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Sunday, February 17, 2013

ESPN/AP: No arbitration cases this year for first time ever

NEW YORK—Baseball is set to finish its first arbitration shutout.

Cincinnati Reds pitcher Homer Bailey and San Diego Padres left-hander Clayton Richard agreed to one-year contracts Saturday, making it all but certain there will be no salary arbitration hearings this year for the first time since the process began in 1974—arbitration was suspended for 1976 and 1977 while free agency was put in place.

I think I saw Shyam Das begging for change outside of Walgreens the other day.

Athletic Supporter can feel the slow rot Posted: February 17, 2013 at 12:07 PM | 25 comment(s) Login to Bookmark
  Tags: arbitration, free agency, labor relations

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   1. Bob Tufts Posted: February 17, 2013 at 03:37 PM (#4371059)
Will any "mainstream' baseball reporter note that the existence of (more) commonly accepted offensive and defensive metrics takes some of the valuation guesswork out of the system and narrows the bid-offer spreads?
   2. Walt Davis Posted: February 17, 2013 at 04:36 PM (#4371076)
Have they? That would be an interesting analysis. I can't imagine how you'd ascribe it to the metrics rather than standard "everybody knows the market better" arguments.

Anyway, the salary arb system has worked like a charm. It should really be a textbook case in economics and law courses.
   3. Tripon Posted: February 17, 2013 at 04:39 PM (#4371077)
I would also guess with more money in the system overall, there's less need to quibble over a couple of million per player.
   4. bobm Posted: February 17, 2013 at 04:43 PM (#4371080)
http://www.bostonglobe.com/sports/2013/02/17/tampa-bay-rays-still-show-swagger-despite-personnel-losses/3sWq9MHrX6kzWZD8Jcg3aM/story.html


SUNDAY BASEBALL NOTES
Rays still show swagger despite personnel losses
By Nick Cafardo
[Boston] GLOBE STAFF     FEBRUARY 17, 2013

[...]

Have teams become complete wimps to the point where arbitration is now a dinosaur?

Think about it. There are only a few remaining cases. If all of them get settled, it would mark the first time there hasn’t been an arbitration hearing in baseball.

More and more, teams are willing to settle with their players just to avoid what might be a negative setting in which the players gets criticized.

Players are eligible for arbitration between their third and sixth years in the majors. The team and the player’s agent submit figures and then try to hash out a midway point. Sometimes the team feels it has a strong case against an underperforming player, but less and less now do teams want to take their chances with an arbiter, feeling they would either lose or they would win and create hard feelings.Teams actually pay out more money because they don’t want to hurt feelings.

The Red Sox are a great example. After playing a half of a year and underperforming, Jacoby Ellsbury was given a $1 million raise to $9 million. The Red Sox could have taken their case to arbitration, offered little to no raise, and might have saved themselves a half-million or so.

But teams generally cave in and don’t stick to their convictions, simply to avoid a confrontation. In Ellsbury’s case, the raise was based more on service time and comparables than performance.Let’s face it, there is more money available to teams because of crazy TV deals. Unfortunately, not everyone benefits. While teams like the Red Sox overpay Ellsbury, they give their minor leaguers $120 a week in meal money. Many teams barely pay their scouts and minor league managers decent wages.

"There’s been a definite change over the past few years,” said longtime arbitration expert Tal Smith, also the former president and CEO of the Houston Astros. “The thing is, it doesn’t have to be a negative process.“

Obviously, both sides state their respective cases and an arbiter decided the results. The player usually makes out well whether he wins or loses. Teams can save themselves significant money, but teams would rather spend the money than make their case.”

But longtime agent Alan Nero, who just negotiated a $175 million contract for Felix Hernandez, feels there no longer is the malice that used to exist between the union and MLB.

"Both sides are so well-prepared now,” said Nero. “Everyone knows a player’s value well before the numbers are even exchanged. I think Michael Weiner with the Players Association and Rob Manfred in the Commissioner’s Office deserve the credit for creating that environment.

"I remember years ago I went to arbitration with Wade Boggs three times and lost twice. The players back then didn’t have much of a chance, but the preparation now is so good that it fosters trying to come up to the midpoint, and if both sides negotiate in good faith, there’s no reason to create the tension involved in going all the way through.”

