One-year deal makes sense for Pence

The Astros signed Hunter Pence to a one-year, $3.5 million contract Saturday in his first year of arbitration eligibility. There appears to be some kind of groundswell of support by the fans for locking Pence up to a multi-year deal, but that doesn’t make sense for the Astros.

Pence has three more years of arbitration eligibility remaining after this season and will continue to get paid his market value as long as he keeps producing. We’ve seen the Brewers lock up Ryan Braun and the Rays sign Evan Longoria to multi-year deals to essentially buy out the final years of arbitration, and those could wind up being good deals down the road.

The Astros still have three-plus years to get a long-term deal done with Pence if they see fit, so it makes no sense to do it now. A deal like that would give the player some security and could been seen as an act of goodwill, but it’s not really cost reductive. Teams would have to pay today’s market value for the player and then project what it’s going to be like two, three or four years down the road.

Long-term deals make sense when you can buy out years of free agency, but to do that for Pence at this point in his career you’d have to sign him to a six-year deal (four arbitration years and two free agent years). There’s not much sense to that considering Pence won’t be a free agent until after the 2013 season.

In case you’re wondering, Pence has four arbitration-eligible years because he’s a “Super Two,” which means he has less than three years of Major League service time (2.156) and ranks in the Top 17 percent in total service in the class of players who have at least two but less than three years of service.

5 Comments

Brian, help me out here as I don’t know the arbitration rules all that well. Does Pence still have the option to decline arbitration through those years? While the ‘Stros would get draft picks in return if Pence signed with someone else, that doesn’t sound like a great trade to me if Pence is who we think he is. Do I understand this correctly? Is the team taking a risk that he will decline arbitration?

No, Pence cannot decline arbitration. He’s under contract for the Astros until the 2013 season. The arbitration process in the case of players with between three and six years of service time is a way of determining their fair value.
You’re thinking about free agents. Jose Valverde, Miguel Tejada and LaTroy Hawkins were free agents and the Astros had the choice of offering arbitration (if the players accepted they would be signed and would get a raise from their previous salary) or declining. If they offered arbitration and the declined and signed with another team (Valverde), the team gets compensatory draft picks. If they didn’t offer arbitration and the players signs with another team (Tejada), they get nothing.
In short, there’s a difference in the arbitration process for free agents and young players like Pence, Michael Bourn and Wandy Rodriguez.

I disagree. Pence is a five-tool player, and if you wait for his arbitration years to be up, he’ll then be a free agent and demanding $12 million a year for six year. The Astros are so locked down with the contracts of Berkman, Oswalt and Lee right now, I’m shocked that they don’t see the value in locking up a young guy long term for a long time. You may pay him a little more on the short term, but make no mistake, it will be far better to do that and then pay him only $6 million or so in the last half of the contract instead of the roughly DOUBLE that amount he’ll get as a free agent.

I don’t understand the arithmetic of Pence having played just 2.156 seasons. He played full seasons in 2008 and 2009 and 107 games in 2007. Seems like that’s at least 2.5 seasons and really more like three full seasons.

2.156 means two years plus 156 days on the Major League roster out of a 183-day season, so it’s nearly 3 years.

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