What Matters In Arbitration

Arbitration matters to teams and players alike, since millions of dollars are often at stake in a single hearing. But the process by which teams and players settle salary disagreements can be confusing, since the system is complex and the hearings are private.

At least one thing is simple about arbitration – the statistics. Sabermetricians have developed stats for just about everything, but teams and agents don't want to risk alienating arbitrators with wOBA, xFIP or UZR, so they stick to the basics. Wins don't necessarily indicate how effective a pitcher has been, but they will impact how much he gets paid. Innings pitched, ERA, RBI, runs, homers and doubles figure in, along with other back-of-the-baseball-card stats like batting average, on-base percentage and slugging percentage.

Morneau

But arbitration eligible players have at least two-plus seasons of big league experience, so determining precisely which seasons are relevant is subject to interpretation. The collective bargaining agreement between the owners and the players spells out what matters in an arbitration hearing without going into excessive detail.

"The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal),"  the agreement reads, "the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries [and] the existence of any physical or mental defects on the part of the Player."

In other words, the player's most recent (or platform) season matters and so do career numbers, previous earnings and comparable players. But those four factors are weighed differently depending on how much service time the player has. MLBTR surveyed MLB executives and agents to make sense of the CBA and determine what matters most in arbitration.

When a player is arbitration eligible for the first time, the "the length and consistency of his career contribution" matters a whole lot. It's the first opportunity for the player to reap the benefits of his first few major league seasons, so his entire career matters, not just the platform year.

That's why Justin Morneau (pictured) earned 'only' $4.5MM in his first year of arbitration eligibility. He had just won the American League MVP, but earned less than Albert Pujols, Miguel Cabrera and Ryan Howard did as first-time arbitration eligible players because his career numbers weren't as impressive. The platform year vaulted him into the $4-5MM range, but his career numbers couldn't push him into the $6MM club with the others.

Players' career numbers do matter when they go to arbitration for the second, third and, potentially, fourth time, but not to the same extent. Teams and players generally agree on a raise based on the player's previous salary and what he did in his most recent season. The 'raise' argument, which is common in arbitration cases, depends heavily on the platform year, rather than career totals.

Career contribution matters after a player's first season of arbitration eligibility, though. Consistent players like Mark Teixeira, Prince Fielder and Pujols were well-compensated as arbitration eligible players partly because of their steady careers and partly because they were working from strong platform seasons and high salaries.

In some cases – say a player is non-tendered or injured – career contribution becomes a more significant factor after a player's first arbitration season, as the sides attempt to re-set the player's value.

Because the CBA is ambiguous, teams and agents can weigh platform seasons, career contributions and other factors like "leadership and public appeal" as they see fit. For example, Jose Bautista and Jonathan Papelbon, who are both a year away from free agency, likely emphasized their 2010 seasons differently in discussions with their respective teams. Bautista will likely explain to the Blue Jays that his historic 2010 season outweighs a previously pedestrian career, while Papelbon likely pointed to his history of dominance instead of his disappointing 2010 season.

There are guidelines for arbitration, but there's room for interpretation, which is why teams and agents can look at the same facts and reach vastly different conclusions about a player's value.

Photo courtesy of Icon SMI.


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12 Comments on "What Matters In Arbitration"


4 years 5 months ago

jose should take the money he was offered by the jays

CitizenSnips
4 years 5 months ago

Surely those “complicated” Saber stats are explained in laymans terms in some form. Since baseball is modernizing why can’t the slow shift away from archaic stats begin? Or at least incorporate the other stats.

BlueSkyLA
4 years 5 months ago

I think the real message is, the people who run the teams and who have to write the checks don’t see them as useful measures of performance.

3 years 6 months ago

In negotiations between agents and clubs, that is true, but that wouldn’t matter if the agent could convince an arbitration panel that they’re important. 

phoenix2042
4 years 5 months ago

especially the simple ones like FIP or wOBA. FIP is a pitcher’s fielding independent pitching, so it only takes into account the Ks, BBs, HRs and HBPs because those are the only plays that the defense is not involved in. it removes luck (especially xFIP). wOBA assigns a value to each action a batter can make (single, double, triple, HR, BB, HBP, ROE, etc, etc) and then compares it the average, thus giving a picture of how good of an overall hitter a player is, down to exactly how many more runs they give their team. and even simpler one to explain could be wRC+, which (ignoring how it’s calculated) uses those same outcomes of an at bat and then says how much better (%) it is than average. 100 is average, so 110 is good and 150 is around the MVP. how can intelligent panelists blow off a player just because they know about this stuff?

phoenix2042
4 years 5 months ago

especially the simple ones like FIP or wOBA. FIP is a pitcher’s fielding independent pitching, so it only takes into account the Ks, BBs, HRs and HBPs because those are the only plays that the defense is not involved in. it removes luck (especially xFIP). wOBA assigns a value to each action a batter can make (single, double, triple, HR, BB, HBP, ROE, etc, etc) and then compares it the average, thus giving a picture of how good of an overall hitter a player is, down to exactly how many more runs they give their team. and even simpler one to explain could be wRC+, which (ignoring how it’s calculated) uses those same outcomes of an at bat and then says how much better (%) it is than average. 100 is average, so 110 is good and 150 is around the MVP. how can intelligent panelists blow off a player just because they know about this stuff?

Alex
4 years 5 months ago

Why should the teams have to worry about alienating arbitrators with advanced metrics? As the article points out, winning or losing a hearing can mean a difference of millions of dollars, teams should be able to point to any and all statistics necessary that might further their case. Why shouldn’t we expect arbitrators to be familiar with sabermetric stats? I trust that MLB is intelligent enough to have people who serve in these positions to be more than familiar with the intricacies of the game and its financial facets. Wins shouldn’t factor nearly as much into a pitcher’s value, for example, as their FIP or ERA+, stats that are much more specific and indicative of success.

BlueSkyLA
4 years 5 months ago

Consider that it might be familiarity which causes them to not use these stats as a basis for awarding salary. Just because baseball fans have become enamored with “advanced” stats doesn’t mean that the people who run the teams necessarily are or should be.

Alex
4 years 5 months ago

I think even the most anti-sabermetric baseball officials still know enough to realize that wins are an exceedingly subjective statistic. Further, I don’t think it’s an unreasonable request to want arbitrators to at the very least be familiar with sabermetric concepts and statistics, even if they don’t agree with their significance or usage.

BlueSkyLA
4 years 5 months ago

I doubt much reliance is placed on wins for pitchers. That’s a totally lame stat. But my point wasn’t that the GMs, team owners, and other officials don’t understand the so-called advanced stats, but that they rely on them so little because they understand their limitations better than most fans.

3 years 6 months ago

They can make the arguments, but they have a limited amount of time to do so.  Many long time baseball fans can’t get their heads around the concepts in advanced metrics and statistics, and the arbitrators are used to hearing the same old time worn stats.  So, you argue what is familiar to them.

In any case, there are parameters that are set by the number of years and the salary range of what others at that position with similar numbers of games played have earned in the past.  Unless a player’s numbers show performance well above the others, he’s going to fall within that range. Performance is only part of the equation. Service time and salary history are huge factors as well.

not_brooks
4 years 5 months ago

I hate it when they use photos like this. It stops the post from being a beautiful wall of text.