THE BOOK--Playing The Percentages In Baseball

In talking with some friends who have been through the process, historical comparisons are a big part of the process - they do not simply limit themselves to the most recent year only. 

This is all third hand, of course, and could be wrong, but I don’t think it is.

One big problem is that the arbitrators use statistics to come up with comps...But the kinds of statistics Elias uses to come up with Type A and Type B free agent designations.

So you think all the talk of Lincecum submitting $23 million is all just talk?

Yes, of course it’s all talk.  The arbitrators will not set their highest award ever on a guy’s first year.

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“One big problem is that the arbitrators use statistics to come up with comps”

The presenters use stats to come up with comps.  It’s the arbitrators who choose which of the two presenters came up with the most reasonable comps.

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Dave: I’ll have to find out then.  If the arbitrators are only given the salaries for the most recent season, then where are they getting their salaries from past seasons (is it that they have a DB of such salaries?).

In any case, the MLB team will simply argue that the current economic climate is different, and so, you can’t look at anything other than the most recent season.

They are even limited in the stats.  All arbs are given the BJ Handbook, so that becomes the defacto standard.  If you want to bring up other stats, then you need someone to certify those stats.  The arb can’t just take your word for it.

Most likely it’s just talk.  It behooves Lincecum to make the Giants think he’s serious about that because they may adjust their offer down some (although I doubt Sabean would be so easily fooled...and if he is, I wonder why he is employed).  If he then submits a reasonable-ish 12 mil and the Giants had tossed in 6 mil then his bargaining position strengthens.

In all likelihood Lincecum isn’t going to just throw away his chance to win arbitration and the Giants aren’t going to hope he does and submit a low ball.  I’m guessing the spread will be something like 8-10 or 9-11.

A couple of things:

-- There is a joint exhibit that lists the salaries of all players who were active in the most recent year.  That joint exhibit includes the future considerations so the arbitration panel knows not only what the comparitors received in the most recent year, but how long the contract runs and what additional incentives are included.  If a player was on the second or later year of a multi-year deal, the joint exhibit will list the salaries of previous seasons.  For example, this year’s joint exhibit will list the salaries for Albert Pujols from 2007 through 2010.

-- Beyond the joint exhibit, both player and team will bring up historical comparitors usually looking at any platform year. Those salaries aren’t on the joint exhibit, but the sides never argue over whether Joe Slabotnick was paid $2.45m or $2.65m because a side that is found to be inaccurate on something so simple looses all credibitility so they don’t fudge on that area.

-- The platform year is the year immediately before the contract is signed for the comparitor regardless of how far back it was signed.  So for this winter’s cases, players and teams (and MLB and MLBPA; both are represented at the table and often present the rebuttal) can pick from players signing contracts any year in the past, but both sides - and the arbitration panel - give more weight to more recent years.  Neither side in the Lincecum case will quote how much Jim Palmer got in ‘78 coming off his back-to-back Cy Youngs in ‘76 and ‘77, but Brandon Webb’s ‘07 salary coming off an ‘06 CYA will certainly be cited.

-- Except in unusual circumstances, the platform year will be the same seniority as the player in arbitration: a super two compares himself (and the team compares him to) other super twos, players with 3 years experience compare to others who were at three seasons before signing their platform contract, etc.  Ryan Howard was an exception; both he and the team compared him to players with significantly more seniority.  Howard’s presentation listed four primary comparitors, Mark Teixeira, Miguel Cabrera, Matt Holliday, and Justin Morneau.  At the time of their platform years, Howard had 2.145 years of service, Morneau 3.168, Holiday 4.0, Cabrera 4.101, and Teixeira 5.0.  Lincecum will be another exception; if the team tries to only compare him to other super 2s, the panel will laugh them of the room.  Expect the $13m that Johan Sanata received in his last year of arbitration after winning his second Cy Young to be weighted heavily.

-- The comparitor is rarely a player in the midst of a long term deal.  Santana’s last arbitration case is better precedent than Jake Peavy’s multi-year deal because both sides make trade-offs for long term stability that are not relevant to the one-year deal that comes out of salary arbitration.

-- I’m really interested in seeing how much weight the team puts on Lincecum’s pot arrest.  The CBA expressly allows the parties to present evidence on “special qualities of leadership and public appeal ... [and] the existence of any physical or mental defects on the part of the player.” An arrest is technically relevant to that, but putting too much emphasis on it could hurt the club’s case.

-- The key part of every case is the mid-point between the offer of the club and the demand of the player.  Because the panel can’t split the difference, which ever side is closer to what they feel appropriate will win.  So there is a lot of gamesmanship to figuring out what the other side will submit.  If the player thinks he is can prove that he is worth $5m and knows the club will offer $4m he can demand $5.99m and likely win.  That causes inflation in the market partially offsetting the natural break against inflation that the 6 year servitude rules impose.

-- Baseball arbitrators have to have some fundamental understanding of the game.  The sides don’t want to have to explain that a home run is a good thing for the batter and an error is a bad thing for a fielder.  But neither side wants Tango and his band of merry men on the panel.  What they are looking for is a group of people used to making decisions based on the evidence others present to them but not based on their own independent study of the issues.  In its way, it is much like the jury system rather as opposed to the patent appeal process.  Facts matter, but presentation skills matter too.  I am an arbitrator on a number of permanent public and private panels, but unless I lie, I will never be on a baseball panel because while no where near the level of expertise of MGL, I have spent quite a while piddling with stats and observing the game at a level beyond that desired by the sides.

-- I have not looked at the most recent CBA in the NHL, but I think it has been completely redone.  The previous arbitration provision allowed the arbitrator to pick an amount anywhere between the offer and demand rather than get locked into ruling for one side or the other and also allowed the arbitrator to set the length of the deal anywhere between one and three years.

First off, I never thanked dlf for his great comment.  Really good stuff.

Secondly, compare to the actual 8/13:

I presume the club will demand 8, and Lincecum will offer 12 and settle for 10.  (Ryan Howard was demanded 7 and offered 10, and the arbitrators ruled for Howard.)

I’m going to treat myself to a chocolate-covered donut.  Mmmm… doh-nuts.

Incredible the level of hysteria in the last week regarding how much Lincecum would offer.