Author Archive

On Daisuke Matsuzaka and Fans’ Duties

Remember Daisuke Matsuzaka? The right-hander was Boston’s big-ticket pickup back in 2006, with promises of a gyroball that never panned out. After his injury-plagued tenure in the majors ended, Dice-K went back to Japan and, after a brief, injury-induced hiatus, settled in as a decent mid-rotation starter for the Chunichi Dragons. His 2018 season earned him Comeback Player of the Year honors.

Then things took a turn.

If you’re at all familiar with Matsuzaka’s time with the Red Sox, you know that he wasn’t exactly a workhorse in Boston, with injuries ranging from Tommy John surgery to neck stiffness attenuating his MLB career. But the injury the 38-year-old suffered most recently can only be described as bizarre. Per the Japan Times:

Chunichi Dragons pitcher Daisuke Matsuzaka took leave from his Central League club on Sunday in order to treat a right shoulder injury sustained when an overzealous fan pulled his arm last week.

Yes, that’s right – a fan of Dice-K thought it would be a swell idea to pull on the hurler’s right arm during a fan outreach event. The fan evidently pulled so hard that it caused inflammation in the right-hander’s shoulder, resulting in Chunichi shutting him down. Daisuke remains quite popular in Japan, however, leading some to speculate that Chunichi might actually sue the fan who pulled on the pitcher’s arm – and that the fan might even see jail time. Read the rest of this entry »

Could Players Collude With Each Other?

Over the course of yet another slow offseason, we’ve talked about labor relations and the free agent freezeout. But what we haven’t talked about is the opposite scenario.

So let’s take a look at answering this question: can players (and their agents) legally collude with each other? Teams colluding is somewhat straightforward: clubs make a collective decision to refuse to employ a player, or to offer a player more than a certain amount. We don’t have to go too far back in history to see what that looks like; the NFL, for instance, recently paid almost $80 million to settle claims that they did just that against quarterback Colin Kaepernick. For a baseball example, one need only look to the collusion cases of the 1980s, which ultimately resulted in ownership paying players a $280 million settlement; more recently, Barry Bonds filed (and lost) a grievance for collusion after the 2007 season.

Collusion by players wouldn’t be as simple. Players could, I suppose, all agree to not sign with one or more teams, but that would be inherently self-defeating if it restricted their own markets. More interesting would be if the players decided to coordinate on salary demands.

So let’s say that Manny Machado and Bryce Harper get frustrated at the slow-moving free agent market and tell their agents, Dan Lozano and Scott Boras, to coordinate their negotiations and agree that neither will sign for less than $300 million. Would that be collusion?

The preeminent legal definition of collusion is from Darren Heitner and Jillian Postal, who wrote a particularly excellent note on the subject for Harvard Law School’s Journal of Sports and Entertainment Law.

Collusion at its core is collective action that restricts competition. Under federal law, particularly the Sherman Anti-Trust Act (the “Sherman Act”), collusion is prohibited; however, because of labor exemptions, what constitutes collusive, prohibited behavior in specific sports leagues varies based on the league’s negotiated collective bargaining agreement (“CBA”).

Now, in case you were wondering, the word “collusion” doesn’t appear in the Major League Rules, and it doesn’t appear in the Collective Bargaining Agreement either. However, the Collective Bargaining Agreement does say in Article XX – governing the Reserve System – that rights under the CBA are individual, not collective.

The utilization or non-utilization of rights under Article XIX(A)(2) and Article XX is an individual matter to be determined solely by each Player and each Club for his or its own benefit. Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs.

That’s the language that bars collusion. As Marc Edelman explained for Forbes:

Although collusion under Baseball’s collective bargaining agreement is not identical to collusion under U.S. antitrust laws, the language and case precedence track similarly. Under antitrust law, mere parallel behavior among competitors is not enough to trigger a violation. But, parallel behavior along with a plus factor is sufficient.

