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Will Lincecum Be a Bargain?

The Tim Lincecum arbitration saga has been perhaps the most interesting story of the offseason. As soon as the possibility of Lincecum asking for $23,000,001, or one dollar more than CC Sabathia‘s salary, surfaced on the internet, the speculation began and the questions spilled out. What would Lincecum ask for? Would he do the unthinkable, as mentioned above? Would the Giants call his bluff and give a low offer? What will his case mean for future pre-arbitration stars?

There is no doubt that he is a special case. With two Cy Young awards in his first three seasons, the only player to even compare to Lincecum in terms of pre-arbitration hardware is Ryan Howard, with a Rookie of the Year award and an MVP. Howard came away with $10M in his first arbitration hearing – obviously a far cry from $23M, but also a number that most players don’t see in their third arbitration hearings.

Tim Lincecum’s camp came in at what some thought to be a conservative number, at $13M, making the Giants submission of $8M seem meager in comparison. Given the drop in free agent salaries the last two years, the dollar value of a win is almost certainly lower than the $4.5M we saw in 2008, these numbers compare favorably to Howard’s first reward.

Despite all the questions, it seems almost universally accepted that Lincecum will be a bargain at either price. Relative to his value on the free agent market, that is certainly true. As a 6 WAR pitcher, as projected by CHONE, Lincecum would be worth roughly $21M in this market, which has been paying about $3.5M per marginal win. Both totals submitted to the arbitrators are far less than this amount.

Remember, though, that we expect Lincecum, as a first year arbitration player, to only receive 40% of his market value. As a $21M free market value player, Lincecum should receive about $8.4M from the arbitrators.

So what does this mean? First of all, don’t be surprised if the Giants win their case, as it would be right in line with what the arbitration market has done in the past. Still, I wouldn’t be surprised if Lincecum wins the case, either. Much like Howard, it’s possible that the arbitrators will award Lincecum a dollar amount above his true value due to his superstardom and his awards. If Lincecum wins his case, he wouldn’t be a bargain in comparison to other first-year arbitration cases. This isn’t to say that he’s not an asset – even at a market value contract, Lincecum is still an asset due to what he could fetch via trade and the fact that he can be worth six or more wins in any given season.

Regardless of what happens, it will be fun to watch.