In
2009, 111 players filed for salary arbitration. Before players and clubs exchanged
figures on January 20, sixty-five of these players had agreed to contracts with
their clubs. Of the remaining 46
players, only three players actually went to an arbitration hearing, tying the
low point set in 2005.
It
was the first time that the majority of the decisions went in favor of the
players since 1996. Since the first
hearings were held in 1974, the clubs have won on 280 occasions and the players
have prevailed 207 times.
By my
count, here is the breakdown of the 111 cases.
- 93
players signed one-year contracts.
- 15
players signed multi-year contracts.
- 3
players had their salary determined at an arbitration
hearing.
There
are two situations where arbitration can come into play. By far the most common is the one
involving players, under control of their clubs, with 3 to 6 years of major
league service (MLS), plus the 17% most senior MLS-2 players, referred to as
“super twos”. Of the 111 players
who filed this year, 109 were in this category.
(Editor’s note:
Five Cardinals were in this group. Brad Thompson, Chris Duncan and Todd Wellemeyer came to terms prior to exchanging figures with the club. Rick Ankiel
and Ryan Ludwick settled with the Cardinals just prior to their scheduled
arbitration hearings. For details on their signing amounts, click here, “Ludwick
agrees: Cardinals arbitration scorecard complete”.)
The
other situation involves free agents.
When a player with 6 or more years of major league service files for free
agency, his club has the option of offering arbitration. A club must offer arbitration in
order to get compensation in the form of draft picks if the player signs with
another club. If the player accepts
arbitration, he is no longer considered a free agent and he becomes bound to
that club. If a player refuses
arbitration, as most players do, he is a free agent who can sign with any club
including the one he played for last year.
Of the 24 free agents who were offered arbitration this year, the only
two that accepted were Darren Oliver of the Los Angeles Angels and David Weathers of Cincinnati.
With
the economic uncertainties this year, the market was more difficult to
read. A number of free agents, such as Jason Varitek ofBoston, Orlando Hudson of Arizona, Orlando Cabrera of the Chicago White Sox and Jon Garland of the Los Angeles Angels would
have fared much better if they had accepted arbitration. Clubs also had difficult decisions to
make and recognized that in a declining market, some players would likely be
paid much more in the arbitration process than their market value. This led to non-tendering arbitration
eligible players like Ty Wigginton of Houston, Willy Taveras of Colorado,
Takashi Saito of the Los Angeles Dodgers and Tim Redding of Washington.
The
arbitration process is designed to promote a settlement at a salary in line with
that of other players with comparable performance and service time. Players eligible for arbitration for the
first time receive a large increase in salary since they have no leverage in
their pre-arbitration years when their salaries are under control of the
clubs. Players who have been
through the process before also generally receive salary increases depending on
their performance in the preceding year.
Players
that settle prior to hearings are frequently able to include performance
bonuses, based on playing time, and awards bonuses in their contracts.
The
big winners in the arbitration process this year were Nick Markakis of Baltimore and Ryan Howard of Philadelphia. Markakis, in his first year of
arbitration eligibility, signed a six year contract for $66.1 million, which
carries him through 3 years of arbitration eligibility and 3 years of free
agency. Howard, who won at a
hearing in 2008, received a three year contract for $54 million which takes him
through his arbitration years.
The
relatively quiet arbitration season this year suggest that the system is working
as designed in achieving benefits for both sides. Players with 3 to 6 years of major
league service receive salaries that are influenced by their market value and
Clubs are able to retain the rights to these players through 6 years of major
league service before they become eligible for free agency.
Bill
Gilbert is a baseball analyst and writer and member of the Society for American
Baseball Research (SABR).