That’s just a fancy way of saying that the mere fact that everyone is acting in the same way isn’t enough on its own to trigger a violation of the CBA’s collusion language. That’s why the current talk of collusion based on teams possessing similar player valuations, like the recent comments from reliever Brad Brach, is probably misguided; unless the valuations were based on a universal metric or algorithm all teams share, it’s probably insufficient to constitute collusive action.

So what does constitute collusion? Unfortunately, the CBA never actually specifies the necessary evidentiary showing. Per Heitner and Postal, “The Basic Agreement does not provide what burden needs to be met in order to prevail in this type of grievance.”

Nevertheless, we know that for players to collude in violation of Article XX(E), they’d have to not only have the same salary demands – which would be parallel behavior – but also coordinate their salary demands with each other. Now, to do that, they’d probably use their agents – and while agents aren’t mentioned in Article XX’s prohibition on collusion, they are, well, agents. Legally, under something called agency law, the authorized actions of an agent are considered, legally speaking, the actions of the principal. So if Manny Machado and Bryce Harper tell Lozano and Boras to coordinate their negotiations, the players aren’t exempt from violating Article XX(E) simply because their agents are the ones doing the coordinating.

Despite that, Major League Baseball can’t actually enforce those collusion rules against Machado and Harper or their agents. That’s because of a small oversight in the CBA. Again, from Heitner and Postal:

Article XX(E) prohibits concerted action from both Clubs and players, but the Basic Agreement fails to specify any redress if players violate the provision. The remaining sections of Article XX(E) outline the damages players can collect if they show a violation of Section E(1). Sections E(2) and E(3) provide that in addition to awarding attorney’s fees and costs, an arbitrator can award an aggrieved player treble damages, calculated from lost baseball income if the injury was the product of two or more clubs.106 Further, if five (5) or more clubs are shown to have violated Section E(1), the MLB Players Association (“MLBPA”) is entitled to reopen the Basic Agreement for renegotiation.

In other words, the CBA says that players can’t collide, but provides no punishment if they do so. That means that even if players did collude, MLB probably couldn’t do anything about it.

So why don’t players and their agents collude all the time? That’s actually a question we’ve answered already, back when we discussed agents and conflicts of interest. Remember, the MLBPA has some pretty strict rules governing agents and conflicts of interest:

§5(B)(12) – Actual or Potential Conflicts of Interest – No Player Agent, Expert Agent Advisor or Applicant shall engage in any conduct which, in the MLBPA’s reasonable judgment, may create an actual or potential conflict of interest with the effective representation of players, or the appearance of such a conflict, provided that the simultaneous representation of two or more players on any one Club shall not, standing alone, constitute a per se violation of this provision.

Lozano and Boras coordinating their negotiations would absolutely be a violation of that provision. That’s because coordination of negotiations would mean that agents are doing something other than trying to extract the best deal possible for their own clients. It might not be actionable collusion, but it might be something worse for the agents: breach of fiduciary duty, resulting in the loss of their agency certifications. And that’s why players and their representatives don’t collude – in addition to potentially getting worse deals, if they tried, their agents would likely lose their jobs.

Micah Bowie, Player Benefits, and Another Front in Labor’s Fight

The deepening cold war between Major League Baseball and the MLB Players Association has touched on topics ranging from shoes to minor league pay to free agency. What it hasn’t garnered as much attention are player benefits, such as pensions and healthcare.

There’s a popular misconception that any professional baseball player who spends even one day on a major league roster will receive free health care for life. In reality, that’s not true. Instead, what one day of service gives you is the right to buy into a healthcare plan, which isn’t really the same as free, comprehensive coverage. A player’s eligibility for health and pension benefits is tiered, and depends on how much time the player spent on a major league roster, how much service time he accrued, and can even be a matter of which years he played, as different benefits are available to different eras of players. Different plans carry different co-pays and have varying coverage maximums.

