A new small market peril?

After a discussion prompted by my roommate Tony, and after writing earlier about the ever-increasing amounts of money being doled out to free agents this year, something occurred to me. This market inflation will serve to hurt small market teams in more ways than being priced out of the top end players-for-hire, as usual.

Not only will they not be able to retain their top players once they reach free agency, but arbitration is going to likely become a more popular option for players still under the team's control.

With the huge contracts handed out to mediocre-to-above-average players, the comparisons for arbitration eligible players will be very favorable for them. Many teams will find it difficult to work out reasonable contracts with players to take them through the arbitration eligible years.

Imagine this scenario, if you will: A 25 year old pitcher, after declining his team's contract offer of $3 million a year through his arbitration eligible years, takes his team to arbitration in the winter. He's an average starter, with an average ERA, and an average amount of wins. His agent can point to the deals handed to Adam Eaton, Vicente Padilla, Randy Wolf, and Woody Williams. All are average starters, and all are making between $6 and $11 million a year. It's likely that the agent would offer closer to $6 million, and the team would counter with the $3 million deal. It seems very likely that the arbiter would lean towards the higher figure with all of the precedence that's being laid in contracts this winter. The team would be forced to trade the pitcher or have his large salary take up a disproportionate part of the overall team payroll.

I've been a nonbeliever in the idea that the lack of a salary cap has hurt small market teams, since many have found ways to succeed by looking for undervalued assets, but a large part of that success has always been young players who are under club control, and older mediocre players with one or two good skills. With the precedent being set this winter, I'm concerned that arbitration will increase salaries too quickly, and the once cheap older players will see their stock rise out of control with the scarcity on the market.

Of course, I hope this doesn't happen, but watch out for it.