The Early Deals and Inflation

We are one day into baseball’s offseason, but teams and players have been making decisions on the expected market valuations of the winter for a couple of weeks now. It’s early, but we’ve got some interesting data points to look at when trying to ascertain what MLB clubs think salary inflation will be like this winter, after several years of deflation or stagnation.

The decisions that look like they may give some insights into the expectations of what players will cost this winter.

Dodgers sign Ted Lilly to a 3-year, $33 million contract.
Reds exercise Bronson Arroyo‘s $11 million option.
Tigers sign Brandon Inge to a 2-year, $11.5 million contract.
Twins exercise Jason Kubel‘s $5.25 million option.

These four moves are the most significant that we’ve seen to date, and they all point in a similar direction – these four teams all seem to believe that we’re in for some inflation this winter.

Ted Lilly is pretty comparable to Randy Wolf, in that both are soft-tossing lefties who pitched well in Los Angeles. After wisely deciding to let Wolf leave, however, the Dodgers ponied up for Lilly, paying a bit of a premium to keep him over what Wolf got from Milwaukee last winter.

Bronson Arroyo is a useful innings eater, but it would be hard to argue that he’s appreciably better than Joel Pineiro, who got just $16 million over two years as a free agent last winter. While the commitment is shorter in term, the difference in per-season salary is significant.

Inge doesn’t have a great comparison from last winter’s class, but overall, last year’s market price for a starting infielder seemed to be around $6 million per year. Placido Polanco, Marco Scutaro, Mark DeRosa, Freddy Sanchez, and Miguel Tejada all signed deals in that range. Inge, coming off a worse season than almost everyone in that group, got essentially the same number for two years with a team option for a third.

And finally, there’s the Kubel decision, which is probably the most curious of the bunch. Despite wanting to retain the services of Jim Thome, the Twins were willing to pay $5 million to keep Kubel on the roster, despite a down season and no obvious starting position on the 2011 team. Given how the market for designated hitters cratered last winter, with good players having to settle for $5 to $7 million on a one-year deal, the Twins decision to give Kubel a similar amount is either a miscalculation of his value or the priced-in expectation of coming inflation.

Until we see teams start to bid openly for players, we won’t really know what the going rate for talent is this winter. Early returns, however, suggest that we may be in for a pricing increase.

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Dave is the Managing Editor of FanGraphs.

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