In other words, this isn’t that dissimilar from any other employer-based health insurance system. But playing baseball isn’t like other employment, and that can lead to trouble for former players.

The Major League Baseball Players Association has, throughout its history, done a poor job securing benefits and pensions for its members and their families during collective bargaining negotiations. Read the rest of this entry »

Let’s Fix MLB’s Salary Arbitration System: Introducing Restricted Free Agency

We’ve reached, at long last, the finale of our series on how to fix salary arbitration. The previous installments have all focused on how the arbitration process works, and how it might work better – from changing evidentiary rules, to granting greater independence to the arbitrators, to eliminating the either/or model. But today, we’re going to look at something different: who is eligible for arbitration, and how we might replace the current system with one designed to adapt to the realities of the current market for player labor. Doing so requires addressing service time manipulation, and ensuring that both sides can opt-in or out of a particular arbitration hearing and also that players are paid even in a slow free agent market. Can we do all of that without breaking teams’ payroll? I think the answer is yes.

A little over a year ago, Travis Sawchik floated the idea of adding restricted free agency to baseball, which would bring the sport more in line with the NFL and NBA. More recently, he revisited the topic.

Players with more than three years of service time but less than six are eligible for arbitration. The first year of arbitration eligibility is supposed to garner a player about 40 percent of their open-market value, the second year 60 percent, and the third year of arbitration approximately 80 percent, though that estimate does not always apply. While arbitration earnings are far greater than pre-arbitration salaries, which are typically near the minimum salary, they are still short of market value.

The type of restricted free-agency system that owners attempted to implement in 1994 seems increasingly beneficial to players today. That system could have made young star Francisco Lindor a 25-year-old free agent this winter and Mookie Betts a 25-year-old free agent last winter.

An approach similar to other sports leagues could address many of the problems inherent to baseball’s current system. So let’s examine how Travis’ system might work in practice. To start, let’s look at current rules for arbitration eligibility, courtesy of the fantastic FanGraphs Library (which, if you’ve never used, you should).

Players are eligible for arbitration hearings if they meet any of the following requirements:

  • They have at least three full seasons of MLB service time, and less than six. Players with six or more years of service time become free agents after their contracts have expired, while players with less than six seasons are under team-control. Up until players have acquired three seasons of service time, their salary is determined solely by their team. For years three through six, players can take their salary demands to an arbitration panel if they can’t reach an agreement with their team.
  • If they have less then three full seasons of MLB service time, but are within the top 22% of players with more than two years of service time. This is called the “Super Two” exception, and it often leads to top prospects being held down in the minor leagues until they have passed the Super Two threshold. For more on this, see our Super Two page.

Read the rest of this entry »

The Minor League Wage Battle Isn’t Over After All

Last year, Nathaniel Grow and I each wrote that it looked like the longstanding battle over minor league wages might be on the verge of ending with the passage by Congress of the Save America’s Pastime Act, a statute that had the dual effect of capping minor league players’ pay and threatening the existence of Independent Leagues. Despite Major League Baseball’s success in lobbying for and obtaining passage of the Act, it seems that the league isn’t done yet, moving its fight from the federal level to the states.

Last week, Ben Giles of the Arizona Capital Times reported that MLB is backing a bill introduced in the state legislature by Representative T.J. Shope that would exempt minor leaguers from Arizona’s state minimum wage laws.

HB 2180 would carve out minor league baseball players in Arizona law by enshrining the exemption in federal law in state statute. If signed into law, the bill also applies retroactively, meaning teams would be free from liability against any prior claims that the law was violated.

