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Players and Teams Exchange Arbitration Numbers

Saturday, January, 24, 2015

The first step in Major League Baseball’s (MLB) annual arbitration dance begins as players and teams publicly exchange salary numbers.  About 150 players are eligible for arbitration under the MLB’s arcane rules regarding service time.  In the process, the players and their agents release what they believe their services are worth, the team counters with their own estimate, and if the numbers are two far apart for an easy resolution the two parties immediately enter binding arbitration to resolve it.   


The majority of players and teams enter deals almost immediately.  In 2014, for example, 91 players out of 150 signed contracts the same day numbers were exchanged.   


Most teams prefer to avoid arbitration hearings and would much rather negotiate directly and quickly to find a common ground on salaries.  The reasons for this are many: Players often become disaffected and angry with management if they feel they are not valued properly, and lengthy hearings can delay player arrivals at Spring Training and affect their performance in the coming year.   


Another factor is that many difficult negotiations end with one-year contracts, which often just postpones the real negotiation.   


While players cannot parley their arbitration hearings into free agency, large one-year contracts are not uncommon for players nearing the end of their contracts with teams, making exchange day in the arbitration process a dramatic moment for many players, especially those who have enjoyed very good seasons the prior year.  While most contracts may be settled quietly, there are always a few big names who go for big money.