The Braves, Jason Heyward, File-to-Trial & Arbitration

The Braves are going to arbitration with Jason Heyward over $300 thousand dollars. It’s a wonderful sentence, full of so many words that could set you off in a million different directions. And so I followed those strings, talking to as many people involved in arbitration as I could. Many of those directions did lead me to denigrations of arbitration, and of the file-to-trial arbitration policy that the Braves employ. There’s another side to that sort of analysis though. Arbitration is not horrid. File-to-trial policies have their use. This is not all the Braves’ fault.

Salary arbitration has a goal, and to the most part, it accomplishes that goal. Designed to reward teams for investing in players and developing them, it keeps players with their drafting teams for six (service) years after their big league debut. And because players should be rewarded for their work — and some more than others — it manages to slowly ramp up their compensation at market-like levels.

It’s how well it does the last thing that seems to be the sticking point. Reds Vice President Bob Miller recently went on a rant against arbitration, and those were the things he pointed out:

One common misconception about the process, Miller said, was “it’s not the talent of the player.”

“It is purely based on stats based on what they’ve done in their career compared to others of that same service class, what they’ve been paid previously,” Miller said. “There are so many stats that it’s like law. You can grab this one paragraph of a clause as opposed to this. In certain classes, relief pitchers are done by holds. …

“Here’s the ridiculous part: First-year arbitration-eligible closers make more than the best starting pitchers. … It’s out of whack, it’s a very poor process and we muddle through it.”

It’s not breaking news that the arbitrator sitting at the end of the process is not a subject-matter expert. That’s the way with arbitration in most cases across the legal landscape, and to some extent, it could be by design. “Arbitration is like a hallway,” one baseball person told me, “and you have to come to an agreement by the end of the hallway, or you both play Russian Roulette.” He continued to point out that if someone like Keith Law was sitting on the bench, teams might be happy to go to trial more often. Trial is onerous and expensive and time-consuming. So, in a way, having someone from outside baseball sitting at the end of the process gives both the player and the agent an impetus to come to an agreement with the other side. That’s how you have zero arbitration cases in 2013.

But are the arbitrators such novices? Tom Van Riper at Forbes called back to the beginnings of the practice, and yeah, that sounds bad:

Rich Gedman, a Red Sox catcher who batted .295 in 1985, pointed out at a hearing that his batting average was among the twenty highest in the league. Red Sox officials, presumably with a straight face, argued that Gedman’s average didn’t even crack the top 100. How? By showing the panelists a list of every player in the AL, including those who batted, say, .333 by going 3-for-9. Gedman lost, settling for $650,000 instead of $1 million. His career went down the tubes fairly quickly after that.

But Van Riper’s piece admits to a “maturing of the system,” and it’s hard to argue that there haven’t been improvements. Arbitrators were given the Bill James handbook a couple years back, and ostensibly anything explained within is fair game at the hearing. But people involved in the system weren’t sure if the arbitrators are required to read the book, or if they consult it for cases. Arbitrators that belong to the National Academy of Arbitrators take part in seminars, peer review sessions, and discussion of emerging cases that help them understand their particular field of arbitration better. Being assigned to arbitrate baseball is a plum job, and there are few that get the honor — there isn’t a peer-based education system in place. Perhaps this would be a way to improve outcomes, if management and labor both find a way to help educate the arbiters that come in.

In any case, there are probably some limitations to the system placed upon it by the mere existence of an arbitrator at the end of the filing process. That can be a good thing to keep people from going to court, and since everyone agreed that going to the arbitrator was a worst-case scenario, there’s probably not a lot of incentive to change the system after 2013 yielded zero cases.

And it’s also, to some extent, unavoidable. Who else will be able to come in and rule upon a player’s market value — that’s also not firmly entrenched in either the labor or management camp? Imagine if a former union man sat at the table. Or a former general manager. Parallels to football and basketball don’t work — their drafts are shorter, there’s no real minor leagues, and so creating a rookie pay scale based on draft position works better. It would be nonsensical to pay a lower draft pick less after five years in the minors have molded him into a star.

