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The arbitration process can be confusing, but you can bone up on it with the aid of David's interview, which originally ran on April 13, 2008. Please note that an earlier CBA was in effect when this article was written, so some details have changed.
The Richardson Professor of Law at Northeastern University School of Law, Roger Abrams has been a baseball salary arbitrator since 1986. A former scholar-in-residence at the Baseball Hall of Fame, Abrams is the author of four books, including Legal Bases: Baseball and the Law, and Money Pitch: Baseball Free Agency and Salary Arbitration. David talked to Abrams about the baseball arbitration process, including who is eligible, what can and cannot be argued at a hearing, and why arbitration works.
David Laurila: How did you become involved in both baseball and baseball salary arbitration?
Roger Abrams: I guess we all became involved in baseball when we were kids, and I've never progressed beyond that, although I deal with "grownup kids" now. I started teaching a course in sports law at Case Western Reserve, in Cleveland, in 1985. In 1986, I received my first appointment as a baseball salary arbitrator, which came at a perfect time, because I had begun to study the business of sports. I've been teaching sports law since then, and periodically doing salary arbitration, although not every year.
DL: In a more general sense, how does one become a baseball arbitrator?
RA: You become an arbitrator for baseball by first becoming a labor arbitrator. It takes a considerable amount of time and some good fortune to become an arbitrator. You have to be able to conduct a hearing and resolve disputes in accordance with the provisions of collective bargaining agreements. I hear disputes involving companies and unions that arise under collective bargaining agreements all over the country. For example, I am the permanent arbitrator at Disney World in Orlando, involving a number of the unions that represent their employees. I knew folks involved in Major League Baseball and the Major League Baseball Players Association, and that is likely why I was selected to be a salary arbitrator. Whenever you make a decision in salary arbitration, of course, you're making one side happy and the other side unhappy. Although "careers" as a baseball salary arbitrator aren't quite as short as that of the average baseball career–which is about four years–there is no such thing as a truly permanent salary arbitrator.
DL: Bias is inherent to human nature. How much bias is there in the arbitration process?
RA: I think very little. What the parties have done now in their collective bargaining agreement is to provide for three arbitrators to sit as a panel to hear salary cases of eligible players. So if there is any sort of bias in judgment, it is balanced out by the fact that there are two other professional neutrals on the panel who are hearing the case. The panel decides the cases in accordance within the criteria set forth by the owners and the players union in the collective bargaining agreement. If the cases weren't tough, they wouldn't make it all the way to arbitration. More than 90 percent of cases that are filed are settled, so it's the tough ones that are heard.
Let me give you an example of what "tough" means: what do you do with a player who had two brilliant months on the mound in his platform year–what the parties call the year before salary arbitration–and then spent two months on the disabled list? Should he be considered comparable to a pitcher who had similar statistics for a complete season, or is he more like the pitcher who proved unreliable–at least physically–and thus should be discounted in value? In salary arbitration, the player and the club are not represented by Major League Baseball and the union. It is the agent who represents his client, the player. An attorney, often from a large law firm, represents the club. When they come to arbitration, what they try to do is show you who this player is like, and it is that group of "comparables" which is the key in determining whether the arbitration panel should select the final demand of the player or the final offer made by the club. It is final-offer arbitration; the panel selects one or the other. It does not compromise.
DL: Who is eligible for salary arbitration?
RA: Under the collective bargaining agreement, you have to have three years of major league service, and less than six years. There are also times when a player with more than six years might be able to use the process, but those rarely come to a hearing. In addition, the collective bargaining agreement has added a group of players with just short of three years of major league service, but in the top 17 percent of the two-year class. They are referred to, in salary arbitration, as "the Super Twos," and it's good to be a Super Two because they earn about a million dollars more, on average, than the plain old twos who are not eligible for salary arbitration. In practice, many players are eligible, but most cases settle; only a handful will actually go to a hearing.
DL: Do good attorney arguments win arbitration cases, or do good numbers decide them?
RA: A good attorney can't overcome bad numbers. But numbers are always mixed; stats are in the eye of the beholder. The first case I heard involved Mets pitcher–and now network color commentator–Ron Darling in 1986. Ron Darling had a terrible habit of putting people on first base, so his opponent's on-base percentage was very high. But his agent quickly pointed out to me, in his rebuttal case, that his opponents' batting average with runners on base was really low. Darling became a tiger with someone on first base. So "comparables" are in the eye of the beholder, because there will always be a statistic that will balance off another statistic. If a player has a high batting average, does that make him a great player? No, because no one wins games because of batting average; you win games based on runs produced. Yes, someone who won the batting title in their third year in the major leagues would seem to be a good candidate for a good raise, but on the other hand, you'll certainly hear from the ball club about how many of his hits came when the games were no longer in doubt or with no one on base.
DL: Back in 1986, statistics like batting average with men on base weren't nearly as common as they are now. Were they at the arbitration table?
