Today is the last day to offer arbitration to free agents. Offering arbitration does a few important things.
1) It can get you a player on a one year deal who you wouldn’t necessarily want for more than that. While free agents don’t usually accept arbitration they sometimes do if the market seems stale (see: Greg Maddux).
2) It sets up the compensation draft picks you get if the player is ranked as a Type A or Type B if they decline.
3) Most importantly in some ways, it allows the team to continue to negotiate with a player. If the team does not offer a player arbitration, they cannot negotiate with him until much later.
So, if the Yankees don’t offer Pettitte arbitration (which would be abnormally stupid of them) he almost certainly won’t be coming back and they’ll have to fill that hole with someone like Oliver Perez, thus negating the draft picks they’d be getting anyway.
Update: I looked around and found this at scout.com:
However, if the team declines offering arbitration to a player before the deadline (December 7), then that free agent is allowed to sign elsewhere and, and the team loses negotiating rights with the player until May 1 of the following year.
Ouch, that’s really bad. The Yankees had better offer Andy arbitration. The deadline for arbitration this year is obviously different but the rest is the same.
Another Update: I did some digging and apparently this is the first year where you can continue to negotiate if a player declines. It’s very hard to find the correct search term to dig this stuff out:
A club not offering arbitration to a six-year free agent no longer comes with additional disincentive. Until last year, a club not offering arbitration to its former player who had opted for free agency would forfeit its rights to negotiate with the player.
Source: Mets.com article about Oliver Perez.