July 3, 2012

Overthinking It

Does Arbitration Drive Players Away?

by Ben Lindbergh

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​"Why did they trade for me if that's what they think?"—Yankees left-hander Jim Abbott, after losing a 1993 arbitration case in which the team used a "very negative" presentation

Imagine, for a moment, that you’ve just accepted a job that requires you to join a union. This union is pretty powerful, but there are limits to its power. The main downside of your new deal is that you can’t control your own fate: for your first several years, you won’t get to choose which company you work for or where you spend most of your time.

On the plus side, you have a healthy minimum salary, your contract is guaranteed, and you know that if you keep coming to work, you’re virtually assured of making at least as much next year as you're making now. But if you want to increase your compensation quickly, your options are limited. If your employer doesn’t agree to give you a raise, the only way you can get one is to go in front of an independent arbitrator who knows little of your work and attempt to persuade him that you’re worth it.

Meanwhile, your boss will be doing his best to prove that you aren’t. He’ll bring up your lousy attendance record and all the time you spend reading articles about baseball when you’re supposed to be working. He’ll mention your long lunch breaks and that time you took a nap in the toilet stall. He’ll say you seem a lot like previous employees who didn’t make much more money than you’re making now.

Regardless of what the arbitrator decides, you’re not going to forget the things your boss said when he was trying to keep your salary down. You know it was just business, and you enjoy your job, and you’re making more money than most. Oh, and you get groupies! Life could be a lot worse. But when you finally earn your freedom and get to decide where you’ll be living and working for the rest of your career, won’t you still remember what was said? Won’t you wonder whether another company might value your skills more highly? And won’t you be inclined to decide that it’s time for a change?

It’s July, which makes this the perfect time to read about arbitration. The last arbitration case took place nearly five months ago, and the next won’t be heard until nearly seven months from now. You’re in arbitration withdrawal. You’re sick of hearing about the All-Star Game, the trading deadline, and the developing pennant races. You’re just marking time till mid-February, when teams and players whose negotiations have stalled will once again attempt to outargue each other over some relatively small sum of money. Well, I’m sorry—I can’t make the season end sooner. But I can try to answer a question that otherwise would have kept you awake until pitchers, catchers, and arbitrators report to spring training.

Remember that imaginary scenario I stopped describing two paragraphs ago? Well, it wasn’t actually imaginary. It was about baseball players! From 1974-2012, 515 players under team control went to arbitration. Of those 515, 214 won their cases. That tally is significantly slanted toward the owners, but right now, we’re not interested in the outcome of the cases. We want to know what happened later. Did the players who went all the way to an arbitration hearing end up spending less time with their teams? What kind of ancillary costs does a club have to consider before deciding not to accept a settlement?

In an interview on the Up and In Podcast last year, then-Braves Director of Baseball Administration (and current Braves Scouting Director) John Coppolella talked at length about the fallout from arbitration, a subject he knows an awful lot about. (If you haven’t, you should listen to and learn from the whole interview here or on iTunes.) One of the things he knows is that the process often hurts a player’s feelings even more than his bank account.

Anything’s fair game, but here’s the thing: you need to live with that player for the next three years. You need to go through hearings with him. And if you like Johnny Shortstop, and you want to sign him long term, and you bring [off-the-field issues] up in front of a court hearing, that’s not too good. It’s tough, and it’s a fine line to walk. Really, arbitration is a process that is very difficult and very painful for all parties involved, and when you bring stuff up like that, it makes it even worse.

…

You don’t want to bring up any off-field transgressions, or any other kind of problem, because you do need to live with the player. It’s tough. I don’t have the numbers, and I haven’t done the research, but if you look at the players who’ve gone all the way through hearings, the percentage of them that have signed back with that team is probably miniscule… I know how we feel about being pulled out of spring training to go to a hearing to fight over what can sometimes be tens of thousands of dollars. And players have to feel even worse. Players train all offseason so that they can get ready, and then they get pulled out of spring training, taken away from their teammates. They need to fly cross country to a hearing, they sit in that hearing and hear a team tell them how bad they are, and all the things they did wrong. And then it’s like, ‘Okay, but now we’re friends.’

Pretty strong stuff. Thanks to data gathered by Maury Brown and the late Doug Pappas, hosted at The Biz of Baseball, and made more database friendly by BP intern Andrew Koo, we can check to see whether Coppolella’s suspicions were correct.

For each of the 515 players who went to arbitration, Colin Wyers came up with a comparable player (or “match”) from the same year with the closest number of total plate appearances in the same number of seasons (defining a “season” as any year in which a player made at least one major-league plate appearance). Then he looked to see whether both players were still with the same franchise a year later, two years later, three years later, four years later, and five years later. If either member of the matched pair didn’t play in a given season, both players were removed from the sample. This method adjusts for the pesky problems of players entering arbitration at different stages of their careers and player movement patterns changing over time.

Here’s what the results look like for batters:

The production of the arbitration players and their matches was pretty comparable over the five years following the hearings, but the stay rates look a little different. The players who’d gone to arbitration stuck around less often over the first three years. After that, if a player was still with a team, he was roughly equally likely to stay whether he’d gone to arbitration or not. These rates didn't vary significantly based on whether a player won or lost his hearing.

Those numbers seem to support what Coppolella was saying, but the rates for pitchers (with an additional control for role) don’t tell the same story:

Surprisingly, pitchers who went to arbitration weren’t any less likely to stick around.

Perhaps because Coppolella is so cautious when it comes to arbitration, the Braves haven’t gone to a hearing during his time with the team (though they have come close). In fact, they haven’t gone to arbitration since 2001, when they went 1-2 against Andruw Jones, Kevin Millwood, and John Rocker.

Of course, there could be some lurking variables here. Teams could be more likely to go to a hearing and risk an airing of grievances with a player they don’t care as much about keeping. Clubs that are strapped for cash might be more likely to jeopardize their relationships with players in the interest of keeping their payrolls low, and those same teams might be less likely to lock up their players long term. Star players might be more likely to hold a grudge about a hearing and make a team pay for it later, in which case the overall stay rates might not be the best indication of the risk a team runs by going ahead with a hearing. Teams have a keen sense of what their players can take, so they might know which players would accept the necessity of a hearing and which would resent it. And in some cases, front-office personnel turn over quite quickly, so the executives who handle a player’s arbitration case often won’t be around when he hits free agency. If those faces have changed, it would be hard to hold a grudge.

In recent years, a number of notable players have gone to arbitration. Miguel Cabrera and Dan Uggla went with the Marlins. Cabrera is now in Detroit, and Uggla is in Atlanta. Hunter Pence went with the Astros. Now he plays for the Phillies. Arbitration veterans like B.J. Upton, Wandy Rodriguez, and Anibal Sanchez might be on the move before long. But plenty of other players weren’t bothered by whatever went down at their hearings. Ryan Howard went to arbitration with the Phillies. If they were overly hard on him in the hearing, they made up for it by signing him to an extension that will keep him on the payroll in perpetuity. Jered Weaver went to arbitration with the Angels and several months later agreed to a home-discounted deal.

The arbitration process may be unpleasant, and it’s probably better for a team to try to save itself the trouble. One thing it’s not, though, is a sure sign that a player will soon pick up stakes.

Ben Lindbergh is an author of Baseball Prospectus. Follow @benlindbergh
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