate. Should Ellsbury win the MVP, an record breaking figure of $13M would have precedence thanks to Hamilton.

Will the Red Sox or baseball’s arbitration board value Ellsbury that much?

It is difficult question to answer. Jacoby’s 2011 season doesn’t allow for many other comparisons. By fWAR, he has already passed 2007 NL MVP Ryan Howard in value. Howard’s $10M figure is the highest arbitration award given to any position player. However, Howard lead the league in home runs and in RBI’s that season and helped an underdog Phillies team reach the playoff with an incredible September performance. He had also won the 2006 NL Rookie of the Year award. Ellsbury hardly even played in 2010 and his 2008 season was only good enough to give him a third place finish in RoY voting. Given the emphasis that is often given to more traditional stats, it is hard to say what Ellsbury would receive. He has excellent counting stats, but also gets much of his value from the more difficult to quantify elements of the game, especially position and defense.

By way of comparable players, it does become a bit clearer. Much like Hamilton, Phillies’ star centerfielder Shane Victorino avoid arbitration with a multi-year deal. The Flyin’ Hawaiian will received $5M last year, in what would have been his second arbitration year and is getting $7.5M this season. NL MVP candidate Matt Kemp avoided arbitration before his first year and is making $7M this season. He will be eligible once again during the off-season setting up a nearly perfect model for Ellsbury’s case. AL MVP rival Curtis Granderson signed a five year deal worth $35M after his final pre-arb year, giving him just $3.5M for his second arbitration season and $5M for his third. This season he has made a cool $8.25M and been just slightly less valuable than Ellsbury.

Regardless whether Ellsbury takes the Sox to arbitration or settles with them, it is clear that he will be receiving a salary bump of at least 100-150% for next season. It is possible he and Boars will seek a record breaking number. The Red Sox have tried hard to avoid arbitration, but Ellsbury’s case is becoming a perfect storm. When the 2011 season ends, this will be one of biggest stories of the off-season.