Now, you might be wondering why MLB is going to such lengths to exempt minor leaguers from state minimum wage laws when the federal statute is already on the books. The answer is pretty straightforward. Even though there is a federal minimum wage – it is set at $7.25 per hour – states also have their own minimum wage laws, many of which require higher hourly rates than the federal statutory minimum. The way the law is written, the federal minimum wage acts as a floor, meaning that a state is legally allowed to require a wage that is greater than the federal wage, but can’t have a minimum wage that falls below it. Read the rest of this entry »

Let’s Fix MLB’s Salary Arbitration System: Evidence and Admissibility

Perhaps the most commonly discussed issue with the current arbitration system is the pervasiveness of traditional metrics, like home runs and runs batted in, over more advanced metrics like WAR and wRC+. Last time, we talked about how arbitrators use those metrics, and how they have slowly begun to garner greater acceptance as part of arbitration decisions, despite misgivings from agents some agents about whether or not they are properly understood or used by arbitrators. This time, we’re going to explore in greater detail the metrics and evidence itself – and see where there might be a possibility for improvement.

The Collective Bargaining Agreement provides a fairly straightforward list of criteria arbitrators are allowed to consider when ruling on a player’s salary.

The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries . . ., the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance . . . . Except as set forth in subsections 10(b) and 10(c) below, any evidence may be submitted which is relevant to the above criteria, and the arbitration panel shall assign such weight to the evidence as shall appear appropriate under the circumstances. The arbitration panel shall, except for a Player with five or more years of Major League service, give particular attention, for comparative salary purposes, to the contracts of Players with Major League service not exceeding one annual service group above the Player’s annual service group. This shall not limit the ability of a Player or his representative, because of special accomplishment, to argue the equal relevance of salaries of Players without regard to service, and the arbitration panel shall give whatever weight to such argument as is deemed appropriate.

Helpfully, the CBA also gives us evidentiary rules outlining what criteria is not admissible:

(i) The financial position of the Player and the Club;

(ii) Press comments, testimonials or similar material bearing on the performance of either the Player or the Club, except that recognized annual Player awards for playing excellence shall not be excluded;

(iii) Offers made by either Player or Club prior to arbitration;

(iv) The cost to the parties of their representatives, attorneys, etc.;

(v) Salaries in other sports or occupations.

Here’s further detail on what can be used:

Only publicly available statistics shall be admissible. For purposes of this provision, publicly available statistics shall include data available through subscription-only websites (e.g., Baseball Prospectus). Statistics and data generated through the use of performance technology, wearable technology, or “STATCAST”, whether publicly available or not, shall not be admissible.

Read the rest of this entry »

Dan Lozano and the Contract Rumor Mill

This offseason was supposed to be a spending bonanza that would see teams throwing money at generational talents like Bryce Harper and Manny Machado, rotation stalwarts like Dallas Keuchel, and bullpen anchors like Craig Kimbrel. Instead, that quartet, along with among many others, remains unsigned as yet another slow winter drags on. It turns out that last offseason, to that point the slowest offseason ever, wasn’t unique. It may have been, instead, a harbinger of the new normal.

The Major League Baseball Players Association’s new chief negotiator, Bruce Meyer, told the Wall Street Journal that teams’ inactivity was among the biggest threats facing the game.

And it’s not just the union. That trend hasn’t gone unnoticed by the players, whose frustration with owners’ unwillingness to spend is spilling into public forums. Players are now using social media to engage with fans, and each other, about the stagnant market.

The war of words was elevated to a new level last Wednesday, when Dan Lozano, the agent who represents Machado, took to twitter to strongly admonish Bob Nightengale and Buster Olney for their recent reporting. Read the rest of this entry »

Let’s Fix MLB’s Salary Arbitration System: The Arbitrators

In the last installment of this series, we explored the issues posed by the form the arbitration system takes, as well as the constraints a requirement to make an either/or decision when assessing player and team salary figures puts on arbitrators. Today we’ll take a look at the arbitrators themselves, and how they go about their work. To begin, we know that salary arbitrators are typically labor lawyers.