Nero feels the only time it should go to a hearing is in the case of an extraordinary player involved in what could be a landmark case, but those are few and far between. [Emphasis added]
   5. Walt Davis Posted: February 17, 2013 at 06:17 PM (#4371113)
I don't buy the un-highlighted parts of that passage at all. Unless Tal Smith has a different definition of "few" than I do, he's dead wrong -- there have only been a handful of cases that have gone to arbitration each year going back for a decade or more now.

I particularly object to this (which appears to be a continuation of the quote from Smith but the quote marks are screwed up so maybe its the author:

The player usually makes out well whether he wins or loses.

No, the player is screwed over whether he wins or loses. He's just screwed over a lot less than when he was being paid $400,000 per year and a little less than he was in his previous year of arb. But, with rare exception, a player in arb never makes more than maybe 80% of what he could get on the open market. To the extent that teams have "given up", they've given up because they understand what a sweet deal they've got and don't want to rock the boat. If the dealer is willing to sell you the Merc at half price you don't insist on free floor mats.

You can relate this to the Ellsbury situation. How much do you think Ellsbury gets if he was an FA this offseason? Bourn got 4/$48 -- injury or not, Ellsbury is going to get that. (Upton got 5/$75) The arbiter's job is not to determine salary based on the previous year's performance, it's to look at the salaries of similar players with equal service time and (esp in the last arb year) what the player would get on the open market and set the salary accordingly. $9 M for Ellsbury is 60-75% of what he'd have gotten on the open market this year, worst-case scenario is he pulls a Beltre-style 1/$10-12 to prove he's healthy. Without injury, Ellsbury gets $11-12 this year in arbitration even if he was just mediocre. The Sox had zero chance of not giving him a raise and they knew it.

I would also guess with more money in the system overall, there's less need to quibble over a couple of million per player.

The gaps are almost never anywhere near $2 M which is why nobody ever goes to arbitration. $1 M gaps are rare and those are the cases that might end up in actual arbitration. Usually players and teams are maybe $500 K apart and they settle in the middle.
   6. Fancy Pants Handles lap changes with class Posted: February 17, 2013 at 06:32 PM (#4371117)
Isn't the biggest reason for this, that teams no longer have to offer arbitration to get draft pick compensation for FAs?
   7. flournoy Posted: February 17, 2013 at 06:48 PM (#4371121)
Isn't the biggest reason for this, that teams no longer have to offer arbitration to get draft pick compensation for FAs?


I doubt it. Usually teams only offered arbitration to their free agents if they already knew that those free agents would not accept the offer. There weren't many situations like Greg Maddux unexpectedly accepting arbitration in 2003.
   8. Srul Itza At Home Posted: February 17, 2013 at 06:58 PM (#4371126)
I understand where you are coming from, Walt, but I bet most of the players view it like the article does, and like Mike Norris did when he lost his case: “No problem. I was either going to wake up rich or richer.”
   9. Greg K Posted: February 17, 2013 at 06:59 PM (#4371127)
I remember the Jays were too scared to offer Carlos Delgado arbitration when he left as a free agent. Which always seemed odd to me. Sure, he was coming off a down year, but it was still a perfectly cromulent 129 OPS+. He was 32 years old with a pretty impressive track record before that. Was there really a chance he wasn't going to find a multi-year deal to his liking? Was he 10/5 so they wouldn't have been able to trade him if he accepted?
   10. Rafael Bellylard: Built like a Panda. Posted: February 17, 2013 at 08:37 PM (#4371145)
Wasn't there a case this year where the two amounts were something ridiculously close, like 700K and 725K?
   11. JJ1986 Posted: February 17, 2013 at 09:01 PM (#4371148)
Wasn't there a case this year where the two amounts were something ridiculously close, like 700K and 725K?


Craig Breslow? He requested $2.375 million and was offered $2.325 million.
   12. Sweatpants Posted: February 17, 2013 at 09:05 PM (#4371151)
There weren't many situations like Greg Maddux unexpectedly accepting arbitration in 2003.
How many other times has this happened? The only other one I can recall was when Rafael Soriano accepted it after 2009. Soriano for Jesse Chavez didn't work out as well as Kevin Millwood for Johnny Estrada.
   13. OCD SS Posted: February 17, 2013 at 10:27 PM (#4371165)
No, the player is screwed over whether he wins or loses. He's just screwed over a lot less than when he was being paid $400,000 per year and a little less than he was in his previous year of arb.


