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Today is the deadline for teams, players to exchange arbitration figures

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Today is the day you will see a lot of “[Team] and [Player] agree to one year deal, avoiding arbitration” stories. The reason: today at noon eastern is the deadline for all arbitration-eligible players and their teams to exchange salary figures.

Here’s what that means technically:

  • By noon today, all arbitration-eligible players will say what they think they’re worth based on comparable players of their quality and service time and the team will propose a lower counter-figure;
  • Generally, and usually, in the past, the parties would then use these proposals as negotiable figures and eventually reach a compromise deal, usually near the midpoint between the two figures, avoiding arbitration. This process often takes a few weeks;
  • If a deal cannot be reached, the player and the team go to an arbitration hearing and arbitrators pick one of the numbers. They CANNOT give a compromise award. It’s either the higher player’s number or the lower team number, and that will be the player’s salary for the upcoming season.

Got it so far? Good. Now, here’s why things have gotten a bit different in the past few years.

In the past, a small handful of teams employed a “file- and-trial” approach to arbitration. That meant that they treated the figure exchange date — today — as a hard deadline after which they refused to negotiate with the player and stood content to go to a hearing and let the arbitrators decide. Not many teams did this, mind you. Just some. And they were viewed as hardliners. The upshot was that they were willing to risk a hearing — which players really hate — if the could save some money on an agreed deal, struck in the absence of competing offers setting a floor and a ceiling.

In the past couple of years, however, the vast majority of teams began to assume this posture, treating today’s deadline as the real arbitration-avoidance deadline. And it has worked for them. In 2018 there were 22 hearings. In 2019 there were only ten. What’s more, in the aggregate, arbitration-eligible players took a smaller percentage of their projected awards than they had in some time. It’s pretty clear what’s happening: teams are taking harder lines and players are settling to avoid the risk of a hearing, thereby taking less money. Which is to say that clubs’ file-and-trial approach is working.

Oh, and there’s another thing some of you who follow the labor landscape closely might remember: last July when there was some union drama, with Tony Clark pushing out longtime MLBPA attorney Rick Shapiro. From what I understand that was all tied up in vision/strategy for the MLBPA vis-a-vis CBA negotiations. There are at least two sides to every story and I’ve heard at least three in this one, so just know it was kind of a mess.

Whatever it really was, though, one thing is clear: Rick Shapiro was THE GUY at the union who coordinated arbitration cases for the players. There are many capable union lawyers there who work with arbitration, but Shapiro was, without question, the guy who quarterbacked all of it. Him not being around for arbitration season for the first time in years and years cannot be great for the players, the agents and the attorneys who all work together on these things. It would not shock me if his absence has a major impact on this year’s arbitration season, almost certainly in a way that benefits the clubs as opposed to the players.

But that’s something we won’t know for sure for a while. For today, just know that a ton of players and teams will either agree to a deal avoiding arbitration or, in some cases, agree to a long-term extension buying out arbitration and free agency years.

The deadline rules all.

 

Red Sox employees “livid” over team pay cut plan

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Even Drellich of The Athletic reports that the Boston Red Sox are cutting the pay of team employees. Those cuts, which began to be communicated last night, apply to all employees making $50,000 or more. They are tiered cuts, with people making $50-99,000 seeing salary cut by 20%, those making $100k-$499,000 seeing $25% cuts and those making $500,000 or more getting 30% cuts.

Drellich reported that a Red Sox employee told him that “people are livid” over the fact that those making $100K are being treated the same way as those making $500K. And, yes, that does seem to be a pretty wide spread for similar pay cuts. One would think that a team with as many analytically-oriented people on staff could perhaps break things down a bit more granularly.

Notable in all of this that the same folks who own the Red Sox — Fenway Sports Group — own Liverpool FC of the English Premier League, and that just last month Liverpool’s pay cut/employee furlough policies proved so unpopular that they led to a backlash and a subsequent reversal by the club. That came after intense criticism from Liverpool fan groups and local politicians. Sox owner John Henry must be confident that no such backlash will happen in Boston.

As we noted yesterday, The Kansas City Royals, who are not as financially successful as the Boston Red Sox, have not furloughed employees or cut pay as a result of baseball’s shutdown in the wake of the COVID-19 pandemic. Perhaps someone in Boston could call the Royals and ask them how they managed that.