During the off-season, fans will constantly hear about arbitration in baseball. But many are not sure what it is. Does it consist of a bunch of lawyers arguing on the behalf of their clients? Do the teams’ lawyers have valid arguments? What exactly is the legal process?
Arbitration hearing are for players and teams who cannot agree on a salary for the upcoming season. Sounds simple right? However, lawyers will tackle much more complex issues. For a first-time player to be eligible for arbitration; he must:
1. Played in the Major Leagues for at least three years. but no more than six.
(Players are free agents after six seasons of team control)
2. Players, who have played for more than 6 seasons and become free agents, are available to receive arbitration from their current team. It is solely the team’s decision whether or not they will offer the player arbitration. If they offer a player arbitration and he accepts, there typically isn’t anymore debate. Players that teams do not want to retain are not offered arbitration.
Here’s the tricky part of arbitration(lawyers get involved here)
1. Clubs must contract free agents before December 1 to offer arbitration.
2. The player has until December 7 to accept. If he accepts, he goes back on the team’s roster. Debate about a final number may continue if the player accepts. If he declines arb, the sides can continue to negotiate.
3. Teams must offer players at least 80% of the prior year’s salary.
If teams can still not settle on a salary, lawyers are brought in. These lawyers take salary proposals to a panel of professional arbitrators.
4. Both parties must make cases for their aforementioned salary figure to the panel. Lawyers will note statistics, awards, and other accolades on behalf of the player. Lawyers for the team will note attendance numbers and other team related expenses. This process takes place in February.
5. The panel decides on a final number. The team or player can tell the lawyer to appeal the case. Appeals normally take a week to hear.
Ultimately, teams will not use their lawyers to upset their players. Typically, the team’s better young players will appear before arbitrators. If the team wants to retain this young talent long term, they will not upset him through contract negotiations.
More recently, Tim Lincecum of the SF Giants, almost went through an arbitration hearing. However, the Giants had their lawyers proposed a 2 year/23 million deal to Lincecum’s lawyer right before the hearing. Lincecum had initially filed for $13MM, the Giants for 8MM.
The two sides were able to settle, but I hope this article shed some light on the entire legal process.