Revenge of the Nerds
A systematic attack to shift the balance of power has worked too well
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To be eligible for the postseason, a player must be on the 40-man roster by August 31 at 11:59 pm ET. My son snuck into the world just in time to qualify for the 2018 playoffs.
Assuming we have baseball at all this year, he’ll have experienced five World Series by the end of the year — and only two proper Opening Days.
The lockout has been a long time coming. As the game has exploded financially, MLB has wisely strengthened its Labor Relations Department. During my 10 years working in baseball operations departments, it was easy to notice the evolution of MLB’s central contract clearinghouse, often referred to as the LRD.
Many bright people work — and have worked — in the LRD. Some have worked there long enough to have gained an intimate knowledge of all financial matters around the game.
In turn, the Union’s ability to bully teams has weakened.
Arbitration, the formal process to determine salaries for players with three or more years of Major League service and less than six years’ service, has served as a breeding ground for animosity and acrimony between teams and agents. The arb process — methodical and orderly — is generally handled below the GM level. Assistant GMs, directors of baseball operations, and countless team analysts undertake research, preparation and negotiation.
Arbitration has a language of its own. There are specific statistics that are admissible and by which sides argue and arbitrators rule. Players are divided by position and service class — those with three years of service, four years, and five years.
The LRD closely manages the process. There’s a prescribed pecking order of players in each class; in a sense, certain teams are given priority because the salaries of specific players are deemed more consequential.
It’s a routine science, really. Much of player valuation is rooted in comps — players of comparable statistics from that specific grouping (service class and position) from recent years. In turn, certain cases are rather straightforward. Sure, either side may dwell on one statistic to make a player look better or worse than he actually is, but if there are recent comps in place, the case is fairly simple.
There is an arbitration exchange deadline in mid-January by which the player and the club must come to terms. If no agreement is reached, the club and the player exchange salary figures for the upcoming season; it’s the moment when both sides lay their cards on the table. Of course, the artificial deadline inspires many settlements in the final hours and minutes.
After the figures are exchanged, a February hearing is scheduled. Negotiating may continue — deals have been made on the courtroom steps — up until the time the case is brought before a panel of arbitrators.
One side wins; one side loses. There’s no middle ground once an arbitration case begins.
Both sides generally follow one of two filing strategies — either submit a salary that would be defensible in a hearing, or guess what the other side might file and come up with a number in an attempt to create an artificial midpoint for a pre-trial settlement.
I could go on and on. And for those of you who think working in baseball is all fun and games, I’d be happy to go on. Just not here. I wouldn’t do that to the rest of you.
At some point in the past 10 years, the purpose of arbitration seemed to transcend simply using recent history to determine salaries equitably; it morphed into a death match between MLB and the Union.
For the LRD, arbitration was their Super Bowl. (For many smaller agents, arbitration also presented the first crack they had at a decent payday as well as a stage upon which they could demonstrate value to their clients.) Employees of the league office had favorite teams, sure, but they don’t have a daily rooting interest in the same way that a team employee does. It became very easy to behold players as commodities. The impulse to view and value players no differently than gold, corn, or frozen concentrated orange juice took over.
This work stoppage has been more than a decade in the making. Perhaps because the league hadn’t been able to slow the escalating dollars committed to elite free agents, they targeted the free agency on-deck circle — arbitration. The league needed to find a foothold somewhere. Arbitration provided that security.
But the very specific guidelines of arbitration made it a fertile ground for combat. Arb is also the closest thing baseball has to debate club and mock trial. It was a chance for very well educated and empowered team officials to flex their intellectual muscle.
It was the one chance the nerds had to beat the jocks. Arbitration has nothing to do with how far you can hit a baseball; it’s a combination of math and rhetoric, with a sprinkle of magic. It’s a dissertation, a senior thesis.
So as I look at the cavalier and conceited approach that MLB took to the collective bargaining negotiations, I think about how this mentality may have been emboldened by recent arbitration success.
Here’s the thing, too: The LRD is good. Damn good. Teams went from being individually overwhelmed by agents and threatened by the largely imaginary PR hit of taking a good player into a hearing to quickly and collectively seizing the upper hand.
Some teams instituted a file-and-trial policy. Simply, there’d be no negotiating after numbers were exchanged. If a deal couldn’t be agreed upon before that deadline, there would be no more negotiating. See you at the hearing!
I think the Union was caught off guard. Teams refused to take calls, refused to enter into small talk or listen to an agent’s reasoning. (“Reasoning,” that is.) In turn, clubs stopped negotiating against themselves and bet on their ability to win a hearing.1
And as teams grew their baseball operations departments, they became better suited to dedicate more hours to this singular purpose. Some clubs also elected to outsource the work, hiring specialty law firms. As far as baseball responsibilities go, case preparation might be the easiest to farm out. Plus, by doing so, teams distance themselves from the unpleasantness of sitting across the table from an important player and counting all the ways that he’s insufficient.
Many agents, on the other hand, didn’t have the same firepower available.
There was no mercy. There was little joy. There was always going to be a loser, one side that walked away feeling hurt, beaten, screwed.
It was a precision assault from the league and the teams. And now, many of those executives who proved themselves in arbitration cases five-to-10 years ago are running teams. The conquests and wounds of arbitration remain. They guide. They motivate.
These days, too many teams believe that the World Series is played in January and February. The LRD itself awarded the team that best suppressed salaries with a toy championship belt. Union head Tony Clark admonished the LRD, but don’t believe that the owners had a problem with it.
Funny how some teams are more competitive in the winter than they are in summer or fall. That misguided priority has been exposed for everyone to see, so the Commissioner and 30 owners instituted a lockout in a weak attempt to change the narrative.
It’s no surprise to me that we are without an agreement, without Major League Baseball. I’m just waiting for the year when I can take my son to Opening Day.
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Hearings are widely regarded as coin flips. At the end of most arbitration seasons, each side has about a 50% success rate. The arbitrators are not expected to be knowledgeable students of the game, and some of the best cases have resulted in losses.
Excellent inside look on a topic I know little about!