MLB CBA and Arbitration: Winners and Losers

Between modernizing the game, generating interest from the younger generation, and ensuring a successful future for America’s pastime, there is no shortage of issues facing the MLB. There is a strong case to be made that it is past time for improvement upon the arbitration and overall compensation practices in the MLB.

Overview of MLB Compensation

Once a player enters the Major League Baseball system, they have an initial contract of six years until they can arrive at free agency and test their worth in the open market. MLB contracts have been greatly debated, and the treatment of minor leaguers has even caught the attention of the Senate Judiciary Committee. These problems are exacerbated in cases of players coming from less financially secure situations, making it easier for the MLB and team owners to get away with paying these athletes next to nothing. Though the issues are separate, but not completely disconnected, from the current system of arbitration that the MLB employs.

For the seriously gifted and talented ballplayers who make it into the big leagues, arbitration begins after three years, and after two years for the cream of the crop. At free agency, the player and owner will present their respective ideas of a proper salary in front of an arbitration panel. The panel then selects one side’s offer, and that selection is the player’s salary. It is necessary to mention that it is increasingly popular for players to settle with their team. The players who have not been in the league long enough to arbitrate, but are considered in the top 100 players, can supplement their salary through the MLB central office’s pool of additional money for these players specifically. This pre-arbitration bonus pool saw an increase to $50 million in the newly agreed upon CBA, causing the MLB average salary to increase to $4.41 million, a 5.9% bump from 2021. The average salary increase is unquestionably good for the players and the sport of baseball as a whole, but it does not mean that the CBA fixed all issues with MLB’s compensation, nor does it mean that the arbitration process became less flawed.

Riddled with Issues

When players and teams undergo arbitration, the negotiations are inherently adversarial. These negotiations pit players and agents against their team and the team’s lineup of lawyers. Teams will use statistics to convey the player’s shortcomings, while a player will argue his worth to his team. While the MLB is a business, and business transactions are never cordial, chummy affairs, these negotiations can permanently damage relationships between players and their club. While this comes with its own set of issues, the sides usually compromise on a number that is in between each party’s request. Of the arbitration hearings that occurred this season, there were nine instances of teams winning, and only four athlete victories over their teams. This shows a clear advantage to the teams in these arbitration negotiations, and a lack of influence the player can have in their resulting contract.

The newly agreed upon CBA also grew the minimum salary from $570,500 to $700,000. For those who don’t get a chance at arbitration, the pool of money is considered insufficient by the MLBPA. A major feature of the CBA negotiations was surrounding this pool of money. The MLBPA’s request to increase this pool of money to $105 million was not met, and countered by the owners at $50 million, thus furthering the pattern of compromises that strengthen the owners’ bargaining power. Similar to the pattern in arbitration settlements. Still, the players and their union want players to become eligible for salary arbitration sooner than three years, while owners are comfortable with the status quo. There remain issues of what to base the arbitration on; statistics, notoriety, and longevity all can play a role in an arbitration negotiation.

For the average MLB player who isn’t statistically in the top 100, there is little to celebrate with the signing of the new CBA. The conditions that make the MLB, MLBPA, and the minor leagues the way they now show that there is great room for improvement when it comes to payment in professional baseball. As baseball fans, all we can hope for is continued cooperation between the union and the owners, and good faith between both parties that will allow America’s pastime to flourish for years to come.

Jacob Ehrlich is a rising 2L at New York Law School with a great passion for all sports and sports law. Jacob is interested in all areas of Sports Law, but especially athlete representation, intellectual property rights, and collective bargaining. Jacob can be found on Twitter @SportsLawJacob