Today begins the filing period for salary arbitration hearings, which means the start of a tedious process for players and teams. Once a player files, he and the team must exchange figures by January 19 in anticipation of a February hearing. For the next month plus, teams and players will negotiate for what each considers a fair salary. If they reach no such agreement they present cases in front of an arbiter, who will then choose either the team’s or the player’s proposed salary. In other words, once you get to a hearing there’s no longer a chance for compromise. It’s either one or the other.
Partly because of this all or nothing nature, most cases never go to a hearing. In fact, as Craig Calcaterra notes, 90 percent settle. This has left, since the inception of arbitration in 1974, just 487 hearings, or about 14 per season. It seems like that number has come down in recent years, too, perhaps because of the imbalance in decisions. Teams have won 57 percent of hearings, and while that’s not a huge margin, it does give a player an incentive to settle.
(But at least it’s not as bad as corporate-consumer arbitration, which heavily favors one side.)
At MLB.com Anthony Castrovince describes the history of arbitration and how it has evolved since its inception in the early 70s. Back then it was a way to better reward players for their contributions while still preventing them from becoming free agents. Over the years, players continued to push the limits higher, gaining better and better compensation in arbitration. A handful of cases in each decade stand out, but none quite like Ryan Howard’s $10 million in 2008. The next year, arbitration eligible players received average raises of 172 percent. While free agent salaries trend downward, arbitration salaries continue to rise.
Given the perils of facing an arbitration hearing, chances are the Yankees will settle with both of their arbitration cases, Chad Gaudin and Sergio Mitre. Neither pitcher had a standout 2009, and the Yankees will likely use that to their advantage in negotiations. Mitre’s poor statistics almost force him to settle. Gaudin and his agent will likely concentrate on his numbers while with the Yankees (42 IP, 3.43 ERA), so maybe he has more of a case. But given Gaudin’s 2009 salary, $2 million, and his season-long performance, I’m not sure he can expect too hefty a raise. This could keep the two parties’ proposals close together, making it easier to strike a compromise.