What is arbitration, and how does it work in baseball? Who’s eligible, and for how many years? You have questions, Boardroom has answers.
Each offseason in Major League Baseball, the free agents get all the attention. But as winter draws nearer and the heat of the Hot Stove responds in kind, we’re not about to forget about all the players who don’t yet have the luxury of free agency.
Yes — before you know it, we’ll be in the thick of salary arbitration season. But before that happens, let’s dive into the details and get clear on exactly what MLB arbitration actually is.
How are arbitration salaries determined? Which players qualify for it? How do pre-arb players get paid? Answers are ahead.
What is salary arbitration in the MLB?
Arbitration in baseball is a process through which salary numbers for the upcoming season are determined for players that are not yet eligible for free agency and could not come to terms on a contract by a set deadline. The final salary figure is determined by a third-party arbitrator using proposed numbers from a player and his team as a starting point.
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Who is arbitration-eligible?
Players with more than three years of service time but fewer than six are eligible for salary arbitration if they are not already under contract for the following season. Players and their teams present their own salary numbers based on recent contract benchmarks set by similar players and negotiate from there.
If no agreement can be reached by a deadline typically set for mid-January, the case goes before an arbitrator in February for final settlement.
Some players who have more than two but fewer than three years of service time can also earn arbitration eligibility under the MLB’s special “Super Two” rule.
For a full explanation of how MLB calculates service time, click here to read Boardroom’s MLB free agency primer.
What’s a “Super Two” player?
Players who are currently between two and three years of MLB service but rank in the top 22% of total service time within that group have “Super Two” status, making them eligible for arbitration one season early.
Super Two players still require six years of service time to qualify for free agency. It’s simply an extra year of arbitration eligibility that replaces a pre-arb year.
What is the MLB arbitration deadline this offseason?
Players and teams must submit proposed salary numbers by Jan. 14, 2022.
UPDATE 3/11: Now that the MLB lockout is over, Ken Rosenthal reports that the MLB arbitration deadline has been reset to March 25. Actual arbitration hearings will not take place before start of the regular season on April 7.
How do pre-arbitration players negotiate their salaries?
They don’t.
Multi-year extensions are attainable for certain notable pre-arb players like Fernando Tatis Jr. or Ronald Acuña Jr., but teams ultimately have 100% control over pre-arb players’ salary numbers.
What happens to arbitration after the league’s collective bargaining agreement with the MLBPA expires on Dec. 1?
The system is likely to change, but the owners and players remain far apart on details — as with just about every other topic under the sun regarding a new CBA.
In the big picture, the owners prefer a system by which all pre-free agency players are paid out of one central pool of money, with salary numbers determined through player performance. The league floated the use of benchmarks like Fangraphs’ wins above replacement (fWAR), but the players are reportedly not remotely interested in going down that road.
UPDATE 3/11: We have a new CBA! Click here to read Boardroom’s breakdown on the big changes coming to Major League Baseball under the new labor deal.
What’s the current record-high salary a player has earned via the salary arbitration hearing process?
The $13.5 million an arbitrator ordered the Houston Astros to pay Gerrit Cole for the 2019 season remains the highest salary to emerge from a hearing.
What’s the current record salary an arbitration-eligible player has earned by any means?
Mookie Betts and the Boston Red Sox avoided arbitration before the 2020 season by coming to terms on a one-year, $27 million contract.
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