RA: They were. Not quite sabermetrics, but people who are inside the game–and those are the folks you get in salary arbitration–are quick to point out the deficiencies in the opposing side's case. As arbitrators, we are not "baseball specialists." We are arbitrators. We are neutrals, and we decide cases based on the evidence presented to us. We rely on the representatives of the two parties to present good cases. Under the collective bargaining agreement, the hearings are time-limited. Each side gets an hour to present its case, plus a half hour for rebuttal. We then have to make a decision within 24 hours, with no opinion explaining our reasons. That can be very frustrating for an arbitrator who is used to writing an opinion, saying "this is how I've decided, and let me explain to you the reasons why." But that is the system that organized baseball and the players' association created, and if you accept that appointment, you follow their system.
DL: You used the phrase "not quite sabermetrics," but can it be assumed that more advanced statistics are presented today than in years past?
RA: It's a mixed bag. What you don't want to do is confuse the arbitrators, and some of the sabermetric stuff can be rather confusing. On the other hand, arbitrators can understand the importance of a strikeout-to-walk ratio. They can understand why ERA is a critical stat as opposed to wins and losses, which are meaningless–the pitcher doesn't win or lose the game; the club wins or loses the game. The pitcher is responsible for earned runs. That is very simple-minded sabermetrics, and that is helpful in salary arbitration. Of course, it's all glossied up in the submissions, which, frankly, you don't have enough time to read within 24 hours, let alone digest.
DL: Does projection enter into the equation, or only what the player has already done?
RA: As arbitrators, we are not asked to predict. We're asked to compare someone's prior performance with comparable players' prior performance. Now, I have to admit that as a salary arbitrator, when I go out to a game and see a player whose case I dealt with, I take a special interest. But that's just being a fan. In salary arbitration, you don't predict, and you can't possibly predict. The fact that players trend down after age 29 is irrelevant. These are kids who have between three and six years of major league service, so most of them are in the prime of their performance years. In effect, what you're doing as a salary arbitrator is placing them in their right place in Major League Baseball's wage system. And it's not for you to decide if a player is being paid too much or too little. I think some arbitrators are a little concerned about awarding someone five million dollars, as if to say that no one is worth five million dollars to throw a baseball. The answer to that is: that's not your job. Your job is to decide what a club would pay this player if he was there on the free market. He's not on the free market, because he's still covered by the reserve system until he has six years of major league service. So you should not be reluctant to award him five million dollars if that is closer to what his comparables are paid by major league clubs.
DL: In assigning comparables, is age a determining factor?
RA: Age is not determinative; it is years of major league service, which we refer to as MLS. Although the collective bargaining agreement is vague on this, arbitrators generally look at the same number of years of major league service, or maybe up to one additional year of service. One problem occurs, for example, if you don't have many comparables. For example, if you have a designated hitter who has three years of major league service, there may not be any other designated hitters with three years of major league service. Maybe the others all have 10 years of MLS. How do you figure out who the comparables are and decide the case? Well, some very clever representatives have developed something called "the look-back comparables." They look back at someone with more major league service and see what they earned when they were in the same service cohort as the player who is in salary arbitration. The opposing side should point out, however, that there's been inflation in salaries. The average major league salary is now over three million dollars a year, so it has to be adjusted accordingly. But sometimes you have to be creative in order to give the arbitrator the correct comparables. On the other hand, simply because you have an eligible pitcher who is great, but is paid substantially less than a free agent pitcher who has comparable statistics, it doesn't mean that the eligible pitcher should be paid the same. That's because there really is a seniority system in baseball, although it is not set forth in the collective bargaining agreement. If you look at the average salaries based on years of major league service, they increase almost a million dollars a year. That's how the free market seems to have operated. You can't just grab somebody who has played for six or seven years and compare him to your player, who has been there for three or four years. At the same time, you will find in arbitration that agents will argue about "the potential" of a player. But if you can't put a number on it in dollar amounts, it's very hard for salary arbitrators to deal with it.
DL: Is there anything that can't be argued at an arbitration hearing?
RA: You can't argue anything about the financial condition of the club. A player should receive, in salary arbitration, the same salary whether he plays for the Yankees or the Kansas City Royals, even though the cost of living is higher in New York and the Yankees have a team payroll of over 200 million dollars. So you can't argue about ability to pay. Arbitrators won't hear it. You're also not allowed to bring into evidence comments from sports reporters. One day the reporters will say "he's a bum," and the next day they'll say "he's a hero," so the parties have excluded that from salary arbitration. That doesn't mean parties haven't tried to submit this kind of evidence over the years, but I haven't considered it. The parties set forth the criteria–it is their process, not yours–and you are bound to follow what they say.
DL: Performance-enhancing drugs are one of the things you address in your new book "The Dark Side of the Diamond." Can the use of illegal substances be introduced in an arbitration hearing?
RA: There is a story–although I can't verify it–that when Steve Howe was eligible for salary arbitration, he brought his case to salary arbitration. And here he was, sadly, a [substance abuser]. That may not have been the only time arbitrators had heard about "defects" in a player, but those are rare cases indeed. There is a provision in the salary arbitration provision which says that the panel can consider a player's physical and mental defects. I would assume that if any of those folks mentioned in the Mitchell Report were to be eligible for salary arbitration–and my guess is that there are none; they're mostly older players and players no longer in the game–that factor would be considered in salary arbitration as a pro-club factor. Your question is whether it's relevant, and it is. Parties in salary arbitration tend to throw lots of things against the wall in the hope that something will stick and catch the attention of the arbitrators. I have suggested that that's not the best way to do it, but lawyers tend to be "comprehensive."
