A Brief Summary of How MLB Arbitration Works

With a new year upon us, it is time for the most confusing time of the baseball offseason, Arbitration Season. Few know how arbitration works at its very core outside of players or league front office personnel. So to make it as simple as possible, here is the most basic level of how MLB arbitration works:

Who is eligible?

Any player can become arbitration eligible prior to six full seasons of experience if they and their club can not agree on a contract. However, two additional groups are eligible as well.

One, any player filing for free agency can be offered arbitration from the team they are filing free agency from.

The second group is comprised of Super 2 players. These players are categorized under this title because they have played more than two years, but less than three years. Super Two players also must have been active for 86 days in the previous season, and in the top 17 percent of service time for their position. A common example of this could be a player who was originally called up in May or June who has gone on to play two subsequent years with the club.

Now we sort of have a base of who can qualify and who can’t, but while many teams try to avoid arbitration, there is a process for when negotiations can’t be reached prior to the league deadline for arbitration avoidance. Here is a basic explanation for how that works.

If an agreement can’t be reached, the player (and usually his agent), along with team officials, will go to a neutral hearing that lasts about an hour. Both sides get to explain why they deserve to win their price tag, and the panel of judges (usually three judges) picks one side or the other. There is no compromise at this stage.

Example: Say John Smith believes he is worth 8.3 million a year. The club thinks he is with 7.7 million a year. If they can not find middle ground before arbitration and settle on a deal, John Smith will either lose the hearing and make only 7.7 million, or win and make 8.3 million. The judges decide his fate.

The main reason why teams try to avoid arbitration: Imagine if you thought you deserved a raise for all of your hard work you have done at your job. You go to the bosses and say you are worth $100,000 to the company, they say instead that you are worth only $76,000. How happy will you be? Exactly, it isn’t fun knowing what your bosses really think you are worth and players are people too.

That is a simple explanation of the process. Hopefully this helps. A player can avoid arbitration, go safe and compromise on a deal, or try to get what they want.

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