With Major League Baseball’s arbitration hearings beginning today and running through February 21st, I thought it might be nice for those new to baseball, casual fans and even fanatics like myself to take a little refresher course on what salary arbitration and arbitration hearings are. I mean, we hear them talked about every year but what is really going on?
All this is largely based on free agency so I need to preface this article by saying that free-agency in MLB is different from free-agency in any other sport, in that a player cannot become a free agent without six full years of big league service.
Let’s go over the basics of salary arbitration in MLB. Really, the most complicated part of the process is deciphering who is eligible in the first place, after that things become a lot less complicated.
Who is eligible for salary arbitration? Three different classes of players are eligible for salary arbitration.
- The first group of players eligible for salary arbitration are players who have not yet accumulated six years of MLB service before their contract with their team ends.
- Players in the second class are eligible for free-agency. Once they have filed to become a free agent they can be offered salary arbitration from their teams which they can either accept or deny. If they accept then they go through the normal arbitration process of negotiating a contract, if they deny it the become free-agents.
- The third class of eligible players are referred to as “Super 2” players. To be eligible these players have already accumulated at least two years but not a full three years of MLB service and they also must they must have at least 86 days of service in the previous season and rank in the top 22 percent of total service time in their class.
How does the process of salary arbitration work?
- During salary arbitration the player and the team each exchange numbers for the contract for the following season.
- The club’s offer must be at least the same amount that the same amount as the player earned the previous season. The player’s offer can be as high as they like but the two parties must come to an agreement on a number.
- If the team and the player cannot find common ground by the January deadline then an arbitration hearing is scheduled.
- Arbitration hearings are scheduled between February 1st and February 21st.
- Actually, these hearings rarely come to fruition because the players and clubs are still allowed to negotiate between the deadline and the scheduled hearing. Usually they come to a middle number. If, for example, a player wants $10 million and a club offers $8 million the two will agree on $9 million in order to avoid a hearing.
What happens if an arbitration hearing does take place?
If an arbitration hearing is held each party is allowed one hour to present their case to a panel of three judges. A player’s accomplishments or lack thereof are brought into play as can be the team’s record and attendance. The gamble with going to a hearing is that there will only be one winner. The court has 24 hours to make a decision and will either side with the player or the team. The judges are not required to explain their decision.
For example, one case that is going to court this year is between the Oakland Athletics and their right fielder, Josh Reddick. Reddick feels he deserves to make $3.25 million in 2014 but the Athletics are offering him $2 million based their perception on his performance over the past couple seasons. Reddick is an interesting case because he hit upwards of 30 home runs and won a Gold Glove Award in 2012. In 2013 he was injured part of the year and even when healthy his batting average suffered and his home run total was well below 20. He was, however, nominated for another Gold Glove but he did not take home the award in 2013. So it is easy to see here how the two parties do not agree. Reddick’s performance overall the past two seasons combined has been on the upside of average but there are no guarantees for the Athletics that he will return to his 2012 offensive form. As the Athletics are not a team with money to spare they must be cautious. This case is particularly tricky, which is why it is one of very few that actually makes it all the way to the courts.
The courts do not award middle of the road contracts so someone is going to have to lose. In the aforementioned example, Reddick will get his proposed $3.25 million in 2014 or he will get the $2 million the team has offered. It is an arduous process going to a hearing and even though the hearings are supposed to soften any hard feelings, there is still the possibility that the player or team will be unhappy throughout the following season.
What is the whole point of this process, if there may still be hard feelings between a player and their ball club?
The process is typically to help the players who have little or no power in regards to their contracts. New players are usually paid the bare minimum during their first three years of MLB service. During this time the players have absolutely no leverage. The process of salary arbitration and hearings gives the players a means of negotiation so they feel they are being compensated fairly for their hard work. They are allowed a legal platform to argue their worth, with the decision made by an impartial party. Leaving the final decision up to the court keeps the negotiation process out of the hands of the individual, their agent or the team. It is definitely not a perfect system but it is the most just way for the players and teams to come to a compromise.
While all the rules and regulations of salary arbitration can seem both complicated and simple at the same time, I hope I have outlined the process in a straightforward and understandable way.