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Breaking down what’s next in the MLB arbitration process

Teams and players can still negotiate a new contract, or head to arbitration if they cannot reach an agreement.

Divisional Round - Milwaukee Brewers v Colorado Rockies - Game Three Photo by Justin Edmonds/Getty Images

By the time the clock struck one o’clock in the afternoon on the east coast last Friday, more than 150 arbitration-eligible players had a contract in place for the 2019 season. Meanwhile, for 15 of them, their contract situation was still up in the air.

The list of players whose 2019 contract situations are still up in the air features Colorado Rockies third baseman Nolan Arenado, Philadelphia Phillies pitcher Aaron Nola, Houston Astros pitchers Gerrit Cole and Chris Devenski and shortstop Carlos Correa, Cleveland Indians pitcher Trevor Bauer, Washington Nationals pitcher Kyle Barraclough and Michael Taylor, Detroit Tigers pitcher Michael Fulmer, Arizona Diamondbacks pitcher T.J. McFarland, Tampa Bay Rays outfielder Tommy Pham, New York Yankees pitcher Luis Severino, Toronto Blue Jays pitcher Ryan Tepera, Oakland Athletics pitcher Blake Treinen, and Cincinnati Reds pitcher Alex Wood.

Nolan Arenado stands out as the biggest name on this list as he seeks a $30 million contract, which would be the largest for a player in arbitration. Meanwhile, the Rockies offered him $24 million.

What happens now?

Within a few days, teams and players will exchange the figures of the exact salaries they are filing for. From here, the two sides are free to continue to negotiate a contract for the upcoming season. Some of the proposed contracts from the teams and players are withing a few hundred thousands of dollars of each other, while others (like the Rockies’ and Arenado’s) vary by several million dollars. Sometimes, players whose proposed contract is close to their team’s will agree with their agent to compromise with the team so the agent does not have to pay for the arbitration hearing. However, many times the two sides won’t be able to reach an agreement prior to their scheduled hearing, and thus head to their hearing in preparation of defending their case.

What happens during the hearing?

In February, players and teams will head to their arbitration hearings. During the salary hearing, both the player and the team will present their respective cases to the arbitration panel. The panel will make their decision following the hearing; the decision shouldn’t be too hard to make, because they only have two options to choose from: the team’s proposal or the player’s proposal. Because of this, it is in the best interest for the two sides to make reasonable offers. For example, a player will certainly want to earn a contract that pleases them, but they can’t propose a contract that is too high because then the panel will choose the team’s offer.

During the hearing, the player and team can use several pieces of information to argue their case, such as the player’s contribution during the past season, the consistency of the player’s career contributions, the player’s past salary earnings, any of the player’s injuries, the team’s performance, and other similar baseball players’ salaries. That last aspect (the similar players’ salaries) is what the panelists focus on the most. Some of the information that the panel cannot consider during includes the current financial position of the team or player, the public’s comments regarding the team’s or player’s performance, previous contractual negotiations between the two sides, or any fees associated with the arbitration process.

What are the benefits to arbitration?

Obviously the arbitration process will end in one side getting their way, while the other side is less lucky. However, there are benefits to arbitration, too. During the first three years of service time for a pre-arbitration eligible player, they will earn around the minimum salary. However, once they reach enough service time to become eligible for salary arbitration, the player benefits because they are now able to earn a salary that reflects their performance, rather than earning the league minimum. Meanwhile, the team can benefit, too, because, although their player will receive a salary bump, they will still likely receive a salary that is much lower than their true value. This allows a team to have a player on their team that is drastically cheaper than another similar player.

The arbitration process can be hectic, long, and confusing. But in the end, teams and players can both benefit as they prepare for the season ahead.