Morneau's Contract and Other Arbitration Tidbits

I'm a bit late to the party on this thanks to a busy schedule today, but the Twins have avoided arbitration with Justin Morneau by agreeing to a one-year, $7.4 million deal. The Strib also notes that the Twins agreed to terms with Jason Kubel yesterday for one year and $1.3 million, while the Twins website mentions that Juan Rincon signed a one-year deal for $2.475 million. Those signings leave the Twins with two arbitration eligible players in Michael Cuddyer and Matt Guerrier.

The Morneau signing is interesting because it is another one-year deal, rather than the multi-year contract that many Twins fans were hoping for. After all, last season the Twins agreed to a 4-year deal with Joe Mauer that bought out a year of his free agency and will keep him in a Twins uniform through at least 2010. Why not former-MVP Morneau?

First, I have to note that it seems as if the Twins weren't particularly interesting in talking about a multi-year contract with Morneau this off-season. Morneau last week stated that "no discussions [on a long term deal] have been had." It would be one thing for the Twins and Morneau not to be able to agree on the terms of a deal, but to not even be having discussions? Clearly, the team is focused elsewhere. Why?

I think the answer lies both in the amount of time remaining before Morneau becomes a free agent and in the team's expectations of Morneau's value in a year or two. First, Morneau has 3 years and 168 days of service time as of the end of the 2007 season. A full year of service time is defined as 172 days, so he's 4 days short of 4 full years of service time. In order to become a free agent, a player must have accumulated six full years of service time -- which means that the Twins will have Morneau for at least three more seasons, through 2010, even though Morneau will be ever so close to the magic service time threshold for free agency after the 2009 season.

This is important, because it means that for a multi-year deal to make sense at this point, the Twins would probably need to go for at least 4 years to buy him out of a year of free agency. That isn't necessarily true, of course -- the Twins could sign Morneau to a 3-year deal and so avoid arbitration with him, therefore gaining cost certainty. There is some value in that, but there's also some risk; the contract could potentially end up costing more than year-to-year arbitration (or one-year deals) if Morneau underperformed.

Ultimately, it's that uncertainty in Morneau's future performance that I think is the most significant factor driving the decision not to pursue a multi-year deal this year. After all, Morneau is just a little over a year removed from his MVP season, when he hit .321 with 34 homers and 130 RBI's while posting an OPS of 934. His agent is obviously going to be pursuing a contract based on the promise of that 2006 season -- and the farther removed you are from numbers like that, the lower the contract demand will be. Again, that's not necessarily true; if you believe that those numbers represent Morneau's true potential, and that he'll duplicate those numbers in the next year or two, then he should be paid accordingly. That's the nub of the argument, though -- will Morneau repeat those numbers, or won't he?

While I think Morneau will continue to be an important contributor for the Twins, and while I want to see him remain a Twin for the foreseeable future, I'm not convinced he's going to regularly put up 2006-type numbers. Last year, Morneau took a slight step back -- he still hit 31 homers, but his batting average dropped to .271, his OPS to 835, and his RBI total to 111. There's nothing wrong with those numbers -- they just weren't on par with 2006. If Morneau's average output is going to be more like 2007 than 2006, then he's not worth as much to the team. The Twins seem to have either determined that Morneau's average production will be closer to '07 than '06, or they just aren't sure -- and they seem to be waiting for the price to come down.

The most significant danger to this approach is that the market doesn't remain stable. Every year, there is an inflationary effect as free agents sign bigger and bigger contracts. If the Twins wait too long, any advantage they would gain by being right about Morneau's future production would be offset by the new contract paradigm -- and that would make it significantly more likely that Morneau would leave via free agency when his time comes after 2010.

Ultimately, though, the Twins will probably only wait for one more year. If they have guessed correctly, and Morneau has another solid but unspectacular season like he had in 2007, rather than an MVP season like 2006, the Twins should be able to go after a 3- or 4-year deal next off-season that will cost them less than such a deal would have cost this year, with the added bonus of buying out a year or two of free agency. I understand this approach, and I think it's the right way to go. That said, I am of course rooting for Morneau to have a monster 2008 -- I would love for the Twins to have to backtrack on this course of action a little bit, so long as the team can still afford him.

UPDATE: This Star Tribune article includes a quote from Twins Assistant GM Rob Antony to the effect that the Twins are interested in sitting down over the next few weeks to try to get Morneau signed long term. This, of course, contradicts the main argument in my post -- that the Twins are in a "wait-and-see" pattern with Morneau. Or does it? I don't think it's wrong to say that the Twins want to sign Morneau long term -- they just want to do it for their price rather than his price. If a deal is done this offseason, I think it will be because both sides compromised a bit. Remember, though, that just because the Twins have expressed interest in signing a long-term deal by no means guarantees that it will happen; as the article mentions, the team wanted to sign Morneau last year, too, and that never got done.