Craig Kimbrel

Back in October, MLBTR contributor Matt Swartz explained that Braves closer Craig Kimbrel has been so good in his first three seasons, he broke our arbitration projection model.  We eventually decided to create a special rule because of Kimbrel, which limits a player's raise to $1MM beyond the previous record for his player type.  Since Jonathan Papelbon had set a $6.25MM first-time arbitration record for closers in 2009, we capped Kimbrel's 2014 projection at $7.25MM.

Without the rule, our system had assigned a $10.2MM projection to Kimbrel, so we lopped off about $3MM more for which he at least had a statistical argument, if not a precedent.  With such a wide spread of possibilities, it was no surprise when Kimbrel and the Braves ended up exchanging arbitration figures.  Kimbrel and his agent David Meter submitted a $9MM figure, a number reflective of the attitude, "We don't just deserve to beat Papelbon's record, we should crush it."  The Braves went with $6.55MM, which would have thrown Kimbrel just $300K beyond Papelbon's record despite this potential hearing coming five years later and Kimbrel's far superior statistical record.

With a midpoint of $7.775MM, Meter would only have had to convince an arbitration panel his client deserved a dollar more than that, meaning that Kimbrel should get $1,525,001 more than Papelbon did.  You always hear that arbitration hearings are a crapshoot, but if I were a betting man, I would have bet on Kimbrel's side.  It's not just Meter putting together the argument; they would have had the knowledge of a motivated players' union behind them. 

Once the two sides reached the point of exchanging figures, a one-year deal went off the board because of the Braves' file-to-go stance.  But the two sides still discussed a multiyear deal and were able to get it done.  Kimbrel signed a four-year, $42MM deal with a club option for 2018.  The deal bought out all three of Kimbrel's arbitration years and one free agent year, with the option for a second free agent year.

For Meter and the Braves, one key question that had to be explored before agreeing to this deal was how much Kimbrel stood to earn in arbitration going year-to-year.  I asked Matt Swartz to show me a few scenarios.  Initially, Matt used what I considered to be fairly conservative stat projections for 2014 and 2015.  He used Steamer's 65 innings, 28 saves, and 1.88 ERA for Kimbrel's 2014 season, and then regressed to the mean a bit on 2015 with 55 innings, 22 saves, and a 2.20 ERA.

Using these stats and assuming Kimbrel lost this month's arbitration hearing, he'd have salaries of $6.55MM, $9.9MM, and $12.9MM for a total of $29.35MM over his three arbitration years.  In his actual multiyear deal, Kimbrel will earn $28MM over his three arbitration years.  In this scenario, Kimbrel left just $1.35MM in arbitration money on the table.  In his multiyear deal he still conceded up to two free agent years, and of course the younger a free agent is, the better he does.

Using the same stats and assuming Kimbrel won this month's arbitration hearing, he'd have salaries of $9MM, $12MM, and $14.7MM for a total of $35.7MM.  It's interesting to note that there was a lot more at stake in the 2014 hearing than the $2.45MM spread — losing this one hearing would have lost Kimbrel a projected $6.35MM in total arbitration earnings.  Comparing the $35.7MM projection to the $28MM his contract pays, Kimbrel gave a discount of more than 21% for his arbitration years.   

As I mentioned above, I felt that Matt's statistical projections for Kimbrel were pretty conservative.  The 50 saves Matt projected for 2014-15 is equal to his 2013 total.  In three years as a closer, he's averaged 46 saves per year.  Still, great closers fall short of the 40 save plateau all the time.  I asked Matt to plug in 35 saves for each of the 2014 and '15 seasons and run the numbers.  With the pair of 35-save seasons, Kimbrel projected to earn $33.65MM for 2014-16 if he lost his 2014 arbitration hearing and $40.1MM if he won it.

It's clear that the Braves feel Kimbrel has a good chance to reel off quality 35 save seasons in his next two years, with a reasonable chance of more than 70 overall.  Let's say, then, that the team might estimate his arbitration earnings in the $34-42MM range.  Compared to the actual contract, they might consider their arbitration savings anywhere from 18 to 33%.  In the scenario where Kimbrel wins his 2014 arbitration hearing and then reels off a pair of 35 save seasons, which I find quite plausible, the Braves essentially secured his first free agent year for free, plus an option on a second.

Keeping with the 35 save scenario, Kimbrel's 2016 salary projected at $16.1MM if he won lost his 2014 hearing and $17.9MM if he won it.  Since more than 35 saves a year is certainly possible, I'd widen that range and just say Kimbrel could have earned $16-20MM in 2016 alone.  Whatever the exact number, even the free agent market is not paying that much for elite relievers.  The Braves were likely picturing not being able to keep Kimbrel on the team in 2016, a point at which he'd have reduced trade value with an arbitration salary outstripping his potential free market salary.  Furthermore, if you take a more aggressive 40 save projection for Kimbrel for 2014 and assume he would have won the upcoming hearing, a $14MM salary for 2015 appeared possible.  Even that might have been untenable for Atlanta, reducing their Kimbrel window to one more year.

Since Kimbrel could have potentially earned all $42MM through arbitration and then gone to free agency as a 28-year-old, you might ask why he signed this multiyear deal.  As with most multiyear deals, Kimbrel chose to leave some potential earnings on the table for guaranteed money now.  Eric Gagne is a cautionary tale.  The former Dodgers closer was invincible from 2002-04 and then pitched 15 1/3 innings from 2005-06 due to elbow issues.  If something like that happens to Kimbrel, he's still got all $42MM coming to him, which is not the case if he had decided to go year-to-year through arbitration.

The arbitration pay scale for closers is just wacky, even more so in a time where teams are backing away from huge contracts for relievers.  With this deal, the Braves subverted the arbitration system and found a way to keep an elite reliever for more than one or two additional years.  If Kimbrel stays healthy and reasonably effective, they'll save significant money compared to arbitration, too.  Kimbrel can rest easy, having secured his family for generations three years prior to when he would have reached free agency.