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Friday, January 23, 2009
The Tampa Bay Rays and the "File-and-go Strategy"

Bill Chastain, an reporter covering the Tampa Bay Rays, wrote an informative piece on January 20 about Willy Aybar and Dioner Navarro’s salary arbitration negotiations with the Rays. (“Aybar, Navarro will go to arbitration; Pair of players unable to come to terms with Rays before deadline). The article outlines the Rays’ “file-and-go strategy,” and it contains a number of quotations about the team’s philosophy from Gerry Hunsicker, Senior Vice President, Baseball Operations. It is worth reading if you are interested in baseball labor relations. This has been the club’s policy for some time under Andrew Friedman, Executive Vice President of Baseball Operations.

As Bill Chastain points out in the article, “Josh Paul is the only player to go to arbitration during Friedman's tenure and the backup catcher lost on both occasions.” Those two hearings were in 2006 and 2007. In 2007, Paul requested $940,000, and the team offer was $625,000. The arbitration panel of Robert Bailey, Richard Bloch and Christine Knowlton sided with Tampa Bay. In 2006, Paul wanted an increase from $450,000 to $750,000 and Tampa Bay countered with a modest increase to $475,000. The arbitration panel for that hearing was Dan Brent, Margaret Brogan, and Elliott Shriftman.

In 2002, the team went to a hearing with Esteban Yan. Yan was seeking an increase from $743,000 to $2,400,000, and Tampa Bay felt that $1,500,000 was the appropriate figure. The arbitration panel of Dan Brent, Roger Kaplan, and Carol Whittenberg agreed with the team. After the Phillies lost to Ryan Howard last year for their first setback at a hearing (the Phillies are now 7-1 in their 8 hearings), the Rays became the only team with a perfect winning record in arbitration hearings.

After reviewing the exchanged numbers between the two parties, I thought I spotted an interesting point. The differences between the two figures are amongst the closest of all of the 46 exchanged figures this year.

Willy Aybar
2008 salary = $401,200
Team offer = $900,000
Player request = $1,050,000
Difference = $150,000
Midpoint = $975,000

Dioner Navarro
2008 salary = $412,500 (base salary) - $10,000 for making the All-Star team
Team offer = $2,100,000
Player request = $2,500,000
Difference = $400,000
Midpoint = $2,300,000

I have at least two thoughts about this. If the parties were that close, why couldn’t they get a deal done before the deadline? Second, does the “early deadline” prompted by the “file-and-go strategy” help push the two parties closer to each other? One of my arguments has been that salary arbitration usually works because most of the time the parties agree to a figure at the midpoint or slightly below the midpoint.


2 thoughts:

1) Why does the fact that the two parties reach an agreement near the midpoint evidence that salary arbitration "works"?

2) I don't know the answer to this questions, but what are the "costs" of salary arbitration? Is outside legal counsel brought in for these situations (for either side)? Does the expense of arbitration come out of the agent's commission? If the costs or arbitratin are significant, I agree that arbitrations where the parties are only $150,000 off seem fairly inefficient,

Anonymous Anonymous -- 1/26/2009 4:50 PM  

Look at the case of Josh Paul, where his salary request and the team's offer were clearly not in line. Had Paul behaved rationally and been willing to settle for a more reasonable figure, he could have maximized his salary above the figure he got. Instead, arbitration penalized him. If the difference between the offer and the request is small, that indicates that the threat of arbitration has caused at least one of the parties to reconsider the chance that they'll get a favorable decision on a number further away from that midpoint.

Anonymous Tom Flesher -- 1/27/2009 1:39 PM  

Your suggestion that the sides should agree somewhere around the mid-point assumes that the two sides know what the other's filing number is going to be before hand. That is not the case. Much of the strategy in an arbitration case is the filing number, and neither side divulges their figure to the other before the actual exchange. To settle "close to the mid-point", etc. would require both sides to know this number in advance. Because of the Rays philosophy of "file-and-trial" there can be no talks after the numbers are exchanged, and thus it is hard for the sides to agree before the exchange to a number close to the mid-point - a number not known until after the exchange.

Anonymous Anonymous -- 1/27/2009 5:52 PM  

The Tampa Tribune's Marc Topkin reports that the Rays and catcher Dioner Navarro have an arbitration hearing date set for February 9.

Navarro's representatives have requested $2.5MM and the Rays have offered him $2.1MM. An arbitrator will decide between one of the two figures and announce his decision a few days after the hearing. Navarro hit .295/.349/.407 last season with seven dingers and 54 RBI.

Blogger Pbenn001 -- 1/28/2009 1:42 PM  

I am posting an answer to the first point in the first comment on the main part of the board.

Blogger Ed Edmonds -- 1/28/2009 4:23 PM  

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