As a student of both the law and baseball, I’ve always been intrigued by salary arbitration, an essentially arbitrary process that pits an employer against an employee in a battle over a one-year contract. Back in 2005, I wrote a piece examining just that aspect of arbitration, and it’s still relevant today. The arbitration process remains a prickly issue for teams and a rather opaque one at that.
As fans of the Yankees, we’re not used to watching the team go to arbitration. In fact, since beating Mariano Rivera in 2000, the Yankees have gone to arbitration just once. That hearing came in 2008 when the team won a dispute against Chien-Ming Wang over $600,000. Whether the hearings are worth it is a question the Yanks have apparently answered in the negative recently.
Recently, Maury Brown at the Biz of Baseball released a salary arbitration scorecard in an effort to bring some transparency to the process. He’s tracking all of the hearings since arbitration started in 1974 and has info on the arbitrators themselves for every hearing since 2005. Did you know, for instance, that clubs have won 57 percent of all salary arbitration cases and that only one team — Tampa Bay — has never lost a hearing? The Yanks’ long-term track record, a 12-9 mark, is perfectly in line with the MLB averages.
Armed with this database, let’s take a look at some of the Yanks’ historical arbitration cases. The team was far more likely to go to arbitration in the early years of the process, and in 1974, they went to hearings with four players. In fact, the early years of arbitration were a gold mine for hearings. Players and teams sat through 29 disputes in 1974, a good six percent of all arbitration cases over the last 37.
That year, the Yanks faced off against Wayne Granger, Gene Michael, Duke Sims and Bill Sudakis. Granger’s case was over a matter of $4000. He won but was released before the end of Spring Training. Gene Michael had asked for a raise of $10,500 after putting up a terrible age 35 season, and he lost his case. Duke Sims, a late September 1973 waiver claim by the Yanks, lost his case and was traded in early May. Sudakis, a back-up infielder coming off of a career year, trumped the Yanks by $5000 and had a middling 1974 season before the Yanks traded him to the Angels in December.
For the Yankees, those four cases would be their only panels of the 1970s, and the team wouldn’t need an arbitrator until the 1981 off-season. That winter, Rick Cerone had the good fortune of a career year, and he won his arbitration panel. The difference in that case was $900,000, and just seven years after the Yanks went to arbitration over what now amounts to pocket change, baseball salaries were already on the rise.
Throughout the 1980s, the Yanks would sit through the bulk of the franchise’s overall arbitration hearings. In 1982, the Yanks’ $300,000 offer to Ron Davis, who was asking for $575,000, made them winners, and Davis was traded before the 1982 season began. The team beat Bobby Brown over a matter of $85,000 and beat Dave Revering over $75,000. Revering too would be traded in mid-season.
And then the big names arrived. In 1987, at the height of Don Mattingly’s career, the first baseman won a $1.975 million arbitration award. The Yanks had countered with $1.7 million, and this hearing is a notable won because even had the Yanks won, it would have been the highest arbitration award in history at that point. In 1988, Mike Pagliarulo earned himself a significant raise even though the Yanks won his hearing. His 1987 salary sat at $175,000, and the arbitrator award him the Yanks’ $500,000 offer.
Once the 1990s began, the Yanks continued their slow and steady trickle of hearings. In 1993, Jim Abbott asked for $3.5 million, but the Yanks’ $2.35 million won out. John Habyan asked for $800,000 but was granted $600,000. Randy Velarde asked for $1.05 million, and even though he had made just $360,000 the year before, the Yanks’ offer of $600,000 was deemed insubstantial.
The following year would bring the team another trio of forgettable names. In 1994, Pat Kelly won his arbitration hearing and received $810,000. But the Yanks beat Kevin Maas and Terry Mulholland. The difference in the Maas case was just $65,000, but the Yanks rightly wouldn’t budget. Maas never played another game for the team.
After this burst of early-decade hearings, the big stars came to the forefront. In 1996, the Yanks lost to Bernie Williams over a difference of $445,000. In 1999, they lost to Derek Jeter over a matter of $1.8 million. In 1999 and 2000, the team split hearings with Mariano Rivera. The closer, better at nailing down the 9th than his salary, won in 1999 when he asked for $4.25 million but lost in 2000 when he asked for a then-record $9.25 million. No arbitrator wanted to push that limit for even the best closer.
On a historical level, the Yankees have been fairly active in the arbitration field with no real advantage over any other team. Their 21 cases rank them eighth overall in baseball since 1974, but they’ve sat through just one hearing over the last ten off-seasons. Meanwhile, since the Mattingly arbitration and the explosion of baseball salaries in the late 1980s, the average difference for the Yanks’ arbitration cases is $713,000.
It’s a messy process with teams explaining why a player doesn’t deserve as much as he thinks he’s worth, and it can lead to a rather disgruntled employee for a least some time after the hearing. Yet, salary arbitration lives on, an alternative-dispute resolution system drafted by a multi-billion-dollar business as they argue over a few hundred thousands dollars. After all, somehow, someway, salary levels have to be determined, and when the two sides can’t come to terms, they reap what they have sown.