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ARBITRATION IN BASEBALL.
Term Paper ID:21838
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Essay Subject:
Changes from 1974 to 1994, labor agreements, salaries, reserve clause, negotiated vs. final offer types, economics, incidence, player grievances, injuries.... More...
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10 Pages / 2250 Words
7 sources, 30 Citations,
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Paper Abstract:
Changes from 1974 to 1994, labor agreements, salaries, reserve clause, negotiated vs. final offer types, economics, incidence, player grievances, injuries.
Paper Introduction:
Final Offer Arbitration in Baseball
This paper will discuss the use of arbitration in major league baseball. The first part of the paper will briefly examine the history of salaries in major league baseball and the change to arbitration in 1974. The second part of the paper will focus on final offer arbitration concerning salaries. This part will describe final offer arbitration and will discuss the effects it has had upon salary negotiations and player salaries in general. The third part of the paper will look at arbitration in the context of termination issues. This part will include a discussion of examples involving injury grievances.
In 1974, the owners and players in major league baseball agreed to use salary arbitration as the means of setting players' pay. In the 20 years since this happened, attitudes towards arbitration in
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Louis University Law Journal 135-69 (1987).Fizel, John L. 41 Arbitration Journal 63-69 (March 1986).Ensor, Richard J. The arbitrator ruled that the player's right against terminationdue to an employment injury had to be balanced against the team's right todetermine which players are most skillful. McLaughlin. Under the1985-1989 Basic Agreement, the non-salary grievance process is completelyseparate from the salary settlement process. 3 Journal on Dispute Resolution 243-62 (1987).-----------------------[i]Fizel, Play Ball: Baseball Arbitration after 2 Years, DisputeResolution Journal, June 1992, 42.[ii]Fizel, supra note 1, at 42-43; Dworkin, Salary Arbitration in Baseball: An Impartial Assessment after Ten Years, 41 Arbitration J. In the 2 years since this happened, attitudes towards arbitration in baseball havechanged. Salary Arbitration in Baseball: An Impartial Assessment after Ten Years. 32 St. 63, 63-64(March 1986).[iii]Fizel, supra note 1, at 43.[iv]Note, Baseball Free Agency and Arbitration, 3 J. The Committee must then send awritten decision to the player within 1 days. Almost all of those who filed for arbitration received salaryincreases. On the other hand,divergence in offers has not dramatically increased either.[xiii] Another measure of final offer arbitration in major league baseballis a comparison of results. During the first 1 years, both sides were satisfied enough withthe process that most observers concluded that arbitration would continuein baseball with few changes. Conventional arbitration, therefore, has a"chilling" effect on negotiations. Comparison of Arbitration Decisions Involving Termination in Major League Baseball, the National Basketball Association, and the National Football League. The result of the negotiations was the player strike and theaborted 1994 season.[i] In the years before 1974, major league players were at the mercy ofthe owners when it came to salary negotiations. Both players and owners have agreedthat the prehearing negotiations are expedited by the arbitration process.These results concur with those of final offer arbitration in othersettings.[viii] On the other hand, the number of players filing for arbitration hasincreased since 1974. This arbitrator is selected from apanel chosen by the Major League Baseball Players Association and theowners' Player Relations Committee. Only nine players received salary cuts after filing forarbitration.[xv] On the other hand, players continued, on average, to be paid lessthan their market value. 135, 156-57 (1987).[xxviii]Id. First, players with more than six years experienceand not currently under contract to a team could choose to be free agents.Teams could competitively bid for free agents. Once drafted by a team, aplayer could only negotiate with that team. Neither can thearbitrator consider the financial position of a player, press comments orother testimonials concerning the performance of a player or the team(excepting awards for playing excellence), offers made by either the playeror the owner prior to arbitration, the costs to the parties of theirrepresentatives (attorneys), and the salaries in other sports oroccupations.[iv] The decision of the arbitrator is binding and limited tothe either the salary request of the player or the salary offer of theowner.[v] The main reason that final offer arbitration is used in baseball isbecause labor experts believe it promotes bargaining efforts that oftenresult in the parties resolving their disputes without resorting toarbitration. A MLBPAgrievance undergoes the same procedure, except that the Association canonly appeal a Grievance or complaint involving player discipline with theapproval of the player or players involved.[xxv] The League Presidentand/or the MLB Commissioner is the final arbitrator of all disciplinedisputes.