What is MLB arbitration?
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Arbitration occurs when a player and team cannot agree on a wage for the following season. The club and the player have a hearing, which is heard by independent arbiters. The arbiters then decide in favor of the player or the club.
MLB arbitration rules
If a player does not have a contract for the upcoming season and the club tends one, the player must agree on a wage figure. By mid-January, both parties must reach an agreement on a figure.
The team will proceed to salary arbitration if the player and the club cannot agree on a wage for the following season. Both the player and the team submit a compensation figure that they believe is reasonable, based mainly on the salaries of players of similar calibre and productivity in prior years.
A panel of independent arbiters hears the matter in February and finds the player or the team in favour.
Before going to arbitration, a player and the club will typically agree on a paying figure. In recent years, franchises have opted to sign players to extensions, often “buying out” years of arbitration and sometimes free-agency years.
Typically, athletes receive rises throughout the arbitration process, although their pay cannot be reduced by more than 20% compared to the previous year.
Who is eligible for arbitration?
MLB salary arbitration is reserved for players with at least three years of MLB service time but has not yet achieved free agency earned after six years of MLB service time.
In other circumstances, players who achieve a particular service-time criterion become eligible for arbitration a year early – this is referred to as a Super Two player.
What is a Super Two player?
A Super Two player has more than two. Still, fewer than three years of MLB service time — time spent on a 25-man roster or the MLB Injured List — but ranks in the top 22 per cent of service time is pooled with arbitration-eligible players, accelerating the player’s arbitration clock and giving him an extra year of arbitration.
The deadline for Super Two eligibility changes from year to year, depending on when the top 22 per cent of the roster was called up/placed on a 25-man roster. The Super Two threshold was set at two years and 115 days of service time in 2019, the earliest years.
How is the Arbitration Panel Selected?
A panel of three arbitrators decides each major league arbitration dispute. The Players Association and the Labor Relations Department appoint arbitrators to hear pay arbitration disputes yearly. If the Players Association and the Labor Relations Department cannot reach an agreement, the arbitrators are chosen from a list given by the American Arbitration Association. The Players Association and Labor Relations Department narrowed the list to three, selecting one arbitrator to serve as panel chair. Most of the time, the arbitrators are not “baseball people,” but instead retired or currently serving Judges.
How is the Arbitration Conducted?
Arbitration proceedings are held in secret and are strictly confidential. Each side is given one hour to deliver their first arguments, followed by half an hour for rebuttal and summary, with the player’s representative speaking first. Regardless of the presenting order, neither party has the burden of proof. The costs of the hearing are split evenly between the parties. Fees for lawyers and witnesses are borne solely by the parties.
The player and the club provide the panel with a signed Uniform Player’s Contract at the hearing (contract). Except for Paragraph 2 (Payment), all portions of the agreement must be completed. When the signed contract is delivered to the panel, the player is effectively signed.
Benefits of salary arbitration
Players on rookie contracts have no salary negotiating power, which means that the club sets the player’s wage as it deems suitable (usually around league minimum). Arbitration-eligible players are compensated more equitably for their services to their big league team, and they now have a say in their pay for the first time.
Cons of salary arbitration
Arbitration can be a complicated, violent process in which clubs try to prove the player is worth less than he feels he is, while the player attempts to win a raise in the years leading up to a free agent.
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