Abstract
The first collective bargaining agreement was negotiated in 1968 and has been modified over time. The current agreement in Major League Baseball was negotiated to expire after the 2011 season. In this chapter, we analyze arbitration cases and nontendered free agents. In most cases, after the player or team files for arbitration, a settlement is reached, negating the need for a hearing.
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- 1.
The current agreement is available online at http://mlbplayers.mlb.com/pa/index.jsp Information pertaining to the current agreement that is discussed in this chapter was taken from this agreement. Additional information was taken from Hadley and Ruggiero (2006).
- 2.
Players with a minimum of 2 full years of service may also be eligible; these players must have accumulated 86 full days during the past season. Only the top 17% of such players based on total service qualify for arbitration. These players are known as the “Super Twos”.
- 3.
The lower bound is constrained because the team must offer a minimum of 80% of the previous year’s salary and performance bonuses and 70% of the salary and bonus earned 2 years earlier.
- 4.
While η−1 can be used, it is more appropriate to use the original performance variables to facilitate a proper convex comparison
- 5.
Admittedly, the classification used in this chapter is arbitrary. Hadley and Ruggiero (2006) evaluated hitters without further classification. A trade-off exists between enriching the information set and making inappropriate comparisons. Future research might try to shed light on this particular issue
- 6.
The model presented in Ruggiero (1996) was developed for public sector applications where environmental variables that are nondiscretionary affect production. The model is similar because the reference set is restricted by the rules of collective bargaining agreement
- 7.
After removing Ordonez and Ramirez from the reference set, the upper bound was reduced by $5 million. A limitation of the models in this chapter is comparisons to players who have off years. Outlier analysis, as discussed in Chap. 4 could be applied to narrow the upper bounds
- 8.
A player who signs a multiple year contract faces less risk of poor performance and the effect that will have on future negotiations. Likewise, a team reduces the risk of having to pay even more over the total length if the player performs well
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© 2011 Springer Science+Business Media, LLC
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Ruggiero, J. (2011). Arbitration and Free Agency. In: Frontiers in Major League Baseball. Sports Economics, Management and Policy, vol 1. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0831-5_7
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DOI: https://doi.org/10.1007/978-1-4419-0831-5_7
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