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Monday, March 02, 2009

Arbitration 101

Once the numbers are filed, how relevant do they become in negotiations (assuming both sides want to avoid a hearing)?

Once numbers are filed, for the most part, the negotiation becomes more about numbers than about player comparables. Both sides talk more in terms of the midpoint – “we won’t settle for anything above the midpoint” – as each side tries to work toward an agreement.

The increased relevance of filing numbers can be seen in this year’s settlements. Consider the fact that, of the 46 players who filed, only three cases went to a hearing this year. Excluding the 12 players who signed long-term contracts after numbers were filed, 11 of 34 cases settled at the midpoint. Many of the settlements that were above (5 cases) or below (15 cases) the midpoint were relatively close.

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