The team does have a side in this beyond just being a big, bad monopoly (which is definitely a factor), and that's player development. You can probably count on one hand the number of guys who are good enough to jump to MLB from college, high school, or the international free agent market. As such MLB is investing in a huge talent pool (i.e. everyone in the minors) for the small number who are actually going to play in MLB to play against and get better. As the teams are developing the player's talent to the extent that they are able to play in the major leagues, some number of years of exclusive control seem like reasonable return on the investment in the total population of players. Obviously you can argue the term of that control over the current 6+ yr period, but to only look at what the players going through arbitration are "losing" ignores other aspects of the system.
   14. Walt Davis Posted: February 17, 2013 at 10:28 PM (#4371166)
Isn't the biggest reason for this, that teams no longer have to offer arbitration to get draft pick compensation for FAs?

This is pre-FA salary arbitration that we are talking about.

Wasn't there a case this year where the two amounts were something ridiculously close, like 700K and 725K?

It was years ago but there has been at least one case where both sides blinked before filing and the team offer was higher than the player request. They get the team offer in that case.

“No problem. I was either going to wake up rich or richer.”

Probably true. I mean everybody knows the rules so the player knows going in that they're not going to get the market rate. It's certainly understandable under those circumstances to view it as "not a big difference between $5 M and $5.5 M."

I probably sound more dismissive of the "teams being nice" argument than I mean to be. There's an incentive for them not to be hardasses. But the incentive is primarily because this is a process that works very well for them so they don't want to make it an acrimonious process on a wide scale. Then you get the probability of pissing off the player but these days teams are so aggressive of arb/FA buyouts of the players they really want to keep that I don't imagine they even get to a potential acrimonious point with players they really care about.

In the end, the settlement is always somewhere between the two numbers -- the players and the teams are compromising, the teams aren't just giving in. I will say that it seems to me that teams often come 60% of the way rather than 50% of the way so there may be some conscious concession on the team's part to maintain good will but we're talking $50-100 K, not a million.

Most of this goes out the window when it is one of those exceptional situations -- Jeter, Howard, Lincecum -- but teams seem to try to avoid this with the buyouts.
   15. Howie Menckel Posted: February 17, 2013 at 10:37 PM (#4371169)

Gotta love Oakland 2B Mike Edwards in 1980, who asked for $50,000 - while the team offered $58,000!
lol

I think Edwards' number won and therefore settled for 50 grand..

   16. RoyalsRetro (AG#1F) Posted: February 17, 2013 at 11:33 PM (#4371185)

Wasn't there a case this year where the two amounts were something ridiculously close, like 700K and 725K?


I want to say Scott Hatteberg back in the day.

I also want to say there was actually a case where the player requested less than what the team offered.
   17. DJS and the Infinite Sadness Posted: February 17, 2013 at 11:54 PM (#4371192)
I remember when the Diamondbacks were in arbitration with Jorge Fabregas. The team filed at $875,000 and Fabregas at $1.5 million. Arizona won and Colangelo immediately signed Fabregas to a 2-year, $2.9 million contract. And then traded him like 4 months later.
   18. Good cripple hitter Posted: February 18, 2013 at 02:31 AM (#4371223)
I also want to say there was actually a case where the player requested less than what the team offered.


As mentioned above, that happened with Mike Edwards. He came to terms with the A's before it reached arbitration.

The same thing happened with Mike Flanagan. The salary notes on his baseball reference page has "Player asked $485K, team offered $500K!" next to his 1982 salary. The arbitrator reportedly just cancelled the case and awarded Flanagan the 500K.
   19. DJS and the Infinite Sadness Posted: February 18, 2013 at 03:06 AM (#4371225)

The same thing happened with Mike Flanagan. The salary notes on his baseball reference page has "Player asked $485K, team offered $500K!" next to his 1982 salary. The arbitrator reportedly just cancelled the case and awarded Flanagan the 500K.


