Arbitration Contract Negotiation

Arbitration…good or bad?

When the gavel drops, my collar pops

This post seems apropos since it is February, and February is the season for abritration. In a previous post titled, “Want to be an MLB agent? (Part I…of many)”, arbitration in baseball was briefly discussed. It was noted that:

  • A player may become eligible for salary arbitration one of two ways:
  • A player with less than 6 years in the MLB, but 3 or more years at that level
  • A “Super Two”: A player with at least 2 years in the MLB, but less than 3 years at that level. He must have accumulated at least 86 days of MLB service during the past season and rank in the top 17% in total service in the class of Players who have at least two but less than three years of MLB service
  • The majority of arbitration cases are settled before the actual hearing.

But even though the majority of cases are settled before a hearing takes place, an article by the Kansas City Star has a dark tone when it comes to actually going through with an arbitration case.

It is unlikely that a Sports Agent and his/her client end up winning an arbitration hearing, with the client only winning 40% of the time since arbitration began in 1973. Recently, the Agents are pulling in a smaller percentage of victories than that.

The article does a good job explaining the actual arbitration hearing, which is important for any Agent to understand.

The beginning consists of the Sports Agent defending their proposal for about an hour followed by an hour of counter arguments by the baseball team (which often relates to a low fan attendance correlation). The Agent gets a 30 minute rebuttal and the team ends the hearing with a 30 minute conclusion. A panel of 3 arbitrators decide which side wins.

The real damage may result in your client’s new knowledge of his/her inadequacies. I found this quote from the article to be noteworthy:

“I remember an arbitration case in Texas with Lee Stevens,” Brewers general manager Doug Melvin said. “At the end, he said, ‘It was like having an autopsy done while you’re still alive.’”

The lesson is that an arbitration hearing can be expensive, take up a lot of time in preparation, may be damaging to your client’s psyche, and has a high risk of failure. If arbitration can be avoided, and most cases are settled before-hand, both the team and your client may benefit. But if your client is being grossly underpaid, arbitration may be the only way to have your client accrue what he/she deserves.

[tags]baseball, arbitration, sports agent, salary[/tags]

By Darren Heitner

Darren Heitner created Sports Agent Blog as a New Year's Resolution on December 31, 2005. Originally titled, "I Want To Be A Sports Agent," the website was founded with the intention of causing Heitner to learn more about the profession that he wanted to join, meet reputable individuals in the space and force himself to stay on top of the latest news and trends.

Heitner now runs Heitner Legal, P.L.L.C., which is a law firm with many practice areas, including sports law and contract law. Heitner has represented numerous athletes and sports agents as legal counsel. He has also served as an Adjunct Professor at Indiana University Bloomington from 2011-2014, where he created and taught a course titled, Sport Agency Management, which included subjects ranging from NCAA regulations to athlete agent certification and the rules governing the profession. Heitner serves as an Adjunct Professor at the University of Florida Levin College of Law, where he teaches a Sports Law class that includes case law surrounding athlete agents and the NCAA rules.

3 replies on “Arbitration…good or bad?”

There’s some good stuff in Moneyball about arbitration, and how both sides accept the process — that the team is going to make the player out to be a scrub, and the agent will make him out to be a deity on the diamond.

[…] In a post made almost exactly a year ago I looked specifically at arbitration in Major League Baseball [The Arbitration Battle: Advantage – Team]. The observations that I made last year seem to be on course again this year. When an arbitration case is actually heard, owners have an advantage (they are 4-1 so far this year). There are also a lot of negative consequences that may come along with following through with a hearing instead of settling before-hand [Arbitration…good or bad?]. […]

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