December 1, 2006
Arbitration is an interesting concept when it applies to baseball. It is one of those somewhat misunderstood aspects of the collective bargaining agreement. Theoretically the purpose of arbitration is two-fold. First it provides a safeguard to minor league players who are drafted by a major league baseball team. Teams retain the rights of a player for 6 years after drafting them. During this time the player is sent to the minor league system where they develop skills that will hopefully allow them to flourish at the major league level. Because of the sometimes long lag from draft day to major league debut, a team needs some sort of guarantee that their investment in raw talent will not go unrewarded. Arbitration allows for this by allowing the team to maintain ownership of their talented players at a relatively known salary rate to provide fiscal clarity for young prospects. The arbitration process has a second and equally valuable aspect. It allows players to see their value increase based performance. This safeguards the player from having his market value stagnate when he comes to the major league level. Arbitration ensures that the player receives fair market value for his services during the time at which a team owns his rights. These were the reasons why arbitration was added to the collective bargaining agreement. There was another hidden benefit to the team that has become an interesting subplot to the off-season.