[xxvi] The most controversial issue in termination involves injury. This might indicate that the final offer arbitration system failedin its purpose of inducing owners and players to successfully settledisputes on their own. Even so, salaries usually continue toremain below market value. Salaries were thus set considerably lowerthan market value. Play Ball: Baseball Arbitration After 2 Years. Even when playerslost in arbitration, they received salaries which were larger than in theprevious years. Playersare thus in a "no-lose" situation.[xii] Straightforward figures show that the spread between players' finaloffers and owners' final offers increased steadily between 1974 and 1993.In 1974, the players' salary requests were 2 % higher than the owners'salary offers. The majority of players who filed for arbitrationbetween 1974 and 199 reached settlements without employing an arbitrator.Many more players who were eligible for arbitration reached settlementswithout even filing for arbitration. Since 1974, there have been an average oftwenty cases settled through arbitration every year. In practice, this has not always worked as well as had beenhoped, although statistics indicate that both sides have been more willingto resolve disputes prior to arbitration. Do Negotiated and Arbitrated Salaries Differ Under Final-Offer Arbitration? Within 2 days of the filing of the appeal, an arbitration hearing must be held. This conflicts with the interest in having partiesin a dispute negotiate a settlement on their own.[vii] Final offer arbitration seems to have had some effect upon thenegotiation process. Dispute Resolution Journal (June 1994): 42-47.Note, Baseball Free Agency and Arbitration. In addition, players who resisted signing wereeffectively "blacklisted" and forced out of major league baseball.[ii] In 1974, players and owners agreed to two significant changes insalary negotiations. Arbitrators have been forced todecide whether a player was terminated because of an injury suffered as aresult of employment or because of a lack of skill. Disagreement can leadto severe consequences. Thus, fear is the prime motivation factor in finaloffer arbitration. In Glenn A. The club then has 1 days to respond to the grievance inwriting. at 45.[xv]Id.[xvi]Id. Final Offer Arbitration in Baseball This paper will discuss the use of arbitration in major leaguebaseball. Louis U.L.J. The first part of the paper will briefly examine the history ofsalaries in major league baseball and the change to arbitration in 1974.The second part of the paper will focus on final offer arbitrationconcerning salaries. Thisdiscrepancy amounted to an average of $243,638, or 82%. If the grievanceis not resolved, the player must then file a written grievance with theclub's representative within 45 days of the occurrence from which thegrievance arose. The third part of the paper will look at arbitrationin the context of termination issues. This value reflects the extra revenue earned by ateam from the performance of an individual player. at 45-46.[xvii]1985-1989 MLB-CBA, Article X.[xviii]Article X (A)(1)(a).[xix]Article V "Salary Arbitration."[xx]Article X(A)(1)(a)(i-iii).[xxi]Article X(A)(1)(b).[xxii]Article X(B) Step 1.[xxiii]Article X(B) Step 2.[xxiv]Id.[xxv]Article X(E) "Grievances Initiated or Appealed by the Association."[xxvi]Article X(C) "Special Procedure with Regard to Certain DisciplinaryAction."[xxvii]In the Matter of the Arbitration Between The American and NationalLeague of Professional Baseball Clubs (San Diego Padres) and Major LeaguePlayers Association (Glenn A. 46 Industrial and Labor Relations Review 548-59 (1993).Coleman, Jay, Kenneth M. One of the most active subjects inthis area has been injury grievances. But it found that most finaloffer arbitration awards tended to be of low quality, because they layoutside the range of negotiated settlements. 1992 Journal of Dispute Resolution 159-73.Dworkin, James B. In the summer of 1994, the team owners enteredinto the negotiations with the players with the intention of revising the199 labor agreement. Negotiations can continueduring this time and the case may be withdrawn from arbitration if anagreement is reached prior to the hearing. Owners wonapproximately 55.6% of these cases through 1993. at 156-57.[xxix]In the Matter of Arbitration Between The American and NationalLeagues of Professional Baseball Clubs (Atlanta Braves) and Major LeagueBaseball Players Association (Paulino O. Under the process used in baseball,the player and owner must submit final salary figures before a hearing isscheduled before a single arbitrator. at 65; Coleman, Jennings, & McLaughlin, Convergence or Divergencein Final-Offer Arbitration in Professional Baseball, 32 IndustrialRelations 238, 239 (1993).[viii]Coleman, Jennings, & McLaughlin, supra note 7, at 24 -41.[ix]Dworkin, supra note 2, at 69; Fizel, supra note 1, at 44.[x]Burgess & Marburger, Do Negotiated and Arbitrated Salaries Differ UnderFinal-Offer Arbitration?, 46 Industrial and Labor Relations Review 548, 548-49 (1993).[xi]Id. Most of theseverely "underpaid" players are those with less than three years ofexperience, who do not yet qualify for arbitration. These figures indicate that there has been no convergencein offers since the implementation of arbitration. Players who finally qualify to become freeagents receive the largest salary increases. At least two commentators, however, argue thatplayers need the threat of arbitration to force their teams into good faithnegotiations.