This is why I'd never make a good arbitrator. I'd have made Flanagan's side argue for the $485K and the team's side argue for $500K and the side that argues more poorly gets their figure as the salary.
   20. Russ Posted: February 18, 2013 at 06:57 AM (#4371235)
As such MLB is investing in a huge talent pool (i.e. everyone in the minors) for the small number who are actually going to play in MLB to play against and get better. As the teams are developing the player's talent to the extent that they are able to play in the major leagues, some number of years of exclusive control seem like reasonable return on the investment in the total population of players.


I do believe that MLB takes infinitely better care of its players than the NBA or the NFL (with the NHL better than the latter two sports, but not as good as the NBA). I think that the investment in the minor league system is a big part of that.
   21. bjhanke Posted: February 18, 2013 at 10:20 AM (#4371258)
Bob (#1) - Back in the 1980s, some player agents employed Bill James to help them present their cases. He talks about it with regard to George Bell and Tim Raines. That would imply that teams and sportswriters were aware that sabermetrics - or at least Bill - had gotten themselves involved in the process. On the other hand, Bell and Raines, were Free Agent arbitrations, rather than young player arbs. I did myself get feelers from a couple of agents back when I was doing the Big Bad Baseball Annual, but nothing every came of that. However it does indicate that at least player agents knew damn well that sabmermetrics brought something to the table. It's hard to imagine GMs and agents knowing that this stuff was happening with out sportswriters finding out about it. - Brock Hanke
   22. Ron J2 Posted: February 18, 2013 at 11:50 AM (#4371307)
#19 I know you know about Bill James' article on arbitration, but it's still an interesting lead in. James got paid to do arbitration work, loved it but felt that it had next to nothing to do with who won.

He attributed Tal Smith's success in arbitration to understanding that it was all about who filed the "best" numbers and worked very hard to get his clients to file realistic offers.
   23. RoyalsRetro (AG#1F) Posted: February 18, 2013 at 12:08 PM (#4371318)
I think the biggest reasons for this are:

(a) There is a trend of locking up young pre-arb players to long-term deals because like the financial security and teams like the cost-certainty
(b) After a decade or two of contentious arbitration hearings, both sides have seen it as something to avoid, even if it means paying slightly higher salaries, or accepting slightly lower salaries
(c) Clubs are awash in cash right now, so not every nickel and dime with players has to be haggled over.
   24. Ron J2 Posted: February 18, 2013 at 12:13 PM (#4371322)
#21 One of the first times that Bill James came to national attention was with the Britt Burns arbitration case. In 1983 LaMarr Hoyt went 24-10 with a 3.66 era and Burns (on the same team) had a 3.58 era but went 10-11.

James researched their respective run support and found that Hoyt got roughly 2 runs a game more to work with. 5.54 for Hoyt and 3.61 for Burns. (We take BB-Ref for granted. James had to do this by hand and have the data prepared in a way that the arbitrator could readily digest the info. An arbitrator won't take your word on the matter)

This may fly in the face of what I wrote in #22 in that James (or to be more precise, the agent -- using James' research) was able to convince an arbitrator that the comps the team had based their filing on were not valid. This very rarely happens. (James did talk about the Pirates being sucked into attempting to argue that Tony Pena wasn't a good defensive player -- after he'd just won a gold glove. Again, teams are rarely that stupid)

What I should have said is that James was very specific. It's all about the comps. Who is comparable and what do they make.

I recall a well known manager -- I think it was Sparky Anderson -- being shocked that somebody could (seemingly successfully) argue that wins don't matter. But James' research (which Greg Spira picked up and expanded) demonstrated that (at least in the case of Burns -- and before ready access to retrosheet data files (or equivalent) you'd have had to approach this on a case by case basis.) you had to look beyond wins to find comps for Burns.
   25. vivaelpujols Posted: February 18, 2013 at 12:18 PM (#4371324)
But, with rare exception, a player in arb never makes more than maybe 80% of what he could get on the open market


Careful here. If everyone were a free agent than free agent salaries would no doubt drop. Now of course arb players are still getting screwed relative to that system, but it's not as much as the 40/60/80 numbers would have you believe.

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