The Art of Arbitration

Arbitration is an interesting arrangement in the context of Major League Baseball. Throughout the season management tells the players how important they are to the success of the franchise. This sentiment is continually impressed upon the player giving them confidence and self-worth. During the off-season, these young players are then subjected to a process where they try to place a dollar value upon their talent based upon the current economic environment of the game. At the same time management likewise attempts to determine a player’s value. These values rarely are equal leaving a discrepancy. If the player and management cannot resolve the differences in the values, they will go in front of an arbitrator and each side will present their case as to why their value is accurate. This puts the team in a very delicate position. Rather than building the player up by telling him how valuable he is, the team is forced to identify the faults or areas needing improvement that justify their lower offered value. Without question this is uncomfortable for all parties. How can a player rationalize that for the majority of the year the team provides positive feedback and reinforcement only to see them go completely in the opposite direction during the off-season? For this reason the Diamondbacks have historically been a team who settled arbitration cases well before the beginning of the hearings so that they are not put into this type of situation. This year the Diamondbacks had come to terms with all of their arbitration eligible players except two: Eric Byrnes and Doug Davis. In Byrnes case, the numbers are relatively close meaning that a deal will most likely be worked out. In Davis’ case, the numbers were substantially different to the tune of over $2 million making it a delicate process.

My experience has been that if a player and ownership are more than $1.5 million a part, there will likely be a deal done. Either the player will be traded before the season starts or the team will work out a long-term contract with the player. My reasoning is that neither the player nor the team will want to lose an arbitration case for that amount of difference. Rather than risk losing and possible hurt feelings or embarrassment, they will settle upon a deal for more than a single year. This gives the player security that they will not have to go through this again next season and it gives the team salary parameters they can plan on for more than just this season. My theory played out perfectly yesterday when the Diamondbacks signed pitcher Doug Davis to a three year contract. For Davis it provides him an opportunity to play for a contending young team with a huge upside. It gives him stability to know where he will be for the next few years. He will also be playing close to home which should make his family happier. For the Diamondbacks, it gives them an assurance that they will have a solid starting pitcher for three years at a fixed cost in an ever spiraling market of uncertainty. Based on Davis’ previous performance it provides the Diamondbacks with confidence that they will receive a large number of quality starts which should in turn provide stability to the bullpen eliminating two potential problems. Finally, it allows both Davis and the Diamondbacks with an opportunity to claim a win without either feeling under valued or over paid. I think general manager Josh Byrnes should be commended for this deal; it makes good baseball sense and good business sense. Of course I reserve the right to change my opinion if Doug Davis becomes the reincarnation of Russ Ortiz in the coming years.

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