Salary arbitration cases are presented before a panel of three arbitrators, all of whom are among the top labor arbitrators in the country. Why labor? Because the relationship between the Players Association and the Clubs is grounded in labor law and governed by a collective bargaining agreement. When not hearing salary arbitration cases over the first three weeks of February, the panel arbitrators are presiding over arbitrations in the service industry, the building trades and in various other private and public unionized sectors.

Against that backdrop, it makes some sense that the information that helps determine the outcome of an arbitration hearing is typically more in line with “baseball card” statistics than advanced metrics. Lawyers aren’t supposed to be baseball experts, right?

Hitters are typically evaluated using batting average, home runs, runs batted in, stolen bases and plate appearances. There are some positional adjustments, but typically the added defensive value of a shortstop relative to a first baseman is not as important in arbitration hearings as it is on the free agent market. Hitters also can receive larger arbitration awards if they have unique accomplishments, such as winning an MVP award. Pitchers typically are evaluated using innings pitched and earned run average. Starting pitchers are rewarded for wins, and relievers are rewarded for saves and holds. Unique accomplishments, such as Cy Young Awards, matter for pitchers as well.

At the same time, however, it’s unfair – and inaccurate – to say that home runs and runs batted in are all that’s presented in an arbitration. As Jeff Passan relates:

The arguments throughout a case run the gamut. Arbitrators have long rewarded home runs and saves, so they are featured prominently among the players with them, like Oakland’s Khris Davis, who could seek a raise from $10.5 million into the $18 million range. At the same time, the arbitration system is not the antediluvian, abacus-using Luddite-fest it has been portrayed as. The wins above replacement metric is used extensively. So are fielding independent pitching for starters and leverage index for relievers. Statcast data is not allowed in cases, mainly because the league has a far greater plethora of it than the union; and in 2016, when the CBA was signed, the accuracy of spin-rate and launch-angle metrics so vital to modern baseball was not tested out over a large enough sample to warrant their inclusion.

So advanced metrics are making their way into hearing rooms, but are they swaying case outcomes? It doesn’t seem so. MLB Trade Rumors’ arbitration model, which is based on those “baseball card” numbers, remains remarkably accurate – suggesting that advanced metrics, to the extent they’re used, aren’t yet carrying as much weight as they perhaps should. Read the rest of this entry »

Let’s Fix MLB’s Salary Arbitration System: Changing the Either/Or Model

In our Introduction, we reviewed some of the issues attendant with the salary arbitration system. Today, we begin to examine solutions. As the system exists currently, I would argue that the largest difference between salary arbitration in baseball and arbitration of the type you see in other disputes is the requirement that the arbitrators must select the position of one side or the other in toto, a feature that seems at odds with arbitration’s goal of helping the parties reach compromise. As MLB’s online glossary explains (emphasis mine):

If the club and player have not agreed on a salary by a deadline in mid-January, the club and player must exchange salary figures for the upcoming season. Unsurprisingly, the club files a lower number than the player does. After the figures are exchanged, a hearing is scheduled in February. If no one-year or multi-year settlement can be reached by the hearing date, the case is brought before a panel of arbitrators. After hearing arguments from both sides, the panel selects either the salary figure of either the player or the club (but not one in between) as the player’s salary for the upcoming season.

This “either/or” approach is unique not just in sports but in arbitration generally. Even the National Hockey League, the only other major North American sport to utilize an arbitration system, doesn’t bind the team and player to only those two options. As one NHL agent explained:

Hockey, unlike baseball, does not have final offer arbitration whereby an arbitrator is bound to pick one side’s proposal or the other. The arbitrator, under current guidelines, is free to pick their own level of compensation anywhere between the two requests.

Hockey’s system, by allowing more freedom to arbitrators in selecting salary figures, granting award rejection rights (in many, but not all, arbitration settings, the losing party has the right to reject the award, at which point various other means ranging from litigation to mediation to a second arbitration are used to reach a resolution), and setting caps on the number of arbitration hearings allowed per team, is substantially more in line with traditional arbitration in other settings. It’s therefore no surprise that hockey has substantially fewer arbitration hearings each year than baseball does.

