The MLB’s arbitration period is bad. It’s complicated and it creates horrible resentment. It puts players and organizations up against each other in the middle of their contract. Yet somehow, both parties are expected to keep a happy marriage afterward. It’s dumb and it’s messy and it shouldn’t exist.
The poor structure of arbitration is one of the reasons why the MLB is almost certain to have a lockout sooner rather than later. But one proposed solution from the league, while not worse than arbitration, is ugly for its own reasons.
The short version is that the league would do away with arbitration and make all players free agents at 29 and a half years old. Until they were eligible for free agency, according to this report, MLB proposed to instead pay players based on an advanced stat (via The Athletic):
“In the August proposal, MLB offered to use a predetermined sum of money that would be distributed to eligible players, those who had reached at least three years of service time. This time, MLB is offering to pay players based on performance, specifically on a calculation of wins above replacement, or WAR. There are multiple variants of WAR, but MLB proposed to rely on FanGraphs’ version, or fWAR. A player’s career WAR would be part of the calculation, weighted for recency. Whether a player has been in the majors for three-plus, four-plus, or five-plus years would affect the calculation.”
Okay. That’s a lot to digest. Before we begin, if you’re curious, you can read this explainer on baseball metric WAR — or Wins Above Replacement — from USA TODAY.
According to the report, the proposal aims to remove the complicated and awkward arbitration process — which needs to happen — and replace it with analytics to help “younger players” get paid more.
According to Jeff Passan, these are the details of the deal (via ESPN):
“Here’s how it would work, per sources: Players with less than six years of service would be paid based on a formula agreed upon by both sides. For purposes of the presentation, the league chose wins above replacement as calculated by FanGraphs. A player with more than three years would multiply his career fWAR by $580,000, and the resulting number would be his salary that season. The multiplier for a second-time eligible player would be $770,000, and a third-time player would receive $910,000 for each fWAR gathered in all his big league time. There would be slight adjustments to salaries based on how the player fared in the previous season, but generally the system would pay players based on the fWAR formula.”
First and foremost, this shows in plain terms that MLB has embraced analytics in a major way. The league has certainly come a long way since Moneyball was released in 2003.
Of course, the essence of advanced analytics is to identify the players best suited to create a winning organization. While these stats are often used by the fans and the general public, front offices can also leverage them to find value and hidden gems.
Obviously, advanced stats are already used in arbitration hearings. But proposing a uniform measurement is tough when no one can agree about the best metric in sports — especially when it’s a catch-all, composite statistic — and many feel it is best when it is a slice of the pie, not the whole dessert.
Another complication that comes up here is pretty major: how did they come to that financial breakdown outlined by Passan?
For more than a decade, bloggers and analysts have tried to determine how much stats like fWAR correlate to salary contracts. While teams feel that the value is around $6 million per win above replacement, others have argued for $7 million and the most recent estimation is around $8 million.
But those figures are for single-season data and this would be for multi-year performance — with a sliding scale multiplier in favor of players who have more experience.
Based on the figures reported by ESPN, Cleveland infielder Carlos Correa would have actually made more money (roughly an additional $6 million from last season, based on my quick calculations) had the proposal been in place.
Passan reported that the MLB franchise would spend “as much” and “perhaps more” through this method than they ever did on arbitration.
But this would take away even the sliver of agency that players and their representation do have in arbitration. In the proposed system, for example, MLB players wouldn’t even negotiate a contract until they are 30 years old.
It’s incredibly important for individuals to advocate for themselves — with the help of their agents — when it comes down to the difference in multi-millions of dollars.
There’s also the issue of choosing fWAR (from FanGraphs) over bWAR (from Baseball-Reference) or any other metric. Each comes with its own internal biases and there are players whose evaluations, on such similar metrics, have greater than a one-win differential between measurements.
Basing future salary entirely on previous performance doesn’t factor in room for expected development and growth, which are huge elements to consider with players who could break out and have star potential in the right system.
Even if teams were to lean on past production, though, there are also some fairly well-known criticisms about the vast limitations of fWAR. Historically, fWAR doesn’t do a particularly good job at valuing pitchers — especially with relief pitchers — or defensive measurements.
Jon Becker, who actually works for FanGraphs, describes stats like WAR as a “constantly-changing public service” and added that it would not make sense for a league to assign contracts based on these metrics.
Sure, in theory, there might be some cool egalitarian elements and high earning potential for guys like Correa in such a methodology.
But it feels more likely that for the majority of the league, such an algorithm will be used to pay as little as possible while under the guise of fairness and equality. As noted by Passan:
“Arbitration-eligible players, in the proposed system, would see their wins worth below $1 million. The formula would benefit some. Superstars could easily exceed $30 million arbitration salaries, whereas the maximum rewarded under the current system was $27 million. Other positions, like relief pitcher, would get thrashed.”
Let’s put it this way: as Jeffrey Paternostro noted, the editor of FanGraphs didn’t even use fWAR as part of his Cy Young voting methodology.
There is no way that it should be used to determine the income of the world’s most talented baseball players. It truly makes more sense to pay them based on the je ne sais quoi they bring to the team.
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