The Game of Arbitration

Salary arbitration is always a weird subject. It is one of those things that is rarely understood by the average baseball fan and one of those quirky things that always seems to be part of the collective bargaining agreement each time it is signed. The origin of salary arbitration started out simple enough. Owners were becoming frustrated when players would hold out at Spring Training because they felt they were being undervalued. The players on the other hand were frustrated that their only leverage for demanding fair compensation was their failure to show up for work. A compromise was therefore necessary that would allow players an opportunity to escalate their earnings especially following a break-out season. Owners would have the opportunity to counter with an offer that made fiscal sense while ensuring that the player would continue coming to work. From these beginnings stemmed other nuances that would have many implications in the game.

Salary arbitration hearings begin in the spring shortly before Spring Training starts. Owners and a player’s representatives exchange dollar figures of what they feel are fair market value for the player’s services. If the participants agree a contract is signed for that amount. If the parties cannot agree then the participants will state their cases of justification for their numbers in front of a mediator who will then determine which side’s proposal should be accepted. It is an odd process as an employee tries to justify why they should be given appropriate compensation while the employer is left explaining why the employee is not worth the value they are asking. At the end of this the employer and employee still must work together which can be difficult especially if the differences in the two salary proposals are substantially different. It just does not build much trust or respect between the two parties.

Since the arbitration process begins in January or February why are we talking about it in November? Well there is an interesting twist to the whole arbitration situation. If a player becomes a free agent, a team may elect to offer that player arbitration. If the player accepts then the team and player will attempt to work out a contract to keep the player with the team. A player may choose to reject arbitration meaning that the player can then negotiate with all Major League ball clubs to try and sell their services. The spirit of the rule is put in place to allow a team and a player to act in good faith towards finding a workable financial compensation plan. If the player rejects the team’s offer then the Collective Bargaining Agreement stipulates that a team be awarded some type of compensation for the loss of one of their players. This compensation comes in the form of draft picks during the annual amateur draft held each June. The amount of compensation is dependent upon the skill and ranking of the player who is lost to free agency. A player ranking at the top 20 percent for their position is classified as a Type-A free agent and the team losing a Type-A player will be awarded two draft selections in the first round of the draft. A Type-B free agent is one who falls within the 21-40 percentiles by their position. A team losing a Type-By free agent is awarded one draft pick.

With respect to the Arizona Diamondbacks, they have four free agents. First Baseman Tony Clark, infielder Jeff Cirillo, and pitcher Bob Wickman do not fall within the definition of a Type-A or Type-B free agent. This means no draft picks would be awarded if another team signs one of these players. Starting pitcher Livan Hernandez has been identified as a Type-B free agent meaning that the Diamondbacks would be awarded a compensatory draft pick if he should sign somewhere else. December 1 is the deadline for offering free agents salary arbitration and as expected the Diamondbacks will offer Livan arbitration. Hernandez is expected to sign elsewhere so the Diamondbacks will at least receive a draft pick as a result. It should be interesting to see how this plays out.

Leave a Reply

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