Talking Baseball

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Posted by Ben K. on Wednesday, January 26, 2005

Arbitrary Arbitration

But first: Recently, this blog passed it's one-year anniversary with very little fanfare. Those of you who are our loyal readers have probably caught on to the fact that we're not posting with any sort of regularity anymore. Yet, you may also have noticed that over the past few weeks, I've thrown up some new columns on a somewhat regular basis. That's because these columsn are for a different site. I'm writing a regular column for a new baseball site called 360 The Pitch. This new site features podcasting, a new form of blogging focusing on the audio component. But it also has a written aspect, and I'm one of their three regular columnists. So check it out. For now, I'll post the entire content of my columns here, but I may stop doing that soon. And now back to the column...

Salary arbitration stands alone in the world of baseball transactions. Free agent pursuits are the best part of the Hot Stove League. Baseball’s collective bargaining sessions are covered religiously. Yet salary arbitration stands as the last bastion to secrecy in the baseball world. What goes on during arbitration stays in arbitration leaving fans to wonder what exactly happens in an arbitration case.

From the start, arbitration is clearly not the desirable ends for a contract negotiation session. As the arbitration panel must choose between either the player’s request or the club’s offer, the arbitration session consists of the player proclaiming his greatness and the team attempting to show how that player is not worth as much as he thinks he is. No matter the result, there’s bound to be some ill will between the team and his club after the case. I know I wouldn’t feel too good if a boss of mine tried to convince me I wasn’t worth as much as I thought.

As far as the public is concerned, that’s about all there is to it; these hearings are, after all, confidential. Yet the arbitration process is a lot more involved than just the outcome, and it seems to me that Major League Baseball’s salary arbitration may be quite arbitrary.

Baseball’s Collective Bargaining Agreement provides the most information a fan can hope to gather about the arbitration process. In it, there are a whopping five and a half pages devoted to salary arbitration. This may not seem like too many, but Article IV, Section F is actually one of the longest entries on a single topic in the 2002 agreement.

While much of the section involves filing dates and contract legalese, a few passages deserve some analysis. First, every arbitration case is heard by a three-member panel made up of “prominent, professional arbitrators” recommended by the American Arbitration Association. This association is one specializing in alternative dispute resolution through arbitration or mediation, as their Web site proclaimed.

While those hearing the panel are highly qualified as dispute resolution, their knowledge of baseball may not be as comprehensive. If you think the battle over traditional scouting vs. sabermetrics is a tense one within baseball, imagine trying to explain the advantages of Runs Saved Above Average to an arbitrator with only a passing knowledge of baseball. And there’s a time limit to boot; each side gets only one hour for an initial presentation and 30 minutes for a rebuttal and a closing statement. My fantasy draft routinely lasts twice as long, and it doesn’t determine anyone’s salary for next season.

The other interesting part of Article IV, Section F is subsection 12. In this subsection, the CBA dissects those criteria which can be used as admissible evidence during the hearing and those facts that must be left outside the room. First, the agreement allows for the broad statement of “the quality of the Player’s contribution to his Club during the past season.” This includes — but is not limited to — his overall on-field performance, his leadership abilities, and his public appeal. Clubs and players can also mention the length and consistency of the player’s career contributions and the comparative baseball salaries of the day.

With these criteria in mind, the arbitration panelists are instructed to give weight to the evidence as they deem appropriate under the circumstances. Furthermore, the arbitration panel is asked to pay careful attention to the contracts and salaries of those players with similar playing time to the player in question. This is a review of the player’s ability at its rawest. He has to justify his worth in relation to his peers in a tough process, and the CBA does not allow any press comments that may provide some more insight into how the player compares to those on his team and those against whom he competes.

That’s a lot of stuff to cram into a 90-minute session, and it’s quite clear to me why teams, players and agents work their hardest to avoid arbitration. It’s not comfortable for any of the parties involved in arbitration. Furthermore, as we’ll see over the next few weeks, there’s no real way to tell who will win and who will lose. It’s the luck of the draw in terms of the knowledge of those panelists, and it all depends on which side clearly and cleverly manipulates those statistics.

Personally, if I were making an arbitration case, I would rely on the current market to deliver me a win. After an off-season in which free agents struck it big, a panel instructed to pay attention to current salary levels would be hard pressed to deny many players a significant raise in today’s market.

Finally, what I see as one of the biggest flaws in the salary arbitration process is the reliance on what the player has already accomplished in his career. Because the player’s past performance is admissible evidence, it is quite possible for a player to win a massive salary increase based upon what he’s already done regardless of what he is likely to do in the upcoming season.

Don’t believe me? Take last week’s column. Roger Clemens’ $18 million salary is certainly based on those seven Cy Youngs. Because he’s put together a Hall of Fame career and an unprecedented seven Cy Young victories, it’s not unreasonable to assume that an arbitration panel would have awarded him $22 million even if any 42-year-old pitcher is unlikely to deliver a season worth $18 million let alone $22 million.

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