Cubs Receive Grimm News from Arbitration Panel

The Cubs have reportedly won their arbitration case with RHRP Justin Grimm, with the arbitration panel siding with the Cubs and awarding Grimm a 2018 contract with a $2.2M salary (the salary submitted by the Cubs). Grimm had requested $2.475M -- a difference of only $275K -- and it may seem curious why the two sides didn't just settle (perhaps at the mid-point) and avoid arbitration.   

Here's a possible reason why the Cubs wanted to go to arbitration with Grimm (besides a 50/50 chance to save $275K): 

Contracts awarded by an arbitration panel - even if the player loses - are automatically non-guaranteed contracts. So in Grimm's case. it's a non-guaranteed "straight" $2.2M contract (no minor league "split salary" and no performance bonus). What this means is that because the contract is not guaranteed, the Cubs could release Grimm during Spring Training and not have to pay him his full salary (which they would have to pay him if the contract was guaranteed). If he were to be released no more than 15 days prior to MLB Opening Day the Cubs would owe Grimm 45 days pay (about $500K), and the Cubs would owe him 30 days pay (about $350K) if he is released more than 15 days prior to MLB Opening Day. (He would receive his full salary if he is released after the start of the MLB regular season). 

And this may be the reason why the Cubs went to arbitration with Grimm, even though the difference between the two numbers ($275K) is relatively insignificant when your payroll is $150M+. And it could be why the two parties did not just "split the difference" and agree to settle at the mid-point between the two numbers.  

When a club and a player eligible for salary arbitration agree to a contract in advance to "avoid arbitration," it often involves the club guaranteeing the contract in exchange for the player dropping the arbitration request. In fact, it is very possible that Grimm was willing to split the difference and settle at the mid-point for $2,337,500 (or maybe even for $2.2M) if the Cubs agreed to guarantee the contract, but the Cubs probably did not want the contract to be guaranteed because they wanted to have both the roster AND payroll flexibility to release Grimm prior to MLB Opening Day without having to pay him his full salary if it turns out he doesn't fit on their Opening Day 25-man roster. (Also, the potential for lingering animosity that sometimes results from an arbitration hearing probably doesn't matter much in Grimm's case, because he doesn't project to have a long-term future with the Cubs anyway). 

Now, the Major League Baseball Players Association (MLBPA) is very sensitive about salary arbitration, so if a player is awarded a contract by an arbitration panel and then is subsequently released by his club prior to or during Spring Training, the MLBPA will almost always file a grievance on behalf of the player, claiming the player was released for economic reasons only (which is not permitted), and asking that the released player receive 100% of his salary as termination pay. In that situation, a club would have to show (by submitting official Spring Training game stats) that the released player was out-performed in Spring Training games by another player (or players) competing for that roster spot.

So if there is a spot for Grimm on the Opening Day 25-man roster, the Cubs have him under contract for a reasonable salary, and if it turns out there is (legitimately) not a spot for him on the Opening Day 25 (like if the Cubs prefer to keep Eddie Butler instead of Grimm - they are both out of minor league options, but Butler is making near MLB minimum salary and so he might be a more-attractive waiver claim than Grimm), they could release Grimm and pay him just a fraction of his salary - AS LONG AS - Butler (or the pitcher who replaces Grimm on the 25-man roster) had a better Cactus League performance than Grimm.  

Or the Cubs could even stash Grimm at AAA Iowa, and that's no matter how Grimm performs in Cactus League games.

Here's how: 

Grimm is not yet an Article XIX-A player (he has not accrued at least five years of MLB Service Time), but he is only 19 days shy of five years and so he will become an Article XIX-A player on April 16th if he is on the Cubs MLB 25-man roster (or MLB DL) on that date. This matters because once a player reaches five years of MLB Service Time and gets Article XIX-A rights, he cannot be sent to the minors by optional or outright assignment without his consent. This is different than being an Article XX-D player and having the right to elect free-agency if outrighted, which Grimm has right now. (Players acquire Article XX-D rights when they have accrued at least three years of MLB Service Time and/or have been outrighted previously in their career, or have "Super Two" arbitration-eligibility status). 

If Grimm is outrighted to the minors prior to becoming an Article XIX-A player (that is, prior to reaching 5+000 MLB Service Time on April 16th) he does not have to give his consent before he can be sent to the minors, and although he would have the right to elect free-agency instead of accepting the outright assignment, he gets no termination pay if he elects free-agency, meaning the Cubs would owe him nothing (which actually is even better financially than releasing him prior to MLB Opening Day!). The Cubs would also owe him nothing if he is claimed off waivers (and if that's the case, they would receive the $50,000 waiver price as well). 

If he is not claimed off waivers and is outrighted to the minors, Grimm would have the right to elect free-agency immediately or defer free-agency until after the conclusion of the MLB regular season (presuming he isn't added back to an MLB 40-man roster in the meantime), but he would be able to deduce from not being claimed off waivers that none of the other 29 MLB clubs wanted him on their MLB 25-man roster (at least not if he's making $2.2M), so it would be unlikely that he would get a better contract from another club if he were to elect to be a free-agent immediately. And so it is very possible that if he is not claimed off waivers, that Grimm would actually accept the outright assigment to the minors (deferring free-agency until after the conclusion of the MLB regular season), and the Cubs could keep him in their bullpen "inventory" at Iowa until there is an actual need for him in Chicago - AND - not risk losing Eddie Butler off waivers (if that becomes a concern). Of course Grimm would be making $2.2M to pitch in AAA, but the Cubs might consider that to be a reasonable price to pay to have an MLB-ready insurance policy on the back-burner at Iowa available to be called-up at a moment's notice.