So why does the ability to select a different number matter? Because the current system in baseball actually incentivizes teams to proceed to hearings, a reality that many teams are now taking advantage of with “file-and-trial” approaches. Consider: as attorney Justin Sievert explained for the Sporting News, when an arbitrator is bound to choose one number or the other, “the panel will choose the offer that is closer to what they believe is the player’s true arbitration value.” To show how this creates issues, let’s look at Dellin Betances‘ 2017 arbitration hearing with the Yankees – the one that had Randy Levine so riled up. Betances asked for $5 million; the Yankees countered with $3 million. Let’s say that the panel had concluded Betances was worth $3.95 million. Under current rules, the Yankees win the hearing – and, by extension, are able to pay Betances less than what he has been deemed worth as a result of submitting a lowball figure.

Now you might think that players also benefit from this margin of error: after all, teams that lose arbitrations arguably end up overpaying their players. But that’s not really how it ends up working, for several reasons. First, teams are allowed by the league to confidentially coordinate arbitration filings and salaries, the effects of which can linger long after an individual player’s case is resolved. Per Jeff Passan:

While MLB works diligently and impressively to coordinate the arbitration targets of its 30 teams — this behavior is sanctioned under the collective bargaining agreement and not considered collusive — agents occasionally make far-under-target settlements. The effect, in a comparison-based system, is devastating: A bad settlement can linger and depress prices at a particular position for years.

Why do we care that teams coordinate filings? Because agents, who are in competition for the same clients, clients with disparate individual interests, don’t achieve the same level of cohesion. Imagine, if you will, that you’re an employee looking for a job. You’ve received three offers from three different employers for roughly the same position. Now imagine that those three employers talked amongst themselves, and decided to make you exactly the same offer for each position. And, to make things more interesting, imagine that they are also collaborating to set the salaries for the other candidates, too. You wouldn’t have much in the way of leverage to make salary demands. The three employers have set the market for your salary, and your ability to effectively counteroffer has been essentially rendered moot.

Now, you might point out that, unlike our job example, arbitration isn’t a free market. The Cubs can’t compete with the Nationals over Kyle Barraclough. But what the Cubs can do is agree with the Nationals on what a Kyle Barraclough is worth. Why do we care? Because arbitration is a comparisons-based system. The current system allows teams to, in essence, work together to set the prices for the comparables their own players will cite. The teams are coordinating amongst themselves to drive down prices for all players, because every player is a comparable for someone, and the teams have set prices for everyone.

The trouble is that agents have no way of knowing what those internal calculations are until after all of the arbs are finished in a given year. Another way to look at this is to consider that teams are building their own valuation tool in arbitration, one that is universal across teams, is position- and comparable-adjusted, and – most importantly – is internally consistent and predictable. Agents’ numbers don’t have that level of cohesion. So when teams enter arbitration with consistent numbers, and players don’t, it’s the players’ requests that appear out of step with the realities of the market. The either/or arbitration system facilitates that trend.

This knowledge gap creates a structural mismatch in favor of teams, a mismatch that shown itself in arbitration outcomes. Players who went to arbitration last winter did fairly well in their cases, and Passan cited an oft-used statistic that “[t]he league historically has won well more than 50 percent of cases.” But in reality it’s much more lopsided than that. In March of last year, attorney Christopher Deubert noted that:

[there] seems to be an increasing willingness of clubs to challenge a rise in player salaries by pursuing salary disputes through the conclusion of the arbitration process – albeit, in many instances, unsuccessfully – as reflected in the aggregate arbitration hearing records.  In 43 years of salary arbitration:

  • In 32 of those years (74.4%), clubs won the majority of salary arbitration hearings;
  • In 10 of those years (23.3%), players won the majority of salary arbitration hearings; and
  • In 1 year, all the cases settled.