DL: Who is required to attend an arbitration hearing?
RA: You've got your arbitration panel, and you have representatives for the player and the club. The player is not forced to attend, but the player is always there. In about half the cases, the player actually says something during the hearing. It doesn't help very much, but it's important that he feels that he's participating. If I were representing a player, I'd want him to say a few words in his case, because otherwise he just sits there, and what he hears from his club is how terrible he is. Of course, anyone who makes it to salary arbitration isn't terrible, but they are not all Babe Ruth either.
DL: From your perspective, just how fractious are arbitration hearings?
RA: I think they can be very damaging. And I have seen, over the years, clubs recognizing the potential for damage. I remember one case I heard where Sal Bando was the general manager of Milwaukee, and Bando went out of his way to explain how good the player on the other side of the table was. It was, "No, he didn't deserve exactly what he was asking for," but Bando understood that this was a player who was going to be on his pitching staff, and he didn't want him to come out of the hearing shattered. It would be interesting to study–which I suspect is true–if many players who win in salary arbitration are traded before the end of the year, especially when they play for clubs that are considered small-market clubs. A small-market club may not have the resources to pay the player what he deserves, but they spin the wheel thinking that maybe they'll win in salary arbitration. If they don't win, they'll trade the guy.
DL: What are some of the other things you've seen, or heard, in hearings?
RA: My favorite story, which I tell in my book–Money Pitch: Baseball Free Agency and Salary Arbitration–involves Don Baylor. This was for an arbitration case involving Brett Butler, who was a great little outfielder. Butler's case–and I didn't know this at the time–was a very important salary case for organized baseball and for the players. It was an example of a comparatively light-hitting outfielder going to salary arbitration. He hit like a middle infielder, and stole bases like a middle infielder, and was a brilliant fielder. We set up for the arbitration in one small room, and found there wasn't enough space because everyone wanted to see this one. I had my luggage with me, plus they gave me piles of data, and I couldn't carry all of it when we moved to a larger room. Don Baylor was there, and he said, "Mr. Arbitrator, can I help you with your bags?" So Don Baylor, an MVP, carried my bags! Why was Baylor there? Baylor was there to testify. Butler's agent emphasized his fielding ability. The club, in its presentation, reminded me that Butler would not be charged with an error if you could not reach the ball. Then the player's agent put on Don Baylor. Baylor testified that he hated to come to Cleveland to play against Butler, because, he said–throwing in a few curse words–that "Butler gets everything I hit!" So Baylor was what we would call, in a trial, a "character witness." He was testifying that Butler got to everything–right, left and center.
DL: So a reporter can't be character witnesses, but a player can?
RA: That is correct. At least, that was the case at the time. The process has evolved over the years. The idea behind the salary arbitration process itself is that it never be used. Every case should be settled, because the parties should know how the arbitrators are going to rule. Of course, not every case is settled, and some have to be heard. So they fly you down to Tampa, and you spend a week out in the sun. One year I was appointed to hear 11 cases, including Derek Jeter's case, and every last one was settled.
DL: Do arbitrators prepare for the cases they hear?
RA: We don't, because we're not allowed to. We don't know whose cases we are going to hear. With Jeter, I didn't learn until later that he was going to be one of my cases. I know which players are eligible, because you can read that in the newspaper, but I don't know until they walk in the door whose case I'll be hearing. The decision of who will make up a panel, and who will be the chair of that panel, is a decision made by the representatives of Major League Baseball and the players' association. Frank Coonelly, who is now the president of the Pittsburgh Pirates, was with MLB for years and he was their chief honcho on salary arbitration. Mike Weiner was on the other side for the Players Association.
DL: Have there been trends as to which side wins more cases?
RA: Management wins most of the cases, somewhere around 65 or 70 percent, and in only a couple of years have the players won more than the clubs. The number of cases varies from year to year, but what's interesting is that even as the parties have now negotiated two collective bargaining agreements without a work stoppage, they haven't touched the salary arbitration provisions. They realize that it works. And it does work.
DL: Have you seen any general trends in the arbitration process over the years?
RA: The money trends in the arbitration process tend to reflect the trends in the wage system in baseball, with one exception. A study I did a couple of years ago showed that the dramatic increase in baseball salaries occurred when a player reached free agency. Before that, if you look at, for example, players with four years of major league service, their average salary remained fairly stable over a number of years. That may be based on salary arbitrators' reluctance to give large awards, but as long as they follow the contract criteria, they're OK. Arbitrators have not pushed up salaries. They have just done their jobs.
Editor's Note: Abrams' fourth book, "The Dark Side of the Diamond: Gambling, Violence, Drugs and Alcoholism in the National Pastime," was recently published by Rounder Books.