• Emily Rollo

The Need for MLB Salary Arbitration Reform

Updated: Apr 14


The Major League Baseball (MLB) salary arbitration system was established almost fifty years ago to resolve salary disputes between owners and players.[1] If the club and player cannot agree on a salary number before the non-tender deadline in early December, an arbitration hearing will occur in February.[2] At the hearing, both sides present their respective salary number to a panel of three arbitrators who will rule in favor of the team or player’s salary.[3]


The salary arbitration system has its benefits. The players are more fairly paid through arbitration as their rookie contracts are not open to negotiation.[4] However, the system also has its flaws and is arguably an antiquated process. It is considered especially outdated in terms of its evaluation methods. The issues with arbitration are at the forefront even more so as the league heads into the 2021 season. Perhaps it is time the system be reformed.


According to the MLB’s collective bargaining agreement, a major league player is arbitration eligible when he accrues three or more years of major league service, but less than six years of service.[5] One year of service time is equivalent to 172 days, which is about 92 percent of one single season.[6] For each day a player is on the team’s active roster or injured list, he accrues one day of service.[7] It is the benchmark for a player’s financial opportunity.[8]


However, teams often manipulate players’ service time to keep them from being arbitration eligible.[9] The clubs then remain in control of the players’ salaries for longer than they should be. This is unfair to the players, and especially those who significantly contribute to their teams, because it eliminates their opportunity for players to be heard in salary decisions.


For example, Chicago Cubs’ third baseman Kris Bryant was arbitration eligible in 2018. The clubhouse kept Bryant in the minor leagues for eight games in 2015, limiting his service time.[10] Based on that season’s performance he was worth 2.5 runs in those extra eight games if he was on the active roster.[11] Beyond what he would have been worth to the team, his service time towards arbitration and free agency was then pushed back.[12] Ultimately, each club has the right to organize their roster as they see fit, but service time decisions should not be based on a team’s desire to preserve their salary dollars. This is what the Cubs were accused of doing to Bryant.[13] However, with a reformed arbitration system, the MLB could prevent teams from manipulating their players’ service time as a way to save their salary spending dollars.


Additionally, the global pandemic forced the league to shorten the season to 60 games. This over 100 fewer than the normal season. This is a unique issue for the arbitration process. It will be difficult for clubs and players to argue their proposed salaries as there is no previous comparable season.[14] For example, agents and clubs will need to determine whether a player’s performance should be evaluated over a 60-game season or whether it be adjusted over a 162-game season.[15] Either way, the statistics may be skewed, which could result in unfair pay. This year more than ever, it will be best for both sides to agree on “pre-tender” deals before the deadline.[16] This will give financial stability for players and money allocation certainty for clubs.[17]


The next issue with baseball salary arbitration is the arbitrators. They are lawyers who decide what side’s salary a player will receive for the upcoming season.[18] The salary arbitrators are labor lawyers and are among the top arbitrators in the country.[19] For the majority of the year, these arbitrators are working in the service industry and other private and public sectors deciding the arbitrations.[20] The relationship between the Players Association and the clubs is rooted in labor law, so labor lawyers may seem like the most appropriate panel to decide salaries.


However, since the arbitrators are not baseball experts or even work year-round for the MLB, the information that arbitrators rely on most to make decisions are considered “baseball card” statistics.[21] Therefore, batting average, home run total (HR), and runs batted in (RBI) are some of the only statistics considered. Pitchers are evaluated on the simplest statistics such as innings pitched and earned run average (ERA).[22] The arbitrators also value unique accomplishments such as MVP and Cy Young awards.[23]


While these statistics are important in determining a player’s worth, they tell an incomplete story. As the game evolved, the more convincing statistics of a player’s worth go beyond the number of HR’s and a pitcher’s ERA. However, the arbitrators do not understand those numbers. Also, there is only a short amount of time for the player and club to present to the panel, so it would be wasted time explaining the advanced statistics to the arbitrators. Thus, they will never really know how valuable these newer statistics are in proving how good a player is for a club.


Therefore, it might be time for the league to rethink the panel of arbitrators. Perhaps players and clubhouses will propose that the arbitrators be lawyers who specialize in sports law or be other professionals who work in baseball exclusively. This would ensure that they have a more advanced and current expertise level of baseball. Another solution could be to require the current labor lawyers to acquire a baseline of baseball knowledge and its most valuable performance measurements. This would bring the arbitration process more up to date with the current culture of baseball.


At the end of the 2021 season, there will be a new MLB collective bargaining agreement negotiated. This appears to be the most opportune time for the league to restructure its arbitration process so that it is fair to both parties and includes modern baseball evaluation processes.



References:

Picture: Baker, J. The Arbitration Case for Kris Bryant. Retrieved from www.chicagostylesports.com/the-arbitration-case-for-kris-bryant/

[1] Rivera, J. (Jan. 13, 2020). What is MLB arbitration? Explaining the rules, eligibility & how the process works Retrieved from www.sportingnews.com/us/mlb/news/what-is-arbitration-mlb-what-does-it-mean-baseball-eligibility-process/1atg6pycmf69o1x5yy2v31o03w

[2] Id.

[3] Id.

[4] Id.


[5] MLB. Salary Arbitration. Retrieved from www.m.mlb.com/glossary/transactions/salary-arbitration

[6] MLB. Service Time. Retrieved from www.m.mlb.com/glossary/transactions/service-time

[7] Perry, D. (Mar. 27, 2020). Why service time is critical in MLB, MLBPA negotiations and what could happen to it if 2020 season is lost. Retrieved from www.cbssports.com/mlb/news/why-service-time-is-critical-in-mlb-mlbpa-negotiations-and-what-could-happen-to-it-if-2020-season-is-lost/

[8] Id.

[9] Kelly, K. (Jul. 1, 2020). How to end service time manipulation. Retrieved from www.beyondtheboxscore.com/2020/7/1/21308743/mlb-how-to-end-service-time-manipulation

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Feinsand, M. (Dec. 1, 2020). Non-tender cutoff may force flurry of moves. Retrieved from www.mlb.com/news/mlb-2020-non-tender-deadline-expectations

[15] Id.

[16] Id.

[17] Id.

[18] MLB. Salary Arbitration. Retrieved from www.m.mlb.com/glossary/transactions/salary-arbitration

[19] Ring, S. (Jan. 18, 2019). Let’s Fix MLB’s Salary Arbitration System: The Arbitrators. Retrieved from www.blogs.fangraphs.com/lets-fix-mlbs-salary-arbitration-system-the-arbitrators/

[20] Id.

[21] Id.

[22] Id.

[23] Id.