Who won arbitration in 2019— players or owners?

The labor war between players and owners rages on.

Free agency is the most prominent battleground, but if the open market is Gettysburg, arbitration is Antietam. Of the 750 players on the 25-man roster and 1,200 on the 40-man, more than 200 were arbitration eligible.

Each of these players, who have accrued somewhere between two and six years of MLB service time*, must negotiate with management for the upcoming season’s salary. Most reach a settlement, but a handful of them proceed to the hearing. It’s a broken system in many ways, as explained thoroughly by FanGraphs’ Sheryl Ring. (Highly recommended reading!)

MLB Trade Rumors tracks arbitration settlements and hearing results. MLBTR’s Matt Swartz has developed a useful model for projecting arbitration salaries. By comparing the projections with the actual results, we can see who won the upper hand in 2019’s arbitration.

Below, I’ll review some of the bigger takeaways from the data. If you’d like to see all of the results, including individual players and teams, you can view my full spreadsheet here.

Big Picture

Let’s get straight to the point: the players lost. Swartz’s model projected a total of $831.53 million for 201 players (not including Aaron Nola and Luis Severino who signed multiyear extensions). The final settlement amount was $816.41 million. The players will earn only 98.18 percent of their projected amount, missing the mark by $15.11 million.

It actually gets worse if you remove the one clear outlier. Jacob deGrom agreed to a $17 million dollar salary, which was a whopping $4.1 million more than his $12.9 million projection. We’ll get into individual players more in a bit, but the next best ‘overearner’ was only $1.4 million above projection. If we exclude all 2018 NL Cy Young winners, players underperformed their projections by 97.65 percent, or $19.21 million.

However, there is a clear difference between the 191 players who reached an agreement before arbitration and the 10 who went through with the hearing. The players who settled received only 97.82 percent of their projected amounts. The players who had the hearing actually earned more than their projections— 102.96 percent.

There were two players who won their arbitration case, yet still earned less than their MLBTR projections because they filed for a lower salary than the model expected. Blake Treinen filed for $6.4 million, whereas the model had him earning $6.6 million. Carlos Correa filed for $5 million, when the model valued him at $5.1 million.**

When the 10 players who went to arbitration are compared to the midpoint between their number and the team’s, they actually fared even better. These players beat the midpoint by a combined $2.89 million, or 105.08% of the midpoint values.**

Arbitration hearings are notoriously nasty. Imagine sitting through hours of your boss belittling you, picking out all of your faults in front of an independent arbiter. It’s not an experience anyone would enjoy; hence the high amount of settlements. That being said, players and their agents might want to consider biting the bullet more often. There’s a clear financial advantage for sitting through one excruciating meeting.

While the players did not do well overall, this is still an improvement over last year. In 2018, the players did so poorly, that they averaged a loss of $150,000 per player. In 2019, it was only an average loss of $80,000.

Winners and Losers— Players

Unsurprisingly, the five players who outperformed their projection by the most money are all superstars.

Trevor Bauer is one of the ten players who proceeded with his arbitration hearing, which he won. It makes sense that four of these players earn very large salaries. It’s easier to outperform by more money when we’re dealing with larger amounts. Even Corey Seager, who’s salary is considerably lower than the others, is not your run-of-the-mill shortstop with 115 plate appearances. His salary reflects his talent much more than his 2018 stats.

Here are the top five players by percentage:

Again, star status appears to be something of a factor. Seager and deGrom are present once more, while the Twins sell a lot of Byron Buxton jerseys. I can’t really explain Robbie Erlin, but after three and a half Tommy John surgeries, can anyone claim Jonny Venters didn’t earn a little extra money?

Congratulations to all the players listed above. You earned quite a bit more money than expected! Here’s the other side:

Just as with the top five players by dollar, it makes sense that the bottom five have relatively high salaries because there’s more wiggle room. Still, these players combined to leave $8.17 million on the table. They’re responsible for more than half of the overall losses taken by the players.

The bottom five by percentage are players of a much different caliber.

With the curious exception of Trea Turner, these players are probably grateful to have been offered arbitration at all. They could have been outright released instead, as Billy Hamilton and Justin Bour were. These lower settlements may have been necessary for the players to remain on the roster.

Winners and Losers— Teams

Things change when switching to the team point of view. The Mariners and Rangers each had only two arbitration eligible players, whereas the Red Sox had twelve. The quality of those players varies as well, as does their level of service time and previous salary. These are all critical factors in the arbitration process.

Four teams handed out at least $1 million more than their projections. The Mets led the way with $3.94 million over projection— all of which went to deGrom. The Dodgers were right behind them at $3.04 million over, led by Seager. Boston ($1.1 million) and Cleveland ($1 million) were the next most generous.

By percentage, the Dodgers and Mets again gave out far more than everyone else— 114.12 and 111.19 percent respectively. No other team surpassed 104 percent.

By comparison, twelve teams finished more than $1 million under projection. The stingiest teams were the Reds and Tigers, tied with $-2.78 million. They were followed closely by the Yankees and Cubs at $-2.76 and $-2.67 million.

Far and away, the Royals stymied their players the most by percentage. They capped them at just 64.47 percent of their projections! Here are their three arbitration eligible players:

While Brian Flynn and Cheslor Cuthbert certainly didn’t do well, Jesse Hahn is the one that stands out. He didn’t pitch at all in 2018 following Tommy John surgery, and he isn’t expected back until the middle of this season. The rebuilding Royals are hoping he can come back and establish value before the trade deadline, but they’re only willing to gamble $800,000 on that happening.

Takeaways

These settlements have long-term consequences. Each player’s salary is a major determining factor in next year’s arbitration. It’s impossible to tell exactly, but losing $100,000 as a Super Two probably costs a player more than $1 million over the entirety of their arbitration years.

Once again, the players need to do a better job. This is at least the second year in a row in which they’ve failed to meet projections. Given that the players who went through with arbitration did so much better, more of them should play hardball in negotiations. If the team isn’t willing to meet demands, let the arbiter decide. It seems to work out better in the end.

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*-Players with at least three years of service time are arbitration eligible every year until they reach free agency, which is after they accrue six years of service time. Some select players with more than two but less than three years of service time get to hit arbitration a year early. These are called Super Twos. Here’s the full explanation from MLB.com.

**-Thanks to Tom Tango (@tangotiger) for pointing out Treinen won arbitration, but “lost” when compared to the model. Further thanks to Tango for suggesting players who went to hearing be compared to the midpoint.

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Daniel R. Epstein is an elementary special education teacher and president of the Somerset County Education Association. In addition to BtBS, he writes at www.OffTheBenchBaseball.com. Tweets @depstein1983