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Arbitration cases; Young Tiger stars are getting expensive

The Tigers have seven players eligible for arbitration this winter. BYB analyzes their arbitration cases.

Dave Dombrowski has settled every potential arbitration case without a hearing as Tiger President
Dave Dombrowski has settled every potential arbitration case without a hearing as Tiger President
Al Messerschmidt

When the 2012 major league baseball season came to an end, the Detroit Tigers had nine players on their major league roster who were not under contract for 2013, did not have enough major league service time to become free agents, but had accrued enough time to be eligible for arbitration during the off season.

We’re going to go through the list of the Tigers’ arbitration eligible players and break down their contract situations on a case by case basis. But first, a little primer- or a brief review- of how the arbitration process works.

Players who have accrued six years of major league service time and are not under contract with their clubs are eligible for free agency. Players who have accrued more than three years, but less than six years of major league service time, and are not under contract with their clubs, are eligible for arbitration. Actually, players who have accrued more than two seasons, but less than three seasons, and are in the top 22% of that group in service time, are also eligible for an extra season of arbitration as "super two" players. Major league service time is the only criteria that determines eligibility for arbitration.

Rick Porcello is one player who fell short of three seasons service time, but qualified as a super two last year, meaning that he will be eligible for four seasons of arbitration unless he is signed to a long term contract in the interim. Team mate Max Scherzer had accrued three years service time, and was also first time arbitration eligible last winter, but is on track for free agency a year sooner than Porcello.

The nine Tigers who would be eligible for arbitration were Alex Avila, Brennan Boesch, Doug Fister, and Austin Jackson, who are eligible for the first time; Max Scherzer, Porcello, Don Kelly, and Phil Coke who are second time eligible; and Ryan Raburn who was eligible for the third and final time. Two of those cases were solved when the Tigers released Raburn and Kelly after the season.

Clubs have until the first week in December to tender a contract offer to players that are eligible for arbitration, or the players may leave as free agents. In the cases of Kelly and Raburn, the Tigers made a quick decision on them and let them go in time to use the roster spots to protect other prospects and add players in the rule five draft.

That leaves seven Tigers- Porcello, Scherzer, Boesch, Jackson, Coke, Avila, and Fister, who are headed for arbitration unless the club comes to terms with them prior to an actual hearing. Some are candidates for possible multi year contract extensions. Others will be fortunate just to make the opening day major league roster.

The fact of the matter is that both clubs and agents are so familiar with the criteria used by arbitration panels that they can pretty much predict what a player will receive, and very few cases actually go to an actual hearing. Just two or three cases every year. In fact, the Tigers have not had a single arbitration hearing during Dave Dombrowki’s tenure as President of the Detroit ball club. But many players have been arbitration eligible and each case has been settled prior to a hearing.

Clubs and players will exchange figures by January 18, 2013. Most cases settle on a figure between the two offers, very often at or near the mid way point. Some players sign multi year extensions, and the few that don’t settle have a hearing in front of a three person arbitration panel. The panel then holds a hearing from February 4 to February 20, taking evidence from the club and the player’s agent, and makes a decision.

All arbitration awards result in one year contracts, and a salary that is either the number submitted by the player or the number offered by the club. They may not choose a compromise number. The contract will have no special clauses such as options, no trade clauses, performance bonuses, or perks. Just a flat one year salary.

Under the terms of the new collective bargaining agreement, arbitration has been eliminated for potential free agent players whose clubs want to be eligible to receive compensation from any new club that signs their former player. Those players now must be given a "qualifying offer" rather than an offer of arbitration. But for players not yet eligible for free agency, the arbitration system remains basically unchanged except for a modest increase in the number of super two eligible players.

The criteria used to determine salaries in arbitration are defined by the collective bargaining agreement. To summarize, the criteria include the player’s contribution to his club the past season, salary history, length and consistency of career contribution, any physical or mental issues, salaries of comparable players with the same amount of experience, and the Club’s success on the field and at the box office.

It’s easy to look at player’s stat lines and say that player A should receive a higher salary than player B, and that may be how things work in free agency, but that’s not how things work in arbitration. The most important criteria is service time, followed by salary history and the salaries of players with similar experience and performance history.

One very important criteria in the performance category is playing time. The more games, plate appearances, or innings pitched, the more work that a player performs for his team, regardless of results. The fact that the team relies on the player to perform is an indication that they’re happy with his performance. Full time players get paid more than part timers. Starting pitchers are paid more than relievers.

The arbitration panel may not consider certain other criteria, such as the financial position of the club, comments made by the media, salaries in other sports, or any previous offers made during negotiations. They will give particular weight to "comps". That is, the salaries of players within the same service group in terms of major league experience, at the same position.

One thing that stands out in the arbitration process is that player salaries almost always increase and never decrease from the previous year’s salary for any player, regardless of how poorly he may have performed during the past season. It is the nature of the major league baseball salary structure, that players are paid below free market levels during their pre arbitration seasons, and those salaries escalate each year as they approach free agency.

One thing that does not happen in arbitration is a comparison between players who are first year eligible and players who have signed free agent contracts. Once again, it’s all about service time.

There are exceptional cases, such as Ryan Howard and Tim Lincecum, where players have won an MVP award or a couple of Cy Young awards, and those players can receive salaries upwards of $ 10 million through the arbitration process (and they may backfire when the player doesn’t live up to expectations). But those cases are the exception, and most will receive a salary in the range of what other players at the same position, with the same amount of service time have received.

The class of arbitration eligible players that the Tigers have this season is a bit larger than most other clubs have. On the one hand, it’s a good sign that they have relatively young talent maturing at the same time. On the other hand, it means that the club will have to pay ever increasing salaries for the same players, so an increase in performance should be expected.

Added all together, the group of seven were paid a total of $ 13.45 million in 2012. Matt Schwartz, who has a model used to estimate salaries of arbitration eligible players, estimates that the Tiger seven will receive a total of $ 25.4 million in 2013. That’s an increase of almost $ 12 million.

We’ll begin this mini series in the next article with a look at the arbitration case of Brennan Boesch.