Most people have never been involved in any sort of arbitration procedure. Arbitration is a process that falls under the umbrella of ADR, or Alternative Dispute Resolution. When people have a dispute over a contract, payment, or other agreement that they can't or won't come to a settlement on, arbitration is one of the avenues, short of a civil court, that people use to resolve the dispute.
Today, you're going to get your chance, as part of a BP contest. More on that later.
There are two main types of arbitration–binding and non-binding, and the parties involved have to agree upon which type it is before entering into it. Binding arbitration means that both sides agree to abide by the decision of the arbitrator (or, more commonly, panel of arbitrators) as final. Non-binding arbitration means that the decision of the arbitrator is a suggested settlement, but both sides retain the option of bringing the dispute to another venue, like mediation or a courtroom.
Other processes under the ADR umbrella include Mediation and Facilitation, which people in the industry can distinguish, but I can't. A mediator works with both sides in a dispute to help them come together and reach agreement, usually through a process of educating both sides about the other side's position, often a great deal of prodding, and some occasionally brutally frank talk to one side or the other about what a judge or jury is likely to do should a dispute end up in court. Most people won't get any closer to arbitration, mediation, or facilitation than their homeowners or auto insurance policies, which usually have a clause compelling the insured to go to arbitration or mediation to resolve a dispute with the insurance company, rather than going to court.
Arbitration procedures have specific rules of conduct, just like a court has rules for things like inclusion of evidence, procedure, etc. Baseball has a very specific set of rules for its arbitration cases. With thanks once again to Doug Pappas and his excellent set of materials over at his Business of Baseball Pages, here's a brief overview of some of the more interesting points:
- Arbitration, in MLB, is Winner-Take-All. The arbitration panel (of three arbitrators) must select either the number submitted by the player, or by the club. They can't pick a number in between. All contracts are for one year.
- MLB's Player Relations Committee (PRC) and the MLBPA select a new group of arbitrators every year. Arbitrators have biases, just like any judge, and getting your case in front of the right ones can make the difference between winning and losing. If the PRC and the MLBPA can't agree by the beginning of the year, the American Arbitration Association (AAA) provides a list of arbitrators, and the MLBPA and PRC take turns knocking names off the list. (Spend a few minutes thinking about this in terms of the Judiciary for a minute. Scary.)
- When a player files for arbitration, the player and the club exchange numbers through intermediaries. The player through the MLBPA, the club through the PRC.
- Arbitration sessions last three hours. Each side gets 60 minutes to submit their case, and 30 minutes to rebut the case of the other side.
- Decisions are expected to be rendered on who won and lost within 24 hours of the hearing.
The real nuts and bolts of the process come in when it comes to the criteria which can be used in making the decision. I encourage you to read the appropriate part of the CBA (Article VI.F) at the link above, but here are some of the highlights.
Things that can be entered into consideration at an arbitration hearing:
- The quality of the player's contribution to the 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 the player's career contribution.
- The existence of any physical or mental defects on the part of the player.
- Comparative baseball salaries.
The last of those points, competitive salaries, is subject to the limitation that players with less than five years of service can't compare their salaries to players whose service time exceeds their own by more than one year. So Miguel Tejada couldn't, for example, point to Barry Larkin's contract if he were eligible for arbitration before the 2001 season.
Things that can't be entered into consideration at an arbitration hearing:
- Financial position of the player or club.
- Press comments or testimonials.
- Offers made prior to arbitration.
- Salaries in other sports or occupations.
- Anything to do with the luxury tax.
OK, that's enough of an overview. On to the main issue at hand:
The Atlanta Braves offered Greg Maddux arbitration, and Mr. Maddux accepted. The Braves have submitted a figure of $13.5 million, and Greg Maddux's representative, Scott Boras, has submitted a figure of $16 million. Obviously, Greg Maddux is one of the greatest pitchers of all time, and no matter what, he's not going to be skimping on his DIRECTV channels in order to have enough money to pay rent on the space for his double-wide.
So what's the contest? Thought you'd never ask. Your job is to make the case before the arbitrator. In 1,000 words or less, submit your case for either Greg Maddux's side of the case, or the Atlanta Braves' side of the case. If your last name begins with the letters A-K, you must submit your case on behalf of Mr. Maddux. If your last name begins with the letters L-Z, you must submit your case on behalf of the Braves. Please, no entries from staffers of major league clubs or sports agencies.
The best entry for each side of the case will be selected, and presented to three BP Staffers for a decision. Each finalist receives a Baseball Prospectus T-Shirt, and the side that wins the case receives a copy of Baseball Prospectus 2003, and a year's subscription to Baseball Prospectus Premium. Send your entry to email@example.com. Entries must be received by Monday, January 27th.
Best of luck. And it could be worse. You could be a securities lawyer having to explain arcane accounting rules to a judge with a degree in Sociology. (If you're a Sociology major, I'm sorry. In so many ways.)