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On FanGraphs: Inside Salary Arbitration PDF Print E-mail
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Written by Maury Brown   
Wednesday, 17 November 2010 08:44

Baseball and moneyIt’s one of the most critical parts of how MLB club’s structure their player salary as players with 3-6 years of Major League Service Time (okay, there are those Super Twos, as well) hit salary arbitration. The raises can be spectacular (Ryan Howard’s record –setting first time salary arb hearing landed him a 1011% raise when his $900,000 salary in 2007 jumped to $10 million in 2008), or it can influence contract negotiations (Tim Lincecum earlier this year).

It’s also a largely misunderstood process.

On FanGraphs (see Inside Salary Arbitration – link active at 11am ET), delve into the process and some of the numbers.  Here’s a teaser passage:

While management may have had fits when the process was initially put in place, and still argues that players leverage the system dramatically, the truth is, it works. There were 210 players eligible for salary arbitration in late November of 2009 (see the complete listing), and by the time the deadline for hearings was reached on Feb 20 of this year, all but 8 cases were resolved before hearings (see the panels, and arb scorecard). Of those eight hearings, clubs won 5 cases (B.J. Upton, Brian Bruney, Wandy Rodriguez, Sean Burnett, and Ryan Theroit) while players won 3 (Cory Hart, Cody Ross, and Jeff Mathis).

Key to the process is how players, their agents and the clubs look at “comps”. The majority of rank and file players can be fairly easily measured between each other.

As example, let’s use Rangers reliever Darren O’Day.

As a first time salary arbitration eligible player, O’Day can be compared to last year’s class of relief pitchers, or players in years past that had the same amount of MLST at the time. You don’t compare pitchers to position players, and rarely do SPs get used.

Last class, 6 relievers with between 3 and 4 years of MLST exchanged salary figures with their respective clubs. Here is a breakdown of the salary figure the players was asking, the figure the club was offering, the difference between the two, the mid-point between the figures, what the settlement figure was, and where it was – plus or minus mid-point – for the club or player

To see more of this story (after 11am ET), select this link

Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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