2015 MLB Arbitration Visualized
These graphics are part of an on-going arbitration research project and is co-authored by Sean Dolinar and Alex Chamberlain.
Major League Baseball’s salary arbitration wrapped up this past week after a particularly busy year where there were 14 arbitration hearings. Arbitration is a process reserved for players who have accrued three to five years of service time (or two years, if he’s Super-Two eligible; a negligible detail in the context of this post). The entire process revolves around the mechanism of the arbitration hearing, but very few cases actually make it that far. In the formal arbitration process, the team files a one-year contract offer and the player counter-files a one-year contract demand. If both parties cannot reach a formal agreement, an arbitrator is summoned to rule in favor of one party or the other — that is, the arbitrator chooses either the player’s salary demand or the team’s offer — and the contract becomes binding.
However, players and teams typically avoid arbitration by successfully negotiating a one-year salary. Sometimes, both parties file for arbitration and submit salary offers but still end up successfully negotiating without having to resort to a hearing.
The graph below visualizes this process using data obtained from MLB Trade Rumor’s Arbitration Tracker tool. Each player’s gray line represents the difference between his filing and the team’s, and the gray tick indicates the midpoint between the two. (Team filings are always less than player filings.) The yellow dot represents the contract value upon which the team and player settled.
It’s immediately noticeable that most settlements occur very close the midpoint. Since the arbitration process, if fully carried out, is a gamble for both sides, teams and players both have a strong incentive to settle before the arbitration hearing to mitigate their own risks.
A player-team settlement doesn’t have the dramatic flair of an arbitration hearing. As aforementioned, the hearing is an all-or-nothing gamble; there is a clear-cut winner and loser for each case. The gray line in the graph below represents the same filing numbers as the previous graph, but now the results are bound to either end of the range indicating if the player won (green) or if the team won (red).
Again, there’s no meeting in the middle here. Of the 14 hearings this offseason, players won six and teams won eight. An arbitrator ruled in favor of Mark Trumbo to the tune of almost $2 million; meanwhile, an arbitrator ruled against Josh Donaldson for almost the same amount. Despite having a more moderate gap of $1 million, Mat Latos and Neil Walker — the players with the two highest filings in arbitration hearings — lost their cases. Just from eyeballing the data, teams generally won the hearings with wider ranges in offers, and players generally won the hearings with narrower spreads.
The two graphics in this post represent only the cases where the team and player filed salary figures, but usually the team and player reach an agreement before filing. We wanted to provide a comprehensive and very large graphic that visualizes all the players eligible for arbitration and signed a one-year deal. We omitted multiyear contract extensions, because they are more difficult to compare since players will typically discount their one-year value in exchange for long-term security.
We’ll have more arbitration related information on the site as the project goes along, but for now, we thought you’d enjoy these looks at how the process resolved for each player this winter.
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This is beautifully done. Nice graphics, guys.
Nice work! Is there any data that correlates with whether or not a player wins his arbitration case? Is such a thing predictable?
Each case is different. A player winning a case does not mean he had a good year. It just means that his filing was closer to what the arbitrators think he should get paid than that of the team. A player and a team can file for any amount but the arbitrator will choose either or, not a midpoint, so the filing amount has to be as realistic as possible.
Yeah, there’s a little bit of a game theory element to it, which makes this fascinating. We are working on analyzing more data to produce something with much more insight. The best way to accomplish this is to predict the value of a player then compare it to the filing numbers. I don’t think with the limited sample size and the inherent randomness of an arbitrator, any highly predictive model can be made. I do think there might be some opportunity for some lift. MLB Trade Rumors already has pretty good prediction numbers, so that’s the best place to look at the moment.
Any trend regarding what year of arb the player is in? i.e. do 4/5 year guys tend to win more arb cases then super-2/3 or anything like that?
Based on pure conjecture, since we haven’t looked at this specifically yet, I’d say 4/5-year guys will tend to lose cases since their filings are higher with wider margins. I do however know that 3-year guys have the lowest variance in salaries compared to everyone else. 5-years guys have the most.
Are the arbiters the same? It seems insane that Trumbo would get $7m versus Donaldson’s $4m. Is there no mechanism for consistency? Donaldson has been a clearly better batter by almost all metrics, has been more durable and is a plus defender at a slight position premium versus Trumbo as a minus fielder at a negative position… All while Donaldson has racked up some MVP votes along the way…
Please explain how this happens!?!?!
Short answer: It’s bad to assume the arbiters are consistent.
Service time and previous salary are large parts of the arbitration outcome. Donaldson is Super-2, while Trumbo has 4+ service years.
Nice work. Maybe it would be helpful to put the players service time in the colored dot.
What do we know about the arbiters? What is their background? I am going to ask Google about this, but also wanted to hear what you know. I would hope some have risk assessment backgrounds with solid understanding of stats, probability, and uncertainty.
Basically lawyers. The system is not built for sabermetrics. Traditional stats dominate (HR, W, IP, SV). It’s a double edge sword for the players. You move to advanced analytics, you take away money from players who were expecting it, but give it to the traditionally undervalued players.
You are looking at this the wrong way. Donaldson was a Super-2 and Trumbo was an Arb-2 and for players who are Arb-2 and beyond you have to completely ignore the final number and focus on what the raise is from the previous season.
We are accomplishing two separate goals with Donaldson (or any Arb-1 or Super 2 player) and Trumbo (or any Arb-2 and beyond player). For Donaldson, the goal of the arbitration process to put a value on his entire career-to-date. For Trumbo, the goal is ONLY to put a value on his 2014 season since we already established his career-to-date going into 2014.
Trumbo’s camp thought his 2015 season was worth 1.9 million and Arizona thought it was worth 500K, that leads to a midpoint of 1.2 million. I actually worked on this case for the Tulane competition so I can tell you that virtually all of the most comparable players fall above 1.2 million (Matt Joyce, Seth Smith, Delmon Young). That’s why he won and Arizona probably should have realized this instead of risking a hearing. My guess is that they saw more SABR-friendly players with lower raises (Choo, Heyward) and mistakenly thought they had the upper hand, but that’s just pure conjecture on my part.
As for Donaldson, his midpoint was 5.025 million which is one of the highest totals a player has ever had. There were only 4 possible players he could choose from, Buster Posey, Giancarlo Stanton, Matt Wieters and Dan Uggla (and we can ignore Uggla since its from 2009 and he won his hearing so that number is inflated). So basically he had only 3 comps and none of them were similar to him, while The Jays were able to use Pedro Alvarez, his best comp and a whole host of players who fell just below him with nearly equally impressive stats.
By God! Jerry Blenins was going to have his day in court!
*Blevins…or are the Nationals just being super cheap?
It might be indicative that the Nationals have made a decision to employ the “file-to-trial” approach to arbitration cases.
Definitely my favorite case among all the data points. Seems like it was more of a moral victory for Blevins than anything else.