That teams won a majority of cases in three-quarters of the years for which data is available is pretty remarkable, and demonstrates just how lopsided the present either/or system is when confronted with the knowledge gap created by team coordination. Teams are incentivized to offer lower numbers, knowing that, because all other teams are doing the same, they are likely to succeed. For a player, proceeding to arbitration has meant that they are more likely than not to be underpaid relative to the figure they submit to the arbitrator, which generally serves to incentivize settlements and drive down overall player earnings. Given that the likelihood of winning is priced into settlements, a midpoint between the two figures is no longer the ideal settlement posture; players are incentivized to accept a number closer to the team’s figure just to take every dollar they can. And players, their agents, and the MLBPA have far fewer resources at their disposal for hearings, a problem that is compounded as file-and-trial method results in more cases reaching arbitration. From Passan:

Going to trial can be pricey, particularly for smaller agencies that do not have in-house lawyers with enough expertise or experience to argue an arbitration case. Hiring outside counsel costs up to $55,000, an expense that falls on the agent. And when the spread, or the difference between the sides, is minimal and the 5 percent fee on the difference won’t come close to covering the attorney fees, the incentive is clearly to settle — a fact that teams know and leverage.

So why would eliminating the either/or system help? First, it incentivizes numbers closer to the player’s actual worth, rather than basing a result on resource allocation and structural features. Second, it allows arbitrators leeway to avoid outliers – the current system incentivizes extremes, whereas scrapping the either/or system allows arbitrators to push the parties towards compromise. And third, it creates organic salary movement as arbitrators begin to make their own determinations regarding player worth, requiring them to become more educated in baseball vernacular. And better educated arbitrators are good for everyone, a fact that will be the focus of my next piece.

Let’s Fix MLB’s Salary Arbitration System: Introduction

Arbitration season is upon us. This winter, Mookie Betts‘ contract set a record for a second-time arbitration-eligible player after agreeing to a $20 million deal with the Boston Red Sox to avoid arbitration. NL Cy Young winner Jacob deGrom set some records of his own with his $17 million agreement with the Mets. But other players didn’t fare as well. Aaron Nola and the Phillies were over $2 million apart; a smaller but still significant gap exists between the Yankees and Luis Severino. We’ve talked before about the problems inherent in the current system of salary arbitration for major league baseball players. With a growing number of cases going to arbitrators, and with those cases proving to be seemingly quite contentious, I thought it would be useful to explore solutions to an increasingly thorny problem. This piece will serve as a refresher of the basics; we’ll offer some fixes in the days to come.

Often, analyses of MLB salary arbitration focus on the fact that the hearings typically only consider traditional, “old school” statistics.

Another quirk to the arbitration process is that it usually only factors in “baseball card statistics” rather than more sophisticated metrics. While teams signing free agents are typically up to speed on sabermetrics, the arbitration process does not account for them. Counting stats are important, as is playing time in general. Since labor lawyers typically sit on arbitration panels, the concept of “making it to work every day” is something that holds value.

That last sentence is something else important to focus on: salary arbitrators are typically randomly selected labor lawyers. And while some have a comprehensive knowledge of baseball, it isn’t their day job: arbitrators usually hear many different types of cases, with many different fact patterns. That means that a baseball salary arbitrator may well also arbitrate cases on entirely different matters.

Now, the 2016 Collective Bargaining Agreement does allow for the use of some publicly available advanced metrics.

Only publicly available statistics shall be admissible. For purposes of this provision, publicly available statistics shall include data available through subscription-only websites (e.g., Baseball Prospectus). Statistics and data generated through the use of performance technology, wearable technology, or “STATCAST”, whether publicly available or not, shall not be admissible.

But, often, salary arbitrators aren’t well versed in sabermetrics or advanced analytics. As a result, the statistics being used tend to be basic – very basic. In developing their arbitration projection model, Matt Swartz and MLB Trade Rumors noted as much.

