Francisco Lindor and Baseball’s Arbitration Problem

This is Mike Hattery’s fourth piece as part of his September residency at FanGraphs. Hattery writes for the Cleveland-based site Waiting for Next Year. He can also be found on Twitter. Read the work of all our residents here.

As Francisco Lindor launched his 33rd home run of the season on a peaceful afternoon this past Saturday in Seattle, his future in Cleveland seemed to be weighing on the minds of many, as tweets featuring the phrase #Lifetimecontract flooded my timeline. While I’ll leave the precise terms of a potential Lindor extension to others, Lindor’s evolving profile remains a matter of interest as it relates to the arbitration process.

As Travis Sawchik recently documented, Lindor’s past two seasons have been quite different. Very good, but different nonetheless. In 2016, Lindor rode an impressive defensive performance to a six-win campaign. This year, he’s on pace to record roughly the same WAR total but has arrived at that point by different means, more than doubling the career-high home-run total (15) he produced last season.

On the open market, Lindor’s 2016 and -17 seasons would likely be treated fairly similarly in terms of average annual value. While imperfections certainly exist in the defensive data, the marketplace appears to pay players accordingly, whether the runs are added with the bat or saved with the glove. Major League Baseball’s arbitration structure, on the other hand, is far more archaic.

Consider, first of all, the process by which appropriate salaries for arbitration players are determined, as outlined on pages 18-23 of the 2017-2021 MLB Collective Bargaining Agreement:

The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries (see paragraph (11) below for confidential salary data), the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance (subject to the exclusion stated in subparagraph (b)(i) below). Except as set forth in subsections 10(b) and 10(c) below, any evidence may be submitted which is relevant to the above criteria, and the arbitration panel shall assign such weight to the evidence as shall appear appropriate under the circumstances.

The language here provides enormous discretionary powers to the arbitration panel in terms of how to interpret and weight the evidence presented to them. The inclusion of “mental defects,” in particular, evokes an antiquated version of player valuation.

One positive development of the new CBA is that allows for the use of advanced statistics available in the public sphere, a la the sort found at FanGraphs and Baseball Prospectus, in arbitration hearings. The CBA also forbids the use of the following: “Statistics and data generated through the use of performance technology, wearable technology, or ‘STATCAST,’ whether publicly available or not.” The ban on Statcast data might actually represent another win for the players: as R.J. Anderson noted in August, agencies and players have limited access to data — and even more limited staffs to help them wield it in their favor.

Even with the introduction of new metrics, it’s likely that certain players will have trouble documenting their worth to an arbitration panel. In an era of increasing specialization, platoon players, left-handed specialists, and the Chris Devenski-type multi-inning reliever all possess greater value than their counting statistics might otherwise suggest — value that is nevertheless clear to organizations. Convening a sort of extra-judicial hearing where one party (the teams) isn’t incentivized to adduce its best evidence should raise questions as to the validity of the process.

Unfortunately, players are confined to publicly available data, which certainly has value. How much value remains to be seen, however. When statistics like runs batted in, home runs, wins, and saves, have been around since the dawn of time (or so it feels), attempting to establish metrics like FIP or WAR as the new industry standard is sure to be a challenge. And again, these metrics will never rival the in-house valuation systems created by clubs, which aren’t disclosed at these hearings due to proprietary data concerns.

Indeed, the massive discretion granted to arbiters, as well as the huge advantages for teams in terms of culling and employing data, creates an imbalanced arbitration process.

In a somewhat ironic twist, however, MLB clubs have benefited considerably from the home-run surge that has dominated baseball over the past two years. The accumulation of those counting stats by players comes with a financial cost for teams.

And so, a return to Francisco Lindor. Lindor isn’t eligible for arbitration until 2019, so it’s possible that, following another year of play, circumstances will different. However, if any team has benefited from the home-run spike or “elevation revelation,” it’s the Cleveland Indians. Lindor and Jose Ramirez are at the forefront of it, with the former having surpassed his previous career-high home-run total by at least 18 while also producing an isolated-power figure 100 points better than last year.

Lindor has produced more of his value via the homer this year. (Photo: Keith Allison)

WAR has large error bars, of course, so one can’t say that Lindor’s 2017 season has been an exact replica of his 2016 campaign, just with more homers and less defense. Nonetheless, the overall value accumulation is similar. In arbitration, however, the 2016 version of Lindor would likely be paid far less than the 2017 one.

In 2015, Sean Dolinar and Alex Chamberlain authored a detailed analysis of the arbitration process, including the value of component statistics. Not surprisingly, home runs were the most valuable traditional statistics, outside of saves, for players. For position players, home runs were of huge value — roughly $50,000, as compared to the roughly $200,000 of the non-traditional WAR. In many ways, home runs outpaced almost any other statistic in terms of their capacity to inflate arbitration figures. Indeed, that inflation led clubs to non-tender both Pedro Alvarez and Chris Carter for fear that their home-run totals would lead to arbitration awards that overstated their actual value.

