Francisco Lindor and Baseball’s Arbitration Problem

This is Mike Hattery’s fourth piece as part of his September residency at FanGraphs. Hattery writes for the Cleveland-based site Waiting for Next Year. He can also be found on Twitter. Read the work of all our residents here.

As Francisco Lindor launched his 33rd home run of the season on a peaceful afternoon this past Saturday in Seattle, his future in Cleveland seemed to be weighing on the minds of many, as tweets featuring the phrase #Lifetimecontract flooded my timeline. While I’ll leave the precise terms of a potential Lindor extension to others, Lindor’s evolving profile remains a matter of interest as it relates to the arbitration process.

As Travis Sawchik recently documented, Lindor’s past two seasons have been quite different. Very good, but different nonetheless. In 2016, Lindor rode an impressive defensive performance to a six-win campaign. This year, he’s on pace to record roughly the same WAR total but has arrived at that point by different means, more than doubling the career-high home-run total (15) he produced last season.

On the open market, Lindor’s 2016 and -17 seasons would likely be treated fairly similarly in terms of average annual value. While imperfections certainly exist in the defensive data, the marketplace appears to pay players accordingly, whether the runs are added with the bat or saved with the glove. Major League Baseball’s arbitration structure, on the other hand, is far more archaic.

Consider, first of all, the process by which appropriate salaries for arbitration players are determined, as outlined on pages 18-23 of the 2017-2021 MLB Collective Bargaining Agreement:

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 (see paragraph (11) below for confidential salary data), 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 (subject to the exclusion stated in subparagraph (b)(i) below). 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 language here provides enormous discretionary powers to the arbitration panel in terms of how to interpret and weight the evidence presented to them. The inclusion of “mental defects,” in particular, evokes an antiquated version of player valuation.

One positive development of the new CBA is that allows for the use of advanced statistics available in the public sphere, a la the sort found at FanGraphs and Baseball Prospectus, in arbitration hearings. The CBA also forbids the use of the following: “Statistics and data generated through the use of performance technology, wearable technology, or ‘STATCAST,’ whether publicly available or not.” The ban on Statcast data might actually represent another win for the players: as R.J. Anderson noted in August, agencies and players have limited access to data — and even more limited staffs to help them wield it in their favor.

Even with the introduction of new metrics, it’s likely that certain players will have trouble documenting their worth to an arbitration panel. In an era of increasing specialization, platoon players, left-handed specialists, and the Chris Devenski-type multi-inning reliever all possess greater value than their counting statistics might otherwise suggest — value that is nevertheless clear to organizations. Convening a sort of extra-judicial hearing where one party (the teams) isn’t incentivized to adduce its best evidence should raise questions as to the validity of the process.

Unfortunately, players are confined to publicly available data, which certainly has value. How much value remains to be seen, however. When statistics like runs batted in, home runs, wins, and saves, have been around since the dawn of time (or so it feels), attempting to establish metrics like FIP or WAR as the new industry standard is sure to be a challenge. And again, these metrics will never rival the in-house valuation systems created by clubs, which aren’t disclosed at these hearings due to proprietary data concerns.

Indeed, the massive discretion granted to arbiters, as well as the huge advantages for teams in terms of culling and employing data, creates an imbalanced arbitration process.

In a somewhat ironic twist, however, MLB clubs have benefited considerably from the home-run surge that has dominated baseball over the past two years. The accumulation of those counting stats by players comes with a financial cost for teams.

And so, a return to Francisco Lindor. Lindor isn’t eligible for arbitration until 2019, so it’s possible that, following another year of play, circumstances will different. However, if any team has benefited from the home-run spike or “elevation revelation,” it’s the Cleveland Indians. Lindor and Jose Ramirez are at the forefront of it, with the former having surpassed his previous career-high home-run total by at least 18 while also producing an isolated-power figure 100 points better than last year.

WAR has large error bars, of course, so one can’t say that Lindor’s 2017 season has been an exact replica of his 2016 campaign, just with more homers and less defense. Nonetheless, the overall value accumulation is similar. In arbitration, however, the 2016 version of Lindor would likely be paid far less than the 2017 one.

In 2015, Sean Dolinar and Alex Chamberlain authored a detailed analysis of the arbitration process, including the value of component statistics. Not surprisingly, home runs were the most valuable traditional statistics, outside of saves, for players. For position players, home runs were of huge value — roughly $50,000, as compared to the roughly $200,000 of the non-traditional WAR. In many ways, home runs outpaced almost any other statistic in terms of their capacity to inflate arbitration figures. Indeed, that inflation led clubs to non-tender both Pedro Alvarez and Chris Carter for fear that their home-run totals would lead to arbitration awards that overstated their actual value.

Such outcomes are due, in part, to the discretion granted to arbiters of these cases. However, 2017 might bring forth changes and a more holistic evaluation of player value in the arbitration process. The home-run spike for players like Lindor and others will force organizations, the party with the strongest ability to construct an analytical case, to argue the diminishing value of elevated home-run totals due to the home-run environment — and, in turn, the need for a more comprehensive evaluation system.

As the 2017 season draws to a close, the players’ union has until 2022 to figure out how to construct an arbitration system that better protects players and performs closer to actual market valuations. However, the home-run spike, and the costs associated with it in arbitration, may serve to force a more efficient, progressive arbitrative process.