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Could a Wave of Arbitration Settlements be the Spark to Ignite a Cold Hot Stove?

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Major League Baseball’s arbitration deadline closed at 1:00 PM EST on January 13th.

Each team and their arbitration-eligible players needed to exchange and file proposed salaries for the 2018 season in preparation for an arbitration hearing in the event that the parties could not agree on a number. If a settlement cannot be reached, the arbitration would then take place before a panel of neutral arbitrators who review the salary figures filed by the team and the player and make a decision on what that player’s salary will be for the 2018 season.

In most instances, the arbitration-eligible players and their respective teams reach a settlement on a contract prior to the deadline and avoid the arbitration process — but many don’t. The most notable arbitration players still without a settlement, as of this writing, are: World Series MVP George Springer, Marcus Stroman, Trevor Bauer, Mookie Betts, and Avisail Garcia.  

via The Crawfish Boxes

We don’t need to get too deep into the weeds on the totality of the rules, but generally speaking, players become arbitration eligible after logging three years of Major League service time. The biggest benefit of this process is that the player “earns” some negotiating power with their respective team to set their salary based on their performance. For instance, a budding superstar prospect will be able to lobby for a higher salary after logging three years of MLB performance metrics that far exceed their initial salary. The player can go through this process each year after their third year until signing a long-term deal or reaching free agency after six years of Major League service.

There is a select group of “Super Two” players, who meet certain criteria set out by the collective bargaining agreement. These players gain eligibility after two-plus years of service and then have arbitration rights for four years instead of the usual three. These players have between two and three years service time and at least 86 days service time the previous year. The 22% of those players with the most service time become Super Twos and can participate in the arbitration process for four years before free agency. This Super Two discussion and its relation to the six year free agency window was most recently relevant with budding phenom Kris Bryant and the Cubs’ reluctance to call him up early in the 2015 season.

via SI.com

For some teams, this past Friday’s deadline represented a cutoff time to settle on a salary figure for 2018, while other organizations appear more willing to continue negotiating right up until the scheduled hearing. All of these hearings are set to be scheduled between Jan. 29 and Feb. 16. The organizations that follow the hard deadline typically employ what’s known as the “File-and-Trial” approach, choosing to go to just a hearing once the two sides exchange numbers. For all teams, the arbitration process is important because it allows the team to increase a performing player’s salary while likely being able to make that salary less than the player’s true value on the open market. This is important because it allows teams to save money on a potential superstar under team control and utilize that savings on other players. Once arbitration is complete, teams generally have a clear picture of their roster needs and capabilities for the upcoming season.

There have been many theories bandied about regarding the relatively quiet Hot Stove this late into the offseason. The most notable discussion involves the comparison of the 2017-18 free agents to the 2018-19 class. “Comparison” is probably too generous, because when compared the 2018-19 free agent class of superstars like Bryce Harper, Manny Machado, Clayton Kershaw [via opt out clause], Josh Donaldson, Charlie Blackmon, or Brian Dozier (admittedly a personal favorite), the 2017-18 class is weak and unexciting. It appears as though many teams are actually looking ahead and avoiding any big money free agents in this off-season, opting instead to focus on taking care of their in-house talent first before committing resources elsewhere.

Bryce Harper will be one of next year’s most sought-after free agents (via Emaze)

The shake out of the arbitration hearings in the coming weeks will likely be the spark that ignites the Hot Stove, as teams are more aware of their payroll capabilities for the 2018 season. Once all 30 teams have a sense of what players are signed and at what salaries, the market will start to take shape for those players still hanging in free agent purgatory. In the meantime, free agents like Yu Darvish, Jake Arrieta, J.D. Martinez, Eric Hosmer, and Lorenzo Cain will likely have to wait a few more weeks to find a landing spot. But, be ready baseball fans, because once that first big free agent domino falls, there will likely be an avalanche of signings to follow.

By: Bryan Ludwig