Baseball arbitration, compared to alternative means of resolving management-labor disputes, represents a remarkable success. At the same time, watching how salary arbitration played out for Pedro Strop as compared to the Yankees’ Dellin Betances, one of the few flaws in the system became apparent.
A brief history of baseball arbitration
MLB’s salary arbitration system came to be notwithstanding a lot of kicking and screaming by MLB owners. During the negotiations leading up to the first arbitration proposal, Charlie Finley, former owner of the A’s did not mince words:
“We’ll be the nation’s biggest assholes if we do this.”
Notwithstanding Finley’s vintage hot take, the owners and MLBPA agreed to arbitration in the 1973 collective bargaining agreement. With minimal changes since taking effect, MLB’s salary arbitration process results in over 90% of teams and arbitration-eligible players amicably agreeing to salary figures without a third party arbitrator.
Since 1990, arbitrators have decided fewer than 20 players’ salary disputes in a given year. Ironically, the arbitration system represents a huge win for the owners because it retains elements of the “reserve” system that allowed teams to retain rights to a player when that player’s contract ended.
The system of arbitration established by the MLBPA and the owners has been used in many other situations, even being called “Baseball Arbitration” in legal circles. It is a smashing success.
The numbers, and not necessarily the right ones, tell the story
Notwithstanding that success, why did the Strop and Betances situations turn out so differently?
Comparing the players’ “platform year” stats in 2016, both Strop and Betances are quite good. I have included Jonathan Papelbon’s stats from 2006, when he and the Red Sox agreed to the highest-ever salary for an arbitration-eligible reliever, a 1-year deal worth $6.25 million.
|Player||K/9||BB/9||HR/9||DRA||FIP||Med/High Lev. Innining||All-Star Apps.||Arb. Year Salary|
As compared to Papelbon, Betances recorded a hair fewer medium- and high-leverage outs, struck out a lot more guys, and had a better DRA and FIP. Despite doing all that high-pressure yeoman’s work, Betances only recorded 12 saves, while Papelbon had 35 saves in 2006. And that is a significant reason why, when Betances requested $5 million at his 2017 arbitration ruling, he lost. The Yankees also argued that Betances was not worth $5 million because he has a slow delivery to home plate, allowing opposing base runners to steal 21 against him in 21 attempts.
Without a shred of grace, Yankees President, Randy Levine, called a press conference that was an appropriate homage to Charlie Finley:
“[Betances’ argument is] like me saying, ‘I’m not the president of the Yankees; I’m an astronaut. No, I’m not an astronaut, and Dellin Betances is not a closer.”
Based on the statistics above, other than the incredibly silly stolen base argument, Betances lost entirely due to how the Yankees used him, rather than his real, actual contribution to winning games. If Betances had the same opportunities to save games, he probably would have converted save opportunities at a righteous clip. And yet, the arbitrators sided with the Yankees.
Strop and the Cubs, by contrast, avoided arbitration by agreeing to $5.85 million deal for 2017, $6.25 million in 2018, plus a team option for 2019. To be fair, this was Strop’s second year in arbitration, rather than his first a la Betances and Papelbon. Perhaps the Cubs did not want to bash their player, or value non-closers differently than the Yankees front office, though I find that hard to believe based on how the Yankees acquired three of the top five relievers in the game for the 2016 season (more on that later).
Still, how could the arbitrators side with the Yankees rather than Betances?
These arbitrators are . . . not experts
To help answer this question, I interviewed Professor Joseph Goldhammer, a labor lawyer and adjunct professor at Denver University School of Law, where he teaches sports law and coaches the law school’s baseball arbitration moot court team. Every year, he takes a team of law students to Tulane University to engage in competitive mock arbitration hearings over fictional player salaries. During his professional career, Prof. Goldhammer has gotten to know a number of arbitrators who have presided over actual MLB salary arbitration hearings.
One of those arbitrators told Prof. Goldhammer the gut-wrenching punchline to the following story that helps answer my question.
First off, I want to make clear that I do not know the name of the player, arbitrator, or team involved in this case. All that is beside the point anyhow. To frame the story from a player’s perspective, I want you to imagine that you are a 27-year-old MLB relief pitcher.
You have sacrificed to make a career out of baseball since you moved away from your home when you were 17 years old. Your agent has told you that, after making it to the majors, players generally last an average of 5.6 years, so you have to make enough money to support you, your wife, and your daughter for the rest of your lives in that time. After three years of making the league minimum, you are finally eligible for salary arbitration, and you and the team cannot come to terms.
Your agent starts the hearing by explaining that your ERA in the 6th through 8th innings is below 2.50, lower than any other relief pitcher in baseball over the past year. Just before your agent starts to praise your strikeout rate, the lead arbitrator leans over to one of the two other arbitrators and asks an earnest question.
As this arbitrator explained to Prof. Goldhammer, he had to clarify the following with his fellow arbitrator:
“Is it better for a pitcher to have a low ERA, or a high ERA?”
This question, asked by a brilliant man and expert in labor law, would be devastating for our hypothetical pitcher, and maybe for the team as well depending on the situation.
As trial lawyers know all too well: juries do weird stuff. And I make the comparison of MLB’s “expert” arbitrators to layman juries on purpose. The arbitrators may be experts in labor disputes, but MLB’s collective bargaining agreement does not require them to have any knowledge of, much less expertise in, baseball. They lack basic knowledge of the game over which they exert substantial influence.
And that helps me understand why Betances lost. His arbitration panel gave a lot of credence to the Yankees’ focus on saves, which we all know is a terrible statistic for evaluating relief pitcher performance, and maybe on stolen bases. Each arbitration hearing lasts maybe four hours, which leaves very little time for either side to make its case. Imagine having to spend some of that precious time explaining basic statistics to the panel, hoping that eventually they will understand why high leverage situations are more important than recording the final three outs of the game.
Non-closers aren’t getting their due, but they might soon
In the end, the outcome is unfortunate for Betances, who was clearly upset after the decision and the Yankees behavior, as well as for non-closer relievers in general. The compensation disparity between closers and non-closers is pervasive in MLB, but that may change. Andrew Miller’s recent free agent deal (with, of all teams, the Yankees) shows that the tide is turning for free agents. Think about that for a moment: The Yankees paid Andrew Miller $36 million over four years to be a non-closer, already having Aroldis Chapman on their roster, and had the gall to argue that Betances is not entitled to $5 million because he is not a closer. I expect other non-closer relievers to make similar arguments to Betances in the future, perhaps the arbitrators will be more receptive or knowledgeable.
Betances is probably counting down the days until he can flee the Bronx for greener pastures. With PECOTA projecting the Yankees to win just 80 games this year, good for fourth place in the AL East and outside of wild card contention, the team may decide to part ways with Betances in a midseason trade.
Let’s hope that Theo and Jed and keep Yankee GM Brian Cashman’s cell phone number handy for a midseason deal: Betances would look great in (Cubs) pinstripes. And they, based on the Cubs deal with Strop, are perhaps a bit more intellectually honest with their valuation of non-closers.
Lead photo courtesy Ken Blaze—USA Today Sports
 Before arbitration, the only way players could change teams was through a trade or sale to another team. This prevented players from changing teams, eliminated competition for players’ services, and prevented players from receiving market value for their services. Post-arbitration, teams can pay players the league minimum for the first three years of MLB service, after which the player is eligible for arbitration. Compared to unmitigated free agency, this is a much, much better system for the owners.