Such outcomes are due, in part, to the discretion granted to arbiters of these cases. However, 2017 might bring forth changes and a more holistic evaluation of player value in the arbitration process. The home-run spike for players like Lindor and others will force organizations, the party with the strongest ability to construct an analytical case, to argue the diminishing value of elevated home-run totals due to the home-run environment — and, in turn, the need for a more comprehensive evaluation system.

As the 2017 season draws to a close, the players’ union has until 2022 to figure out how to construct an arbitration system that better protects players and performs closer to actual market valuations. However, the home-run spike, and the costs associated with it in arbitration, may serve to force a more efficient, progressive arbitrative process.

We hoped you liked reading Francisco Lindor and Baseball’s Arbitration Problem by Michael Hattery!

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Mike is a student at Case Western Reserve University School of Law. He has served as a Resident at FanGraphs, and writes at Waiting For Next Year. Follow him on Twitter @snarkyhatman.

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Matt1685
Member
Matt1685

“Convening a sort of extra-judicial hearing where one party (the teams) isn’t incentivized to adduce its best evidence should raise questions as to the validity of the process.”

Say what? How do you figure that each side is not incentivized to adduce its best evidence? Each party is responsible for arguing its case before the arbitration panel and is naturally incentivized to provide evidence to present its own case and not the case of its opponent. Would you raise questions about the validity of debate because each debater is not incentivized to prove the opposing argument for the opponent? Am I misunderstanding what you are saying or are you actually saying that the teams should be forced to work against themselves in the process? Maybe the next time you negotiate for a car you should be forced to reveal that you have no ride to work without the purchase, or the next time you ask for a raise at work you should have to reveal that you have no other job offers.

The arbitration process should follow, and naturally lag behind, the open market. Arbitrators should look at how teams spend their money on the open market – at what they value – and make their decisions accordingly. There will naturally be a lag, of course. The market trend must first be established and only then can arbitrators follow it. I have a hard time believing that players and their agents can’t afford to analyze the players’ data and their value with respect to the recent open market. I do not believe the teams have a significant advantage. Perhaps the players’ union can hire a consultancy firm for all the players. If there is value to it, the players should pay into such a thing and then the teams shouldn’t have an advantage. If the arbitrators will listen to advanced value measurements from the teams when they present it, but only listen to “counting metrics” from the players then it is simply the arbitrators themselves that must be changed. If the arbitrators refuse to follow the valuations of the open market then they should likewise be changed, but if this is the case I don’t understand the discussion about teams having an advantage.

But perhaps most of the perceived “injustice” is the result of the currently rapid rate of change of the assessment of value in baseball and the natural and necessary lag that the assignment of value through the arbitration shows in comparison to the open market.

TKDC
Member
Member
TKDC

Teams also have to be a bit wary about what evidence they try to push. Agents all try their hardest to get their clients to sit in on these hearings, and most do. The strategy here is that teams are less likely to be as forceful in badmouthing the player if he is sitting right there. This is not some one-off exercise. This is an ongoing relationship. I can’t imagine a team thinking it is worth it to start talking about their players’ mental defects or lack of leadership or fan appeal during a hearing.

jsolid
Member
jsolid

Dellin Betances says hi.

TKDC
Member
Member
TKDC

Yes, and Betances isn’t the first player to have a team make a case against him. But they didn’t badmouth him in any sort of personal way. They just said “derr no saves derr.”

Matt1685
Member
Matt1685

Dellin Betances tried to get paid ahead of the curve. He tried to get paid as a closer because of the value he (rightly) thought he provided to the team. But the open market had not yet firmly established a closer-level market for such relief pitchers.

As one example, look at the difference between David Robertson, who signed before the 2015 season for 4 years and $46 M and came with a draft pick penalty, and Andrew Miller, who signed during the same offseason for 4 years and $36 M and was not tied to a draft pick penalty. Miller may have accepted a smaller offer with New York than he could have gotten elsewhere, but I doubt the offer bridged the gap of $10 M plus the draft pick. The difference was that Robertson had positive experience closing and Miller did not.

I think the New York sports media rallied around Betances and decided to blow the whole situation out of proportion. They also don’t seem to like Randy Levine and relish any opportunity they can muster to put him down.

Travis L
Member
Member
Travis L

I interpreted that statement to mean, “teams internally evaluate/represent a player’s value differently than they represent said players value in an arb hearing.”

Teams may know a player is great at defense, and understand they receive a ton of value from it, but they don’t need to include that value in the amount they submit.