Hitters are typically evaluated using batting average, home runs, runs batted in, stolen bases and plate appearances. There are some positional adjustments, but typically the added defensive value of a shortstop relative to a first baseman is not as important in arbitration hearings as it is on the free agent market. Hitters also can receive larger arbitration awards if they have unique accomplishments, such as winning an MVP award. Pitchers typically are evaluated using innings pitched and earned run average. Starting pitchers are rewarded for wins, and relievers are rewarded for saves and holds. Unique accomplishments, such as Cy Young Awards, matter for pitchers as well.

Still, despite its flaws, the arbitration system was, for some time, considered a great success. After all, while it’s generally accepted that free agency led to rising salaries for major league players, there’s at least some evidence that salary arbitration – the process by which players who are not yet free agents, but have at least three years’ service time, have their salaries determined – has also led to improved compensation. Over the last few years, however, salary arbitration has devolved from a system teams and players can leverage to obtain a negotiated contract into a viable means for teams to contest players’ salary demands in the hopes arbitrators side with teams’ lower salary figures.

The concept of “file-and-trial” – that of a team electing not to negotiate with players after arbitration figures are submitted and exchanged – has become so commonplace that Major League Baseball has a glossary entry defining and explaining it. This method has an effect on the strategies employed by players and their representatives, who find themselves at an obvious resource deficit compared to teams. As Craig Calcaterra detailed:

There is certainly an advantage to file-and-trial for a team. It makes the player and the agent work harder and earlier in order to be prepared to negotiate with the club before the file deadline. It also makes them work a lot harder to come up with a defensible filing number given that, rather than merely being an opening salvo in an extended negotiation, it’s something that they will certainly have to defend in open court. It’s also simple hardball. Teams have greater resources than the players and the agents and it’s less painful for them to pay for lawyers and hearing prep and to conduct the actual hearing. There’s risk to the team, of course — they might lose and pay more than a settlement would’ve cost — but teams are obviously concluding that the risk is worth it.

Ken Rosenthal wrote late last year that the MLBPA feared that every team would soon adopt the “file-and-trial” approach. And while that didn’t happen this offseason, the number of arbitration hearings continue to rise, and they are increasingly acrimonious, as Michael Baumann noted for The Ringer.

For years, it was generally accepted that it was undesirable for a team to let arbitration-eligible players actually go to a hearing over salary, since a hearing would force the team to bad-mouth a player; the morale costs outweighed the potential financial gain from holding a hard line. Last year, more arbitration cases went to a hearing than in any year since 1990.

Yankees executive Randy Levine famously ripped Dellin Betances‘ arbitration request of $5 million in the media, comparing Betances’ submission analogous to Levine calling himself an astronaut. Blue Jays righty Marcus Stroman took to Twitter to remark that “[t]he negative things that were said against me [in the hearing], by my own team, will never leave my mind.” The salary arbitration system, initially designed to encourage settlements between team and player, is now driving wedges between the parties, though it is worth noting that whether those wedges persist once players make free agency decisions isn’t a settled question.

What we can say is that the salary arbitration system isn’t working optimally: it doesn’t reflect what we actually know about baseball by excluding publicly available advanced metrics, and it’s further damaging player-team relationships. With this in mind, it’s no surprise that agents are starting to take a harder line on arbitration.

In a mission statement distributed among some players, Jeff Berry, who helps run the baseball division at CAA, outlined a number of steps he believes are necessary to rectify the imbalance of power in the relationship between MLB and the union. It was no surprise that his first target was arbitration. “[A]ttacking the arb system,” Berry wrote in the memo, which was obtained by ESPN’s Buster Olney, “is an ideal battleground for MLBPA/players/agents to take a unified stand and to feel empowered and proactive rather than victimized.”

There’s no doubt that the current arbitration model suffers from some deep structural problems. Over the course of the next few days, we’re going to take a look at how to fix them.