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The Process of Arbitration in the MLB

January 4, 2019

Now that we are into 2019 and less than 2 months until pitchers and catchers report, a lot of craziness is about to happen. With Bryce Harper, Manny Machado, Craig Kimbrel, Dallas Keuchel and A.J Pollock yet to sign, there is still a lot to be determined. All of these players have spent their fair share of time in the MLB and have been awarded with going to any team they desire. You will hear the term “arbitration” come up frequently in the next few weeks. It’s a confusing process if you don’t understand how it works; however, in this article I will break down everything you need to know with arbitration.

 

Your major league career can be broken down into three levels of experience:

  1. Rookie to three years

  2. Four to six years

  3. More than six years

 

1. Rookie to three years of experience
If you’re lucky enough to be drafted to an MLB team, climb your way through the minor leagues and make it to the majors, you’re presented with a rookie contract. The team will make the contract and you have to like it. Technically speaking, you are their puppet for those years.

 

2. Four to six years
After three years of experience and playing well enough that your team wants to keep you, you will enter the tender (give) period. The team will keep you by offering you a contract by the non-tender deadline. If you don’t like that contract and think you’re worth more, you can negotiate your contract with your team. This is your arbitration stage.

 

Arbitration Period (example Scooter Gennett)

 

Gennett has had just over 4 years of experience. He is in the arbitration period. Gennett has been playing above average for the years he has have been up in the big leagues. Last year the Reds paid him $5.7 million, but he out-played that contract by batting .310 and collecting 181 hits, 23 home runs and 92 RBIs. Gennett was top 30 in all major NL offensive categories.

 

The Reds will present him a contract in the coming weeks. The Reds will more than likely offer him a little lower than what he deserves, considering they have an eye on their own books and finances. My guess is Gennett will get offered around $10.5 million. If he is fine with getting paid more in one year than he has in his entire career combined, he will sign the contract and end his arbitration period. If Gennett thinks he is worth more and wants what’s fair, he will file for arbitration. Now Gennett, his agent and the Reds will sit down and talk numbers. They can come to an agreement in this meeting and sign a contract; however, if the two sides still disagree, they will schedule to go to court!

 

If this were to happen, the court date would be sometime between February 1s t – 21s t . The two parties can meet until then and try to agree on a number. If not, they will go to court where an independent third party arbitrator will look at both cases. They will put Gennett’s numbers up against other comparable players. The arbitrator will pick either Gennett’s number or the teams number, and the contract will reflect that.

 

This process will happen for three years (years 4, 5 and 6) of your major league career.

 

3. More than six years

After six years in the MLB and your team hasn’t tendered you a contract, you are granted free agency and able to sign anywhere you want. For example, take a look at Harper and Machado this offseason. They can pick where they want to go and how much they get paid. If they don’t like what they see, they can talk with another team that is willing to pay them what they want.

 

Many players will take their time to talk with other teams but still come back to their original team. This is the most freedom and leverage athletes have in their playing careers. They need to take advantage of their talents and try to get the most money out of the situation. 

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