[ix] The situation of salary figures presents a more complicated problem.A study involving statistical analysis provided some interesting dataconcerning the use of final offer arbitration in baseball. Both sides are deterred fromnegotiating in good faith, since they want to turn the dispute over to animpartial arbitrator. Third, the tremendous increase in broadcastrevenue in baseball has caused salaries to increase dramatically since1986. at 557.[xii]Comment, Arbitration and Salary Inflation in Major League Baseball,1992 J. 32 Industrial Relations 238-47 (1993).Comment, Arbitration and Salary Inflation in Major League Baseball. Only during theyears of free agency collusion (1987-1989) were gains merely "modest" (14%to 19%).[xiv] The players who either negotiated settlements prior to an arbitrationhearing or won during arbitration received the largest salary gains.Negotiated settlements resulted in an average annual gain of 33% to 11 %.Players who won arbitration hearings realized annual salary gains of 44% to174%. The Committee's decision isfinal and binding on all parties.[xxiii] Any appeal of the Committee's decision must be made within 15 days ofreceiving the decision, must be in writing, and must be directed to theChairman of the Arbitration Panel for impartial arbitration. at 157-58. Once a playerqualifies for arbitration, he can expect large salary increases which willbegin to reflect his market value. Between 1985 and 199 ,77% of the players were paid less than their market value. Arbitration concerninggrievances is conventional arbitration. Marburger. Beckert andthe San Diego Padres,[xxvii] the arbitrator ruled in favor of a player whowas terminated after he suffered an injury to his arm. The grievance procedure isset forth in Article X of the Collective Bargaining Agreement. A sample was used of all majorleague baseball players who were eligible to participate in final-offerarbitration between 1986 and 1991.[x] The study concluded that negotiated and final-offer arbitratedsettlements did indeed differ significantly. Second, players withbetween three and six years experience could settle salary disputes througharbitration. agreements."[xxiv] The MajorLeague Baseball Players Association may also initiate grievances. Even during the other years, thesalary gains were significant, ranging from 3 % to 74%. During the second 1 years, however,attitudes changed so much that both sides and many observers begancriticizing arbitration. Such a balancing ofconsiderations was difficult, since the considerations "may be subtle,obscure and not dramatically or plainly demonstrated by the facts." Thearbitrator ruled that the injury was a pre-existing and degenerativecondition which had resulted from years of athletic activity and did notresult from a "traumatic event."[xxx] Major league baseball has utilized arbitration to resolve disputesbetween players and teams in the areas of salaries and grievances. Knowing that there will be no compromise during arbitration,the parties are induced to present reasonable salary offers, fearing thatthe arbitrator could choose the other party's offer. It also has up to 45 days to notify the player of a problem andthe player must respond within 1 days.[xxii] After the club issues adecision, the player has 15 days to appeal the decision in writing. . Convergence or Divergence in Final-Offer Arbitration in Professional Baseball. The player arguedthat the team decided to terminate his contract because of his injury,rather than place him on the injured reserve list. Some level of uncertainty as to the preferred award distribution hasbeen injected into the arbitration as a result of the yearly increase inthe distribution of player salaries.[xi] It has been suggested that whileowners are motivated by fear to present offers which are based upon morethan just a player's talent and usefulness, players are not motivated topresent offers which keep their salary proposals within reason. This should be comparedto the actual salaries received by players during the period ofarbitration. Final-offer arbitration is where the third-party arbitratorsettles disputes by selecting one of the final offers submitted by thedisputing parties as a binding arbitration award. Notes BibliographyBurgess, Paul L., and Daniel R. In deciding the case beforehim, an arbitratorcan consider only a limited range of criteria in making a decision: theplayer's performance during the past year, length and consistency of theplayer's career, salaries of comparable players, and the on-field successand public attendance enjoyed by the team. This part will describe final offer arbitration andwill discuss the effects it has had upon salary negotiations and playersalaries in general. Since the "disability constituted a materialfactor in the decision," the player was entitled to a full salary for theseason.[xxviii] In Paulino O. The statedpurpose of this article is to provide "an orderly and expeditious procedurefor the handling and resolving of certain grievances and complaints."[xvii] A grievance is defined as a "complaint which involves the interpretationof, or compliance with, the provisions of any agreement between theAssociation and the Clubs."[xviii] "Grievances" under this procedurespecifically do not include salary disputes,[xix] the benefit plan,[xx] andactions by the Commissioner's office to preserve the integrity ofbaseball.[xxi] The player must first discuss his complaint with the clubrepresentative who is designated