Arbitration 101

Arbitration 101
by Jack McDowell, Yahoo Sports
January 20, 2004

Jack McDowell
Yahoo Sports
It's time for another bout of the arbitration blues, but what does this system really mean? In simple terms, arbitration establishes a system in which salaries from top to bottom are reviewed and adjusted to mirror those of equal players.

We constantly hear that arbitration and free agency allow the rich to get richer and the poor to remain non-competitive in baseball.

Free agency and arbitration get blamed for things that really don't exist. The baseball economic system allows teams to address their needs on a yearly basis and evaluate players for a long time before having to commit to them.

In the end, arbitration creates a system of checks and balances and breeds parity.

Baseball salaries more clearly reflect a player's standing among other players because after three years baseball does a direct statistical comparison with one's peers in front of a non-partial arbitrator. The system itself forces owners to come to the table with realistic one-year offers that reflect a player's fair market value.

Owners may complain about the arbitration system, but there isn't a better system in place for owners in professional sports today. After drafting a player from either high school or college, a baseball team gets to decide if or when a player is ready for the majors. The team holds a player's rights for a whopping six years in the minor leagues. The system assures that when a player reaches the majors, the organization has had ample time to evaluate the player's capabilities and potential.

Now we all have seen the cases of minor league stars falling on their faces in the big leagues. Well, ownership is covered there as well. A player is not eligible for arbitration for three years, and that turns into four years if the team strategically calls a player up in June rather than having him break spring training with the club.

A club can pay that player anything it wants (above the minimum salary) for those three or four years. Then, if the club decides it doesn't want to pay the jump in salary that arbitration might demand, it can non-tender a contract to that player and look elsewhere. The worst-case scenario for a club is to take a player to arbitration and be on the hook for only one year at market value.

If you haven't figured out whether or not you will move forward with that player by then, then you don't deserve to own a team.

Before you start wondering why the owners hold all the cards, consider the big picture for players and the sport of baseball.

Since 1980, 21 franchises have played in the World Series (and 16 have won). Only two teams have gone more than three times. During that same time in the NBA, 15 teams have made the finals and only seven have won. Five teams have gone at least four times. The Lakers went nine out of 12 years (and that was before they won three straight from 2000-02). Chicago won six in an eight-year span. I think you get the picture.

The numbers speak for themselves.


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Updated on Tuesday, Jan 20, 2004 4:29 pm, EST

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