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Thursday, January 31, 2008
 
Salary Arbitration - Most Deals Are Below the Midpoint

It has been a quiet few days on the arbitration front. Since my last posting, two $1 million deals were signed (Esteban German - Kansas City Royals and Todd Wellemeyer - St. Louis Cardinals). Wellemeyer’s deal includes $100,000 in performance bonuses.

A number of reporters have written that the midpoint is a common settlement point. My research covering the past four years placed 45% of the deals below the midpoint while 22% were actually at the midpoint. For the purposes of my analysis, I am using the base salary. In some instances, the parties agree to performance bonuses that often take the deal to the midpoint or even slightly above the midpoint. My research totals are outlined below:


Multiyear deals - 2004 (5), 2005 (8), 2006 (7), 2007 (10)
Above the midpoint - 2004 (1), 2005 (3), 2006 (8), 2007 (4)
At the midpoint - 2004 (6), 2005 (5), 2006 (9), 2007 (12)
Below the midpoint - 2004 (8), 2005 (21), 2006 (14), 2007 (22)


Totals for 2004-2007


Multiyear deals - 30 (21%)
Above the midpoint - 16 (11%)
At the midpoint - 32 (22%)
Below the midpoint - 65 (45%)
Total - 143 (99% - a result of rounding fractional percentages)





2 Comments:

You mention some deals are either below or above the midpoint. Are many of the deals a significant distance from the midpoint? I'd be interested to see a breakdown of that.

Anonymous Ken -- 1/31/2008 3:03 PM  


Most of the deals are pretty close. I will create a chart for at least one of the recent years. I have thought about determing the percentage away from the midpoint and creating a category for listing those that are within a certain range of the midpoint.

Blogger Ed Edmonds -- 1/31/2008 10:46 PM  


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