In mid-January, each side to the dispute submits a salary figure to a panel of independent arbitrators. After a few hours of hearings, held in early February, the arbitrators pick one figure or the other. The arbitrator cannot "split the baby" and settle on a salary in the middle of the spread between the club's figure and the player's. One side leaves the arbitration a winner and the other a loser, heightening risk and encouraging negotiation and settlement.
By my count, Cincinnati has approximately seven arbitration-eligible players on their current roster. Here is a list of those players along with their projected 2013 salaries, courtesy of estimations produced by MLBTR:
OF Shin-Soo Choo ($7.9M)
SP Homer Bailey ($5.1M)
RP Alfredo Simon (800k)
SP Mat Latos ($4.6M)
SP Mike Leake ($2.9M)
OF Chris Heisey ($1.3M)
RP Logan Ondrusek (900k)
Add it all up and you get a rough estimate of $23.5 million. That obviously isn't including the $2.9 million the club was projected to pay Drew Stubbs, who was recently traded to Cleveland in exchange for Choo.
The Reds already have about $78 million tied up in guaranteed contracts for next year. This includes the $2.5 million buyout they owe to Ryan Madson, the $500,000 buyout they owe to Ryan Ludwick, and the $3.5 million received from Cleveland in the recent trade. The biggest payroll obligation will be the $17 million paid out to Joey Votto over the course of next season. Bronson Arroyo's $11.5 million salary ranks second-highest on the team.
If the Reds can settle all of their arbitration cases, that will give them 21 players signed for the Major League roster. However, that still leaves Zack Cozart, Todd Frazier, and Devin Mesoraco, among others, without contracts for '13. With the club's payroll expected to hover around $90 million, it appears as though it's going to be a tight squeeze to fit in all of the salary obligations the Reds have. But things like this do have a way of working themselves out.
The club may attempt to execute a contract extension (or two) to help alleviate the financial burden in the short-term in order to push payroll down the road. Two of the leading candidates for such a deal is rumored to be Bailey and Latos. Both would benefit from the security that a multi-year contract would provide rather than a one-year deal, even if it means taking less money in the earlier years. The Reds would also benefit by having more wiggle room now with the hope that revenues increase for future liabilities.
Nevertheless, it is always interesting to see how these situations play out. Cincy has a great cast of returning players with which to work with, and hopefully they are able to do what it takes to keep the group intact.