Tabula Rosa Arbitration

Sidle up to the bar graphs; chomp on the pie charts. Thank goodness that just when you would expect the statistics to become more complicated, they remind you of simpler days.

That’s how Alan Schwartz ends his NYT Keeping Score article on salary arbitration in MLB. Salary arbitration in baseball is an interesting process that employs “final offer arbitration” as a fall-back position to determine player’s salary if the club and player cannot agree on a deal. (See pages 13-19 of the CBA for the procedure.) In short, each side submits what they think a player ought to make. Each side is given an hour to make the case for its salary and a half-hour rebuttal. From this hearing the 3-member panel selects which of the two offers will be the player’s salary for the coming season. Both the players and teams choose from a list of arbitrators to keep or strike.

This is pretty important stuff, right? So, why are arbitration panels so ignorant when it comes to assessing the value of a player? Schwartz highlights the fact that the wealth of baseball knowledge from sabermetrics is virtually ignored.

Salary arbitration hearings, from which members of the news media and public are barred, are places where traditional statistics like batting average, runs batted in and pitchers’ records still reign supreme.

Sure, adding on-base percentage to slugging percentage has gained greater currency. In recent years, relievers’ inherited runners have been discussed. But the industry’s most promising newcomers – more esoteric (and many would say more enlightening) statistics like win shares or value over replacement level – remain on the bench.

Why is this? At a recent meeting of Econodorks I enjoyed a comment by Brad Humphreys about salary arbitration. While this was several months ago, the gist of his comment was that arbitrators are typically professional arbitrators with no particular knowledge of baseball. This just blows my mind. Isn’t the whole point of this process to determine s “fair market value” of a player’s contribution to the team? How can an arbitration panel largely ignorant of all but the most basic baseball statistics do this?

Here are some possible answers and why I think they are wrong:

  • The time constraints of the hearing prevent an adequate presentation of sabermetric statistics, so lawyers stick to the basics.

    I don’t think so. Schwartz describes arbitration rooms to be well-equipped for speedy delivery of relevant facts, “Exhibits can be as thick as phonebooks, each side’s back-room bunker filled with enough computers and photocopiers to rival a local Kinko’s.” Also, according to the CBA, “The aforesaid time limitations may be
    extended by the arbitration panel in the event of lengthy crossexamination
    of witnesses, or for other good cause.”

  • Teams and players are ignorant of the knowledge of sabermetrics.

    There’s too much at stake here. I don’t buy the fact that teams and players will remain ignorant of knowledge common to stathead-baseball fans given the monetary incentives to understand this stuff.

  • People who are trained arbitrators simply are not stat-savvy.

    Schwartz alludes to this in the article,”‘You’re dealing with nonbaseball people, so the basic stats – average, homers, R.B.I., on-base percentage – are the ones they understand most,” said Mike Hill, assistant general manager of the Florida Marlins.” But, I think arbitrators would learn this stuff and pick up on it quickly, even if initially ignorant. Courts hear expert testimony all the time on all sorts of statistical evidence that would overwhelm laymen.

So what do I think is the answer? Sabermetrics lacks an authority of expert opinion, even though the sabermetric approach is correct. Bill James knows a lot about baseball, and though I believe he has consulted on many arbitration cases, there is no reason for arbitrators to value his opinion over a guy who thinks batting average and RBIs are the best statistics. When you get down to it, James is just a guy who really likes baseball. I suspect any good lawyer might bring this up. I am exaggerating a bit here; while I suspect James did and would hold sway on such panels due to his enormous reputation and intelligence, he’s now off-limits thanks to his employment with the Red Sox. If you put a prominent hobbyist sabermetrician on the stand, is he really going to have more sway than some average jackass off the street who thinks getting hits is what really matters? What about compared to an ex-scout, manager, GM who has some inside credibility? While I think Tangotiger knows a lot more about baseball than a lot of “insiders,” I’m not so sure he would hold such sway in an arbitration hearing.

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