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Volume 2, Chapter 11 Salary arbitration. Salary arbitration. Settle salary disputes between team and player when negotiations for salary fail Submitted to neutral arbitrator, decide precise amount of compensation
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Pro Sport c8-salary Salary arbitration • Settle salary disputes between team and player when negotiations for salary fail • Submitted to neutral arbitrator, decide precise amount of compensation • Limited to issues of compensation and rights for players and the team he plays for • Eligibility for arbitration: determined by CBA • According to experience, sometimes performance • Player’s case presented by agent/lawyer • Usually assisted by representatives from players’ association at the hearing • Grievance arbitration: interpret and enforce rights already created by CBA
Pro Sport c8-salary Salary arbitration in MLB • Eligibility: experience, performance • A panel of 3 arbitrators, chosen annually by players’ association and Player Relations Committee • Role of arbitrator • Consider Performance, leadership, public appeal, length/consistency of career, previous salary, salary of similar players, physical/mental defects, team performance, attendance • NOT considered: financial position of player and team, press comments, testimonials • Select offer of either team or player • Can NOT reveal reasons of decision
Pro Sport c8-salary Super Two in MLB • The service time cutoff for Super Two is determined by the Major League Baseball Players Association each season, equating to the senior 17 percent of players who have accrued between two and three years of service time and at least 86 days of service in the just-completed season • two years and 122 days at the end of 2010 • two years and 139 days at the end of 2009 • Arbitration eligible from 3rd to 6th year • FA after 6 years
Pro Sport c8-salary Salary arbitration in free agents • Another class of arbitration-eligible players: free agents with >6 years of service • Original team has option of offering arbitration • A team must offer arbitration in order to get draft-pick compensation if the FA sign with other team • If the FA accept arbitration, he is no longer FA and becomes bound to his current team (usually ned in prehearing salary agreement) • If the FA reject arbitration (in most cases), he can sign with any (including his original )team
Pro Sport c8-salary Salary arbitration in NHL • Eligibility: age, experience • Roles of Arbitrator • ‘only’ consider performance, compensation of players in similar situations • Determine 1- or 2-year contract, salary, bonus, explanation of reasons for decision • Salary can be either offers or ranging in between • Decision is final and binding on the parties
Pro Sport c8-salary Salary arbitration in NHL • Owners have walk-away right: right to reject award • 3 times in 2 years, no more than twice in same year, used only 2 times 1996-2003 • Player become FA after rejection, If unable to obtain better offer from other team, he can return to previous team with offer prior to becoming FA
Pro Sport c8-salary Comparison of salary arbitration between NHL and MLB • Encourage player-owner negotiation • Very few filed cases go to arbitration • No exchange of briefs before hearing, NHL require parties to exchange briefs 48 hrs before hearing • Making reasonable offers • NHL tend to make extreme offers, knowing arbitrator likely to choose close to midpoint • MLB tend to make reasonable offers: arbitrator consider salary higher or lower than midpoint of both offers
Pro Sport c8-salary Comparison of salary arbitration between NHL and MLB • Consider performance, salary of comparable players • NOT financial situation of teams • Rich team pay more higher salary across league • Not hold player responsible for financial health of team • Salary arbitration NOT set up players’ market, but rather follows it • Based on comparable players’ salary, only following trend set up individually negotiated contracts • Few owners give high salaries, market value of players rise at such a tremendously fast pace
