Arbitration awards: the 40/60/80 estimate is out the window

[Frobby]

Fangraphs’ Ben Clemens did a study of all arbitration-eligible players over the last 9 years, to see what they were paid in $/WAR over the major league minimum.   He broke the players into three groups: position players, starting pitchers and relievers.    He also distinguished between Super-2’s and those on the regular arbitration schedule.  For his study, he treated all negative WAR players as zero WAR, since a player can’t make less than the minimum.  

I won’t republish Clemens’ detailed findings, which you can find in the article linked at the bottom, but here’s a quick summary:

1.   $/WAR for position players and starting pitchers were roughly equal at each level of arbitration, with relievers making about 30% more in year 1 and 70% more in years 2 and 3 in terms of $/WAR.

2.  Super 2’s earn about 20% less than the fully-eligible players in years 1-3, then in year 4 earn about 17% more than a regular 3-year Arb player.   The year 4 exception is relievers, who for some reason get paid 40% more than their Arb 3 counterparts.   

3.  (This part is my deduction from Clemens’ numbers.)  The old estimate that players make 40/60/80% of what they’d make in free agency is way too high and not in the right proportion.   A more accurate estimate for players on the regular Arb track would be something like 20/33/55.  For the Super 2’s it’s about 16/26/44/67.  (This is not really apples to apples with the old 40/60/80 estimate because these estimates are for amounts over the minimum, whereas 40/60/80 was just raw comp, but the difference between the two methods would not be that significant and varies with the quality of the player.). You can see that it’s hugely advantageous for owners to game the service time at the start of the year even if the player becomes a Super 2.   It saves them money even during the Arb years.  It’s no wonder the players are up in arms about the owners gaming the system.

https://blogs.fangraphs.com/an-arbitration-compensation-update/

[Sports Guy]

It’s a system agreed to by the players. There is no gaming of it.  It’s operating within the confines of what the rules are.

Im sure the owners are annoyed by the guaranteed contracts and their inability to get out of deals of crappy players who stop caring but hey, that’s a system they agreed to as well, so you have to deal with it.

[Frobby]

1 hour ago, Sports Guy said:

It’s a system agreed to by the players. There is no gaming of it.  It’s operating within the confines of what the rules are.

Im sure the owners are annoyed by the guaranteed contracts and their inability to get out of deals of crappy players who stop caring but hey, that’s a system they agreed to as well, so you have to deal with it.

I doubt when the players agreed that 6 years was the cutoff for FA they imagined that the owners would hold back good players just long enough so they’d be short of 6 years.   Maybe they should have.   In any event, there are good reasons to change it.  

[Sports Guy]

14 minutes ago, Frobby said:

I doubt when the players agreed that 6 years was the cutoff for FA they imagined that the owners would hold back good players just long enough so they’d be short of 6 years.   Maybe they should have.   In any event, there are good reasons to change it.  

If they didn’t realize that, they are morons and get what they deserve just out of principle.

Not saying it shouldn’t change but if you don’t agree with it to begin with, this isn’t an issue.

[wildcard]

5 hours ago, Frobby said:

Fangraphs’ Ben Clemens did a study of all arbitration-eligible players over the last 9 years, to see what they were paid in $/WAR over the major league minimum.   He broke the players into three groups: position players, starting pitchers and relievers.    He also distinguished between Super-2’s and those on the regular arbitration schedule.  For his study, he treated all negative WAR players as zero WAR, since a player can’t make less than the minimum.  

I won’t republish Clemens’ detailed findings, which you can find in the article linked at the bottom, but here’s a quick summary:

1.   $/WAR for position players and starting pitchers were roughly equal at each level of arbitration, with relievers making about 30% more in year 1 and 70% more in years 2 and 3 in terms of $/WAR.

2.  Super 2’s earn about 20% less than the fully-eligible players in years 1-3, then in year 4 earn about 17% more than a regular 3-year Arb player.   The year 4 exception is relievers, who for some reason get paid 40% more than their Arb 3 counterparts.   

3.  (This part is my deduction from Clemens’ numbers.)  The old estimate that players make 40/60/80% of what they’d make in free agency is way too high and not in the right proportion.   A more accurate estimate for players on the regular Arb track would be something like 20/33/55.  For the Super 2’s it’s about 16/26/44/67.  (This is not really apples to apples with the old 40/60/80 estimate because these estimates are for amounts over the minimum, whereas 40/60/80 was just raw comp, but the difference between the two methods would not be that significant and varies with the quality of the player.). You can see that it’s hugely advantageous for owners to game the service time at the start of the year even if the player becomes a Super 2.   It saves them money even during the Arb years.  It’s no wonder the players are up in arms about the owners gaming the system.

https://blogs.fangraphs.com/an-arbitration-compensation-update/

This is good information about what the arbitrators do.  But I would like to know how and why they award at these percentages.  Do they use a formula?  Is it on past awards?   Is there a way to look at the method they use and boost the future awards to address the player's request for higher salaries for players while under team control?

[Frobby]

1 hour ago, wildcard said:

This is good information about what the arbitrators do.  But I would like to know how and why they award at these percentages.  Do they use a formula?  Is it on past awards?   Is there a way to look at the method they use and boost the future awards to address the player's request for higher salaries for players while under team control?

There isn’t a mechanistic formula.   These numbers are averages and include players who were eligible for arbitration but didn’t actually go to arbitration, either because they settled for that year or because they entered into a long term deal that covered some of the Arb years.   The CBA gives general factors to be considered but no formula.