Prior to the 2007 season, prodigal son Andy Pettitte returned to the New York Yankees. A product of the now defunct draft-and-follow process all the way back in 1991, Pettitte made his Bronx debut in 1995. He proceeded to post an ERA+ at least 10 percent better than the league average in six of  nine seasons during his first tenure with the Yankees, before taking his act to Houston for three years. Upon returning to the Bombers, Pettitte compiled another impressive season in 2007 (110 ERA+) before seemingly declining this past year, with an ERA+ below the league average for the first time in his career (98 ERA+).

A free agent at season's end, Pettitte nonetheless qualified for Type A Free agent status, meaning that the Yankees were essentially faced with the following choices. They could have:

1.) Offered Pettitte arbitration, ensuring that they would  receive 2 compensation draft picks should he sign with another club. Should Pettitte accept arbitration, he would receive a salary somewhere in the range of his 2008 compensation ($16 million).

or the scenario that they did pick:

2.) Decline to offer Pettitte arbitration. The Yankees are reportedly still negotiating with Pettitte, hoping to bring him back at a reduced salary level. However, should Pettitte decide to sign elsewhere, the Yankees receive no draft pick compensation for his departure.

The deep-pocketed organization has been panned by Baseball Prospectus' Joe Sheehan, among others, for declining to offer Pettitte and Bobby Abreu arbitration.  Sheehan summed up his frustration with the situation:

"Two days ago, the Yankees had assets in Abreu and Pettitte that could have been considered short-term investments with minimal risk and fairly certain benefit (were they to rejoin the club), or long-term investments with more risk and uncertain benefit, but higher upside (were they to become draft picks). Now, they have nothing. How a team with the cash reserves of the Yankees can make a choice like that is inexplicable, and recalls the decision to forego the services of Carlos Beltran three years ago, a decision also motivated by short-term cash concerns."

By declining to offer Pettitte arbitration, the Yankees seemingly came to the conclusion that Pettitte is not worth the $16M or so he would have made if he decided to accept arbitration.

Luckily, there are a number of methods now available to evaluate player salary. By converting Pettitte's pitching numbers into a runs above replacement level figure, we can get an estimate of what Pettitte will be worth in 2009. For those who aren't familiar with the concept, replacement level is essentially the theoretical level of performance of a freely-available player who could be acquired for the major-league minimum salary. As Eric Seidman and others have pointed out,  replacement-level for starting pitchers is set at a 5.50 Fielding Independent ERA (FIP ERA). FIP ERA is calculated using just a player's strikeout, walk and home run totals, thus evaluating pitchers based more on their controllable skills.

While Pettitte's 4.54 ERA looks pretty ordinary, he had some pretty terrible luck on balls put in play. Pettitte's Batting Average on Balls in Play (BABIP) was a Sistine Chapel-high .339, the product of leaky defense behind him. In a write-up I completed for Fan Graphs, I found that Jason Giambi, Robinson Cano, Derek Jeter and Bobby Abreu all rated as lackluster with the leather. Per Defensive Efficiency (which measures the percentage of balls put in play that are converted into outs), the Yankees rated just 25th in the majors.

Removing poor luck from his line, it becomes apparent that Pettitte was his customarily productive self in 2008. His 3.71 FIP ERA was actually his best mark since 2005, and the Marcel projection system forecasts Pettitte to post a 3.98 FIP ERA in 183 innings pitched in 2009.

Using that projection and our replacement-level standard for starting pitchers (5.50), we can figure out how many runs above replacement Pettitte projects to post in 2009.

If Pettitte posts a 3.98 FIP ERA in 183 innings, he will surrender about 81 runs:

3.98 FIP ERA / 9 = .442 X 183 innings = 80.92 runs.

A replacement-level starter, due to his lack of effectiveness, would be unlikely to pitch 183 innings. So, what we'll do is cap our replacement-level starter's innings at 150, with the additional 33 innings going to a replacement-level reliever (4.50 FIP ERA):

RL starter: 5.50 FIP ERA/9 = .611 X 150 innings = 91.6 runs

RL reliever: 4.50 FIP ERA/9= .5 X 33 innings = 16.5 runs

Combined, the replacement-level pitchers would surrender about 109 runs.

Subtracting the replacement-level 109 runs from Pettitte's 81 runs, we find that Andy is 28 runs above replacement. 10 runs is considered to be worth one win, so Pettitte is projected to be 2.8 wins above replacement.

So, now we know how many wins above replacement level Pettitte projects to be, but we need to figure out just how much 1 WAR is valued on the free agent market. Using Dave Cameron's research, we find that a free agent win above replacement was worth between $4.5 and $5 million last offseason. Adjusting for salary inflation (which has been about 10% per year in recent seasons), a free agent win above replacement projects to be worth about $5.5 million. Now, we simply have to take Pettitte's WAR total and multiply by the going rate for WAR:

2.8 WAR(5.5M)= $15.4 million

Pettitte projects to be worth just about every penny of what he would have made through arbitration. Did the Yankees undervalue Pettitte's talent level? It's possible. It's also possible that the club thinks that they can play "hardball" with Pettitte and win. In other words, the Yankees may think that Pettitte does not wish to sign with another organization (thus negating the compensation picks), and feel as though he will end up conceding and signing for less than $16 million.

If that happens, all is well that ends well. But if Pettitte takes his game elsewhere, the Yankees will have missed out on the opportunity to either bring back a productive starter worth his salary for one year or select two solid prospects in next year's draft. Was it worth the gamble? Stay tuned.

A Journalism student at Duquesne University, David Golebiewski is a contributing writer for Driveline Mechanics, Fan Graphs and Inside Edge Scouting Services. Contact David via email at golebie1029@duq.edu or judidave87@msn.com