Once you’ve drilled down past the first layer, there are more questions. Certain teams practice ‘file-to-trial’ — meaning that once the arbitration figures are filed, the team and the player are headed to court. The teams that aren’t file-to-trial often settle over the next few weeks and never make it to trial, even after filing numbers. Some settle outside the courtroom, but once you head into the courtroom, the arbitrator can only pick the player’s number or the team’s number. The Braves are a file-to-trial team.

The assumption is that this sort of thing leads to more trials. But the Braves — going to trial this year with three players — hadn’t gone to trial with anyone since John Rocker since 2001. And there are plenty of file-to-trial teams, and nobody went to trial last year. If you use a strict definition of file-to-trial provided by Tim Dierkes — the Blue Jays, Braves, Marlins, Rays and White Sox — four of the 17 arbitrator-heard cases since 2010 have come from that group (three from the Marlins). But ask around, and most people involved in arbitration think the true list of file-to-trial teams is larger. Open it up to some of the suspected group — the Brewers, Pirates, Nationals and Indians — and suddenly you explain away 11 of the last 17 cases.

If arbitration is on some level more efficient because nobody wants to go to trial, and this file-to-trial policy leads to more trials, is it a bad policy? Not necessarily. After all, both involved parties know about the policy, so it’s just a different deadline. As Alex Anthopolous said to Jordan Bastian, “The thought was really it’s hopefully to encourage more dialogue in negotiations with the goal of continuing to avoid arbitration and continuing to try to get deals done and maybe bring both parties to the table a little bit sooner.”

Another benefit of file-to-trial is very important in Heyward’s case in particular. If an agency knows that they are going to trial after filing numbers, they’re more likely to pick a number they can be sure to defend (rather than a number designed to move the midpoint in their client’s favor). Most felt that the policy results in smaller spreads between the filed numbers — voila the $300k that the Braves and Heyward’s Excel Management team are fighting over.

This year, 39 players filed numbers. One has settled. That’s in the normal range (33 to 46 over the last five years). But of those 38 remaining cases, nine are with possible file-to-trial teams. The average spread on those nine cases is $1.6m, the average spread on all filings was $1.25m. Reach back to 2010, and the average spread on all cases is $1.18m (26% difference) and the file-to-trialers averaged… $1.17m (23% difference). Obviously we have sample issues, as well as the fact that we don’t truly know which teams are file to trial. But it certainly seems possible that smaller spreads and earlier resolutions could be a reason to go with file-to-trial.

Are there other possible (external?) reasons for this silly-seeming case? Pressure from baseball to keep salaries down? Most that I talked to didn’t think that was very plausible. You have to defend the number you pick, in the end, and baseball can’t help you in the trial even if they did express a preference over the outcome.

How about the agency at play here? Over the last five years, 23% of arbitration cases have filed numbers at all (the rest settle before the deadline). Excel Management has filed 46% of the time for their arb-eligible clients. They like to push. Maybe the philosophy works better with teams that aren’t file to trial, or maybe the agency doesn’t mind going to trial so much. Maybe they feel that, at the very least, they look like they are fighting for their players if they go to trial.

In terms of goals, arbitration seems to be working. It’s not a sexy thing to say. But if the goal is to bring market forces into the salaries of young players still under team control while also avoiding expensive trials with arbitrators, then the process is working. Outlier, aggressive numbers are unpopular with the system — it’s designed to find the middle ground, after all — so outlier results shouldn’t be common. The fact that neither side generally wants to go to arbitration court is a feature, not a flaw.

If there is a flaw with the system, it’s that it’s a bit circular. Basing things on comps means that a wobble — an outlier decision — becomes a big deal. Using saves and holds (yes these are still popular stats in arbitration discussions) puts too much emphasis on team role and rewards young closers — perhaps unfairly. A big award to a young closer begets big awards to all closers in his class. And so on.

