Salary gap is large, but Jake Arrieta still likely to settle

CHICAGO -- The lone arbitration-eligible player yet to sign a contract with the Chicago Cubs also happens to be the National League Cy Young award winner.

Standing just feet away from each other this past weekend at the fan convention, Theo Epstein and Jake Arrieta said all the right things about getting a deal done and it’s very likely they will before an arbiter hears the case. But since Arrieta is as high profile as it gets, let’s review what this all means.

Friday deadline: Last Friday was the day teams and players had to exchange salary figures for one-year deals in 2016, which will be used in arbitration if it gets that far. It’s why you heard so many players around the league signing that day. Once they both file then the sides have to prepare as if they will go to a hearing, which would take place in the first couple of weeks of February. It becomes a laborious exercise, especially if they settle ahead of the hearing -- then a lot of that preparation is for nothing.

Arbitration rules: There are two key points to remember: By rule an arbiter can only choose the salary submitted by the team or the one by the player. He can’t split the difference. And the sides can still negotiate all the way up until the hearing -- that’s for a one-year deal or a long-term commitment.

Most players get up to three chances through arbitration before becoming a free agent. This is Round 2 for Arrieta as he settled before a hearing last season at $3.63 million. As a player moves through his first six years in the majors his salary continues to rise, especially in those arbitration years when the key is who came before him. Teams, agents and arbiters base everything on comparable players at a similar point in their careers.

Arrieta’s case: Last Friday the Cubs submitted a salary of $7.5 million, while agent Scott Boras asked for $13 million. That's a large gap but as Epstein noted the numbers are used strategically, not as offers. In other words, in negotiations with Arrieta before Friday the Cubs undoubtedly offered in the $10 million range, but in order to find a middle ground the sides submit more extreme figures to get the process moving.

“The filing numbers aren’t offers, they’re filing numbers used to either create a hearing ... or more likely a settlement,” Epstein said. “These numbers provide room for a settlement.”

Going by just those numbers, Arrieta is in line for either a $3.87 million raise or a $9.37 million raise. That’s a wide range, which means it’s probably a good idea for the sides to settle. Both sides may not want to take a chance at going to a hearing.

Comparable players: Max Scherzer won the Cy Young in 2013 but was entering his third year of arbitration, so he doesn’t fit as well as David Price from 2012. Like Arrieta, Price won the Cy Young before his second year of arbitration and his salary increased $5.76 million from $4.35 million to $10.11 million. So that’s the blueprint for Arrieta, with two exceptions: It’s three years later and Arrieta had a better season, producing a 1.77 ERA compared to 2.56 for Price. ERA is a big part of the equation when it comes to arbitration and Arrieta had the lowest second-half mark in the game.

So how much more of a raise does Arrieta deserve? That’s the debate, which involves more parties than just the team and player. The players' association undoubtedly wants Arrieta to receive more than Price (he’s starting $700k behind). The team wants to keep his raise in line with Price as much as possible.

Arrieta’s strategy: On the surface you might think it would be a good idea for Arrieta to become the first player since Epstein took over to have an arbitration hearing, considering he pitched more like a $13 million player than a $7.5 million one in 2015. Common sense would tell you that. But it’s more complicated than that, because an arbiter isn’t necessarily deciding between $7.5 million and $13 million.

The arbiter only has to decide if Arrieta deserves one penny more or less than the midpoint between the two figures, which is $10.25 million. If the arbiter thinks Arrieta should get, say, $10 million then he/she will rule in favor of the team and he’ll receive $7.5 million. If the arbiter believes Arrieta deserves closer to $11 million, then he/she will rule in favor of Arrieta and he'll receive $13 million. And as agents will tell you, arbiters are as unpredictable as juries in a trial. Arrieta’s strategy should be to settle.

What will happen: Given his historic season, combined with the price of inflation since Price signed his deal, expect Arrieta to make better than the midpoint of $10.25 million if and when the sides settle on a salary. He’ll beat Price, but by how much? Think closer to $11 million, maybe just under.