DRaysBay’s Guide to Arbitration

2020 is nearly over, but that doesn’t mean the baseball off-season is.

Due to the pandemic and the revenue streams that were shortened last year, today could be a wild day in the baseball world as teams consider whether they want to cut players or enter arbitration with them, so we are going to talk about arbitration, what it means, and who on the Rays are going to be going through it.

This is everything you need to know to get up to speed about MLB Arbitration.

What is Arbitration?

Before we can answer this question, we need to answer what a basic MLB contract looks like. When a player makes their MLB debut, the clock starts ticking on service time in the MLB, which in most cases amounts to 6 calendar years.

For the first three years, that player is paid a league minimum salary, which in 2021 will be $570,500 per year according to the Associated Press. For their remaining rookie contract years, the player will then begin the arbitration process.

According to MLB.com Arbitration is defined as the following:

Players and clubs negotiate over salaries, primarily based on comparable players who have signed contracts in recent seasons.

The first step of the arbitration process is to decide to “tender” a contract to a player. This just means the MLB club has agreed to pay the player a contract, although the specific number is not yet determined. The non-tender deadline for 2020 is today, Wednesday. December 2nd. If a team does not want to continue a player’s contract, today is the day they must decide if they will cut them from the roster.

Not all MLB players who enter the league fall into the 3 Rookie Years & 3 Arbitration years. If a player has less than three years of MLB service time, but more than two years, then they may become a “Super Two” player instead. The exact amount of service time needed to become a Super 2 depends on the pool of players in the class that year, but generally speaking, it’s a way to give more money to players who have played across three calendar years in the majors but have missed the cutoff for three contract years.

Super Two players will start the arbitration process a year “earlier,” going through the process four times instead of the normal three. In practice it makes the player’s contract seven calendar years instead of six, with arbitration occurring in the final four years.

After the final year of arbitration, a player then becomes an unrestricted free agent.

The Arbitration Process

Once a team has decided to tender a contract to an arbitration-eligible player, both the team and the player have about a month before the arbitration deadline to come to an agreement on next year’s salary.

This process consists of both parties negotiating back and forth on what they believe they deserve for the next year, likely basing it on previous contracts tendered.

In most cases, contracts are 1 year, however you may see contracts negotiated where teams “buy out” future arbitration years by offering multi-year deals during this process.

If no contract is agreed upon between the two parties by the arbitration deadline, then the player and team exchange a number that each side believes is fair, and a hearing date is scheduled. If a salary is still not agreed upon by the hearing date, both the team and player go to the hearing to make their case in front of a panel of arbitrators, who then side with either the player or the team.

The last time the Rays’ went to an arbitration hearing it was with OF Tommy Pham, where they lost. The Arbitration panel awarded the case to Tommy Pham for $4.1 million.

Rays Players Scheduled for Arbitration

Here are the players that are arbitration eligible for the Rays ahead of the 2021 deadline with projections according to MLB Trade Rumors, which has an algorithm created by Matt Schwartz designed to provide three different scenarios, displayed below with three different numbers. Here are the methods they run:

• 1st number: Applies a MLBTR Algorithm model directly with actual statistics from this 60-game season
• 2nd Number: Extrapolates all counting stats to would-be 162-game totals. One home run becomes 2.7 home runs.
• 3rd number: For non-first-time eligible, finds the raise they’d get in a 162 game season, then gives them 37% of that raise

And here are the players scheduled for potential arbitrations.

• Jose Alvarado – $1.0MM / $1.1MM / $1.0MM
• Yonny Chirinos – $1.6MM / $1.8MM / $1.6MM
• Ji-Man Choi – $1.6MM / $2.1MM / $1.6MM
• Tyler Glasnow – $2.8MM / $5.1MM / $3.2MM
• Manuel Margot – $2.8MM / $3.6MM / $2.9MM
• Joey Wendle – $1.6MM / $2.7MM / $1.6MM
• Ryan Yarbrough – $2.2MM / $3.6MM / $2.2MM

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Frequently Asked Questions

Here are some common questions you might have about the process:

What is Service Time?

Service time is the amount of time a player has spent on the active 26 man roster or injured list. In a typical MLB Season - 172 days spent on the roster = 1 MLB “Year”. It is common to have a player reach 1 “year” of MLB Service time across multiple seasons.

What is the difference between non-tendering a contract to a player and designating a player for assignment (DFA)?

Non-tendering a contract takes place in the off-season and immediately releases the player to Free Agency.

Example: OF Hunter Renfroe

A player who is Designated for Assignment or DFA gets placed on irrevocable waivers for 7 days or traded. During that time, the player may be claimed by another team. If the player is claimed by the second team, that player is either immediately added to the new team’s 40 man roster or optioned to the minor leagues, if the player has options left.

Example: C Michael Perez

If a player is NOT claimed off of waivers by another team, then that player is assigned to the minor leagues. Players with more than 3 years of MLB service time may refuse this assignment and elect Free Agency.

Example: RP Chaz Roe

After DFA’ing a player, why wouldn’t teams automatically try to trade a player instead of putting them on waivers after and having another team claim them for nothing?

Just because you can trade somebody, doesn’t mean you should. There might not be a trade offer available, or if there is, the return may not be what the team would want.

If a team DFA’s a player to try to make room on the 40-man roster to, let’s say, make room for a free agent signing, then trading that DFA’d player doesn’t necessarily solve the problem of needing room on the 40-man.

How exactly does a player qualify for “Super Two” status?

First, a player must be have earned between two and three years of MLB service time. Then out of those qualifying players, a player must be within the top 22% of service time to qualify for Super Two status. That time is typically two years an 130 days on a MLB roster, although it will vary from year to year.

How many arbitration hearings have there been?

According to the MLB Players Association, there have been 500 cases presented before an Arbitration Board. Out of those cases, the Arbitration board has sided with the players 214 times, and the team 286 times.

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There you have it! Hopefully this answers all of your questions about MLB arbitration, but let us know if we missed anything or any other questions you may have in the comments!