Author's note: This probably seems like a pedestrian and downer subject to read about on this birdlandiest of mornings, and it is. But it was written before the Orioles had clinched. Congratulations to the 2014 AL East Champion Baltimore Orioles!
Chris Davis's already frustrating 2014 came to a screeching halt (possibly temporary if the Orioles go as far as the ALCS, but a halt nonetheless) when he was suspended for Adderall usage by MLB after failing to seek a Therapeutic Use Exemption but nonetheless taking the drug. This comes after a 2013 campaign where Davis led MLB in home runs, followed up by the current season, where Davis has spent time on the DL, flirted with the Mendoza line all year and cracked a more ordinary 26 HRs in 525 PAs.
Altogether, after Davis was awarded an arbitration raise from $3.3M to $10.3M this past offseason, he has regressed from a 6.1 WAR player to a 1.8 WAR player (using Baseball Reference's version of the metric). This puts the Orioles in a potentially awkward position going into 2015.
First off, let's be clear: Davis is not receiving a pay cut in arbitration. Although players can theoretically receive pay cuts via the process, that would generally be reserved for complete and total lost seasons, either to injury or demotion. Davis can still point to 26 HRs, 1.8 WAR and his service time, and an arbitration panel will grant him a raise, no matter how small. MLB Trade Rumors puts out great estimates every year, but those won't be out for a while, so let's assume, without evidence, that Davis would receive about $11.5M next year.
The generally accepted "going rate" for players is normally considered to be in the neighborhood of $7M/win, which shockingly makes Davis a very slight positive value for the club this year (he has produced 1.8 WAR for $10.3M, or about $5.7M/win).
If the Orioles assume that 2014 is about as bad as Davis can be (probably a valid assumption, although his defense has been a tick better than normal this year), and assume that Davis will only receive a modest arbitration raise, the calculus for jettisoning Davis is not at all clear. At $11.5M, Davis still "breaks even" in terms of team value at just 1.7 WAR.
And, of course, the mere prospect of cutting Davis would involve determining just who would replace him. The Orioles have control of Steve Pearce (himself due a large arbitration raise, almost certainly enjoying a career year and having significant platoon splits), or they could try out prospect Christian Walker (who's probably not ready yet), or they could hit the free agent market, where the most interesting potential signings (Billy Butler, Adam LaRoche and Adam Lind) all have club options, leaving only risky free agents like Michael Cuddyer or Mark Reynolds after that.
So yes, the Orioles should offer Chris Davis arbitration, unless they have some incredible trade completely worked out before then. Even though he'll probably feel pretty overpaid at times, and even though it feels wrong to reward a guy who got suspended for doing something pretty dumb right before the playoffs, the odds are good that he'll still be the Orioles' best option, and by holding on to him through 2015, they can make him a qualifying offer and potentially pick up another draft pick after that. Cutting him loose out of spite after 2014 would be a shortsighted and punitive move that would not serve the best interests of the franchise.