According to the AJC, Adam LaRoche has requested $3.7 million to play in 2007, while the Braves are offering $2.8 million. Should the sides not agree on a salary, the parties will have one of these offers selected by a panel of arbitrators following a hearing in February. Final offer arbitration requires that the panel choose one of these two offers.
LaRoche is entering arbitration at a good time. He just had a very good year during an offseason when salaries are rising. However, I think LaRoche has selected a number that gives him very little bargaining power. I think he should settle as soon as possible, and the Braves have little reason to do anything but wait until February.
I estimate that LaRoche generated $9.79 million in revenue last year Assuming that Adam’s 2007 is identical to his 2006 campaign, and that salaries escalate by 10%—as they have for the past 20 years—LaRoche will generate approximately $10.77 million. This is well above what Adam is even asking, but arbitration-eligible players usually earn far less than their worth on the free agent market.
Recent history indicates that arbitration-eligible hitters typically earn about 77% less than their gross marginal revenue products. For LaRoche this means a projected salary of about $2.5 million, and this number is based on some pretty rosy assumptions. Don’t think that the Braves don’t know this.
If I were Adam, I’d stay close to the phone and take the first compromise the Braves offer. The Braves have a strong case, and I see very little that could sway a panel to award him $3.7 million.
Addendum: I figured I should look at the Braves other arbitration candidate, Oscar Villarreal, as well. Villarreal ought to be worth about $5.08 million in 2007 according to my estimates. Arbitration-eligible pitchers tend to get 78% less than their gross MRPs. This puts his projected salary at $1.12 million. He is asking for $1.3 million, the Braves are offering $860,000. Those are more reasonable offers for arbitrators to deliberate over, but I give a slight advantage to Oscar. However, his nickname “The Vulture” can’t help.