Trying to make sense of arbitration

Late, great baseball union head Marvin Miller once explained that even if the owners thought they lost badly when free agency was granted, what the union really wanted was the right of arbitration. It’s the arbitration process that has driven baseball salaries through the roof much more quickly than free agency.

The legal parameters and procedures attached to the arbitration process would take up far too much time and space for anything less than a book or two, (there have been several books written on this subject). Such discussion would be well outside my realm of expertise and too dry a read for anyone not in the legal profession.

Instead, let’s consider a much more subjective approach—a dissection with a no more than gut level observation. A dissection from a baseball fan and a baseball writers’ casual observation.

Of course, the temptation with such an approach is to degenerate into a rant along the lines of: “He’s a lousy player—why does he make so much money—and why does he deserve a raise?” The arbitration system as it currently stands is not set up in this manner. It is there only to decide between what a player is asking for and what ownership has offered to pay. Nothing else.

This can allow a player to make an outrageous salary demand with the knowledge that should an arbitrator decide that the offer made to the player by the team– usually a raise depending on performance that past season– is insufficient, the player’s demand must be met.

Baseball owners have little or no recourse in dealing with those players who had a less successful or slightly better than unsuccessful season than previously. In the past, it was the players who had little or no recourse. Arbitration has taken the equation from the one extreme, now to another.

It has been suggested by some that the arbitrator should have the authority to choose a figure that he or she feels would be reasonable if neither submission seems fair. This has it’s drawbacks however. The most disagreeable although perhaps the most money saving for ownership would be in losing of  control of the decision on what a player might be worth.  It’s true that arbitration decides what a player will earn that season, but at the very least, owners have had their say with their proposal. Having an independent board decide on a figure other than those submitted by either party might take such control completely away.

This might lead to the precedence of strict statistical “legal” guidelines. A player who bats .240 is worth this amount of money, a player who bats .280 is worth this amount. A pitcher who wins 10 games will automatically receive less than on who wins 15. This might lead to individual stats being more important to a player than team wins or losses.

A manager would be under pressure from both players and management— the players would need to do whatever they could for their own benefit and no longer the benefit of their team. Upper management would insist on the benching of a player fearing another home run or base hit would cost them X amount of dollars. Benching a number one starting pitcher would hurt the team and the player but help the owner. Of course, it would also probably be illegal.

Who knows of a better solution?

0 thoughts on “Trying to make sense of arbitration”

  1. I know this column has been around for a while, but I only just discovered your site (which looks great).

    Perhaps you miswrote or I misunderstood, “This can allow a player to make an outrageous salary demand with the knowledge that should an arbitrator decide that the offer made to the player by the team– usually a raise depending on performance that past season– is insufficient, the player’s demand must be met.”

    This implies that if player x is offered $10M, asks for $20M, and the arbitrator determines the player is worth $12M that the player gets $20M. This is untrue. The player gets whichever amount is closest to what the arbitrator determines – so, in the above example, the team’s offer of $10 million.

    And actually, the arbitrator is “supposed to” find the most comparable player in the game to our player x and derive the salary from that (discounted for “the winner’s curse” – i.e., the assumption that free agents are taking the highest offer as opposed to the most realistic). So, in a sense, the owners(in all of MLB) have set a certain salary based on whatever – BA, HRs, OPS.

    Whether the arbitrator does this accurately, I have no idea either. But the player and the team do base their amounts on what they think the arbitrator will say, so neither side would come up with an “outrageous offer”, because they would most likely lose.

    Now, of course, the arbitrator has to base his number on what has happened, not what will likely happen, in that case your example above (say player x is pretty lousy but got lucky last year), the player may indeed get way overpaid through arbitration. So this is why often teams will not offer arbitration if they feel a player has played way over their head (or they have a cheaper alternative). Which is bad for owners also because their only recourse is to release the player entirely.

    Thanks for letting me ramble.

Leave a Reply

Your email address will not be published. Required fields are marked *