Sports Law Blog
All things legal relating
to the sports world...
Friday, November 06, 2009
The Changing Landscape of Salary Arbitration-Eligible Players and Free Agents in Baseball

With the Yankees winning the World Series last night, the off-season officially began this morning. The clock starts ticking on the free agent filing period of 15 days after the end of the World Series. Buster Olney appeared on Mike and Mike on ESPN this morning. He started his segment with the same point that he made in an article on ESPN Insider on Sunday titled “Baseball's Next Great Economic Disparity.”

Let me quote from his posting:

“Baseball's financial structure appears to have reached a tipping point that can be defined simply. ‘The arbitration process is now outdated,’ said a highly ranked executive, ‘because the players can get more money in arbitration than they would through free agency.’ So now teams are about to adjust to this reality, and this is why multiple general managers expect that dozens of young players with three, four and five years of major league experience will be cut loose rather than offered arbitration in the next 41 days. Not a handful, but dozens.

During the past 48 hours, I went through the rosters with some executives and counted 93 solid non-tender candidates -- players whose current teams simply won't offer them contracts for 2010. If the final numbers come close to that figure, close to 300 veteran players will be looking for jobs in the winter, a staggering number that will inevitably depress the asking prices for free agents.”

Examples that Olney offered in his posted article were J.J. Hardy of the Milwaukee Brewers, Jeremy Hermida of the Florida Marlins, and Bobby Jenks of the Chicago White Sox. In both the article and this morning on Mike and Mike, Olney offered that the big market teams will be able to sign their top choices of both traditional free agents (six years of service) and non-tendered arbitration-eligible players. Small market teams might benefit from a depressed market overall for free agents.

I think that Buster Olney is right on top of this issue. The first two important dates to remember are December 1 and December 7. December 1 is the last day for teams to offer arbitration to their former players who became free agents. Monday, December 7, is the last day for a former free agent to accept arbitration. The non-tender date is December 12. After free agents file, teams have the right the offer arbitration. Often they will do this for projected Type A and Type B free agents to gain a draft choice if the player turns down the offer. Players turn down the offer to talk to all teams about a deal for the upcoming year. If they accept arbitration, they have basically agreed to a contractual relationship with their existing team. They can negotiate a deal or allow the arbitration panel to decide the appropriate amount. This year might be strategically different, however, because of the changing landscape. There will be a lot more free agents this year based on Olney’s prediction. If you offer arbitration to a Type A or Type B free agent, that player and his agent might just accept arbitration when they would have turned it down previously with different market conditions because an arbitration panel might award a figure that is higher than the deal that the player and agent could get on an open free agent market.

I will be monitoring all of this activity in the off-season, and I will post occasional musings.


What is the difference between a Type A and Type B player? Is this defined in the CBA?

Blogger Jeff -- 11/06/2009 11:02 AM  

In a November '06 blog entry, ESPN's Keith Law ( revealed a lot of good info about how Elias determines whether a free agent is Type A, Type B, or neither.

First let's start with the positions Elias uses. All players (not just free agents) are put into one of five groups as seen below. Position is designated as the position at which the player appeared the most over the last two seasons.

* Group 1: first basemen, outfielders, and designated hitters
* Group 2: second basemen, third basemen, and shortstops
* Group 3: catchers
* Group 4: starters
* Group 5: relievers

Here are the stat categories used for each of the five position groups.

* 2B/3B/SS: PA, AVG, OBP, HR, RBI, Fielding percentage, Total chances at designated position
* C: PA, AVG, OBP, HR, RBI, Fielding percentage, Assists
* SP: Total games (total starts + 0.5 * total relief appearances), IP, Wins, W-L Percentage, ERA, Strikeouts
* RP: Total games (total relief appearances + 2 * total starts), IP (weighted slightly less than other categories), Wins + Saves, IP/H ratio, K/BB, ERA

Blogger Pbenn001 -- 11/06/2009 12:14 PM  

Forgot to mention: Check this link out as well for the current Elias Rankings and see who's a Type A and Type B, or neither.

Blogger Pbenn001 -- 11/06/2009 12:16 PM  

In related news: Hermida to the Red Sox and Hardy to the Twins.

Blogger Pbenn001 -- 11/06/2009 12:44 PM  

Type A and Type B free agency categories are establish under Article XX B.(4) of the current collective bargaining agreement. A Type A free agent is a player who ranks in the "upper twenty percent (20%) of his respective position group." A Type B free agent is a player "who ranks in the upper forty percent (40%) but not in the upper twenty percent (20%) of his respective position group."

Pbenn001's posting lists the player groups that Elias Sports Bureau uses to rank the players.

I had already started composing a post on the Hermida trade. I will add the Hardy trade to that post.

Blogger Ed Edmonds -- 11/06/2009 3:06 PM  

This is interesting. If teams really fail to offer arbitration to a good amount of young players, it's going to flood the free agency market and decrease values. It's also going to mean that teams are going to continue the trend of developing young talent. They'll use them for only a couple of years, and then let them go in favor of cheap talent. It becomes a cycle. Already last year there were more unsigned free agents with big league experience than at any other time.

I wonder if there is going to be a growing salary disparity between the truly elite players and the "run of the mill" big leaguer that is more replaceable? The elite will still get their money, but the journeyman will be replaced by the youngster making $400,000.

Blogger gbroshuis -- 11/09/2009 11:49 AM  

Thanks a lot for this information.It is really a great info on changing landscape of salary arbitration for players.

state labor laws

Blogger Yaritza -- 11/10/2009 12:20 AM  

You got a really useful blog I have been here reading for about an hour. I am a newbee and your success is very much an inspiration for me. Please come visit my site Jacksonville Business Directory when you got time.

Blogger rr8004 -- 11/28/2009 11:59 PM  

You got a really useful blog I have been here reading for about an hour. I am a newbee and your success is very much an inspiration for me. Please come visit my site Local Business Directory Of Jacksonville U.S.A. when you got time.

Blogger rr8004 -- 11/28/2009 11:59 PM  

Post a Comment