Perhaps a few classes of players are shunned by arbitration awards. Defense-first players may not get large awards (but still get rewarded for, say, being a starting shortstop that started for his team for the large part of the year). Pitchers in pitcher-friendly parks may get nicer rewards than they are due (but park adjustments are increasingly part of the arbitration conversation). Closers might get too much money (but they might get too much money on the open market, too). Volume still wins out most of all (but at least wins may not be a big deal — the Ross Ohlendorf case is mostly praised as a victory for advanced stats, but it really just seemed to most to have been a victory of ERA over wins).

You’ll see Jason Heyward’s case in the blanks in that paragraph, maybe. Take a look at outfielders with four years of service time that have entered arbitration with a chance at an award between four and six million dollars. Look at their three-year stats going in. Despite being a corner outfielder — no doubt the Braves would rather he was classified as such — the part-time Braves outfielder has produced more defensive value than many of the center fielders in the sample. How much will the arbitrators consider this?

Jason Heyward ’14 1547 55 210 162 32 .253 .335 .438 113 10 34 29 12 $5-5.5m
Austin Jackson ’14 1899 38 292 160 42 .273 .343 .422 109 6 26 14 11 $6m
Gerardo Parra ’14 1586 25 192 130 40 .277 .337 .407 98 1 -2 37 9 $4.3-5.2m
Nelson Cruz ’12 1473 84 199 241 46 .278 .338 .534 124 2 44 -4 9 $5.5-7.5m
Alejandro De Aza ’14 1431 30 194 135 58 .278 .343 .421 107 7 19 5 8 $4.25m
Alex Gordon ’12 1160 37 163 129 23 .270 .353 .447 118 4 28 -4 7 $4.15-5.45m
Adam Jones ’12 1758 63 227 222 29 .281 .326 .455 106 7 19 -14 7 $5-7.4m
Colby Rasmus ’13 1685 60 235 194 21 .240 .314 .427 100 7 8 -9 6 $4.675m
Drew Stubbs ’14 1706 39 226 129 87 .231 .303 .353 82 19 -18 2 4 $4.1m

Maybe Heyward’s defense won’t get as much credit as it deserves. Maybe this happens to certain players in the arbitration system.

But if that’s the case, then perhaps it’s just a little tweak that the system needs. The education of the arbitrators could help — either by peers or by representatives from both sides of the table — and would be entirely normal in the broader perspective of arbitration in general. Baseball may not have wanted statistics gurus as arbitrators at first, but a little education could go a long way. Some involved in arbitration suggested that there should be a single arbitrator — group dynamics, politics, and something called the scorecard effect come into play when arbitrators work with each other on panels and see many cases. If the arbitrator knows that baseball and the players’ union pay his salary and invite him back, and he works many cases, he may (consciously or unconsciously) make sure to come down on the players’ and teams’ sides equally over time (at the possible detriment of valuing every case on its merit). The arbiter’s self-interest.

These are small changes. If baseball would like young players to both stay with their teams at a reduced price, and yet be rewarded according to market forces in some way, then arbitration is a natural result of that desire. If they would like this system to be borne by settlement and agreement between the parties, then the lack of court-room cases testifies that arbitration is succeeding. And if teams feel that file-to-trial policies beget quicker, more reasonable conversations, then they’ll just have to deal with the occasional embarrassing public arbitration hearing with two of their star players that just happen to be represented by an agency that’s happy to go to trial.

Jason Heyward is going to arbitration with his team over $300 thousand. And that doesn’t mean the system is broken.

Matt Swartz‘s work and the arbitration tracker at MLBTradeRumors were a huge help. Thanks to everyone that took the time to explain the process to me.

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With a phone full of pictures of pitchers' fingers, strange beers, and his two toddler sons, Eno Sarris can be found at the ballpark or a brewery most days. Read him here or at October. Follow him on Twitter @enosarris.

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Thank you for the detail on the arbitration process, I was unaware of how baseball ignorant the arbitrators were. It does seem that despite this that what is valued in arbitration is usually what is valued on the open market.