In my latest piece for Baseball Prospectus, I examine the Dodgers’ offseason in light of the news that they avoided arbitration with Chad Billingsley and Matt Kemp, signing the latter to a two-year deal. Both were among the core of eight players who are arbitration eligible this winter:

Last week, a scrap of good news emerged from the Dodger camp, as the team agreed to terms with Matt Kemp and Chad Billinglsley, two of those arbitration-eligible players (both first-time eligibles are represented by former big league ace Dave Stewart, whose menacing glare surely must have been worth something at the negotiating table). Billingsley, who pitched his way onto the All-Star team last summer before enduring a second half so wracked by injury and inconsistency that he didn’t make a postseason start, signed a one-year deal for $3.85 million. Kemp, who enjoyed a breakout season which saw him lead the team in WARP (7.3) and post the highest EqA of any qualifying center fielder (.304), inked a two-year deal for almost $11 million. His 2010 salary of $4 million is believed to represent a high for a center fielder in his first year of arb eligibilty, but his 2011 pact ($6.95 million base plus $600,000 in potential incentives) is more significant.

That 2011 deal more or less represents the Dodgers’ strongest acknowledgment to date that the world will not end after the coming season, which should come as a relief to anxious fans. According to the data at Cot’s Baseball Contracts (h/t new colleague Jeff Euston), the team has just four players under contract after this year: Kemp, Rafael Furcal ($12 million), Casey Blake ($5.25 million), and Carroll ($1.925 million). The club will still have control over the seven remaining arb-eligible players: Billingsley, James Loney and Hong-Chih Kuo (who will be in their second years), Jonathan Broxton, Andre Ethier, and Russell Martin (third years), and George Sherrill (fourth year).

Given the significance of those players to the team’s current and future prospects, one can understand the unease which the uncertainty over their salaries represents at this juncture. That goes doubly when one considers the pre-sale teardown that the recent divorce proceedings of owner John Moores forced upon the division rival Padres; under California’s community property law, Moores and his wife split the team 50-50, requiring the sale of the club to settle the tab. The 2010 season isn’t so much of a concern for the Dodgers, given all the parts in place, but the threat that the McCourts’ divorce could force a similarly wrenching course of action still looms large, particularly when one considers the additional evidence of their tight-fisted ways.

I spent a lot of space summarizing those tight-fisted ways in the forthcoming Baseball Prospectus 2010. Breaking it down to a hail of bullets:

• Failing to offer obviously departing Type A free agents Orlando Hudson and Randy Wolf arbitration, thus costing themselves first-round picks as well as supplemental first-rounders, all worth about $24 million according to some old work by Nate Silver.

• Forgoing the free agent market this winter in anticipation of the raises those arb-eligible players would receive in order to keep payroll down. Meet Jamey Carroll, the team’s marquee signing this winter!

• Consistently surrendering better prospects than they might otherwise have to in their midseason trades in exchange for remaining more or less payroll-neutral. Catcher Carlos Santana (the Indians’ number one prospect, traded as part of the Casey Blake deal in 2008) and third baseman Josh Bell (the Orioles number two prospect, traded as part of last summer’s Sherrill deal) are the most prominent of this bunch, which also includes Andy LaRoche and 2006 first-rounder Bryan Morris (who admittedly looks like a bust in the making) in the Manny Ramirez trade and 2007 second-rounder Michael Watt (not the Minutemen bassist) in the 2008 Greg Maddux deal.

• Paying a major-league low $8.5 million in signing bonuses to draft picks over the past two years, and going similarly cheap when it comes to international signings — long a Dodger stronghold.

• Deferring partial contract payouts until 2011-2014 to Ramirez and Rafael Furcal as well as the not-so-dearly departed Andruw Jones and Jason Schmidt.

Ugh.

In the face of all of that cost-cutting, one can see where locking in Kemp, if only for one extra year, counts as progress… Despite all the talk of this crop of baby blues, it’s worth noting that the team’s strong showing last year had less to do with the performances of their young and largely homegrown nucleus… than is sometime assumed. A couple of weeks ago, Matt Swartz ranked the 30 teams according to the WARP contributions of players in various service-time classes. The Dodgers ranked just 13th in the majors in WARP received from non-market salaries (NM), players either in their pre-arbitration or arbitration-eligible years. On the other hand, they ranked third in the majors in WARP received from auction-market salaries (AM), players with enough service time to be eligible for free agency or to have come from Japan or other foreign markets…

While the Dodgers received more value from their non-market players than three of their four NL West competitors (all except the Rockies), their advantage over the Giants, who received the least value from such young ‘uns, amounted to less than three wins. On the other hand, the Dodgers got nearly as much value from their auction-market players as the rest of their NL West competitors combined. Of their eight most valuable players according to WARP, five (Hudson, Blake, Rafael Furcal, Ramirez and Wolf) were free agent signings.

Since filing the piece, various reports from the Twitscape have Martin ($5.05 million), Sherrill ($4.5 million), Loney ($3.1 million), and Kuo ($950K) signing one-year deals, and the latest word is that they’ve tied up Ethier and Broxton via two-year deals as well. There are no dollar amount attached to those two, but Ethier’s is certainly higher than Kemp, since for arbitration purposes, he’s a year ahead in terms of service time. The great MLB Trade Rumors offers Nick Markakis’ two-year, $17 million deal as an appropriate comparison given service time and general caliber of play, which is what this arbitration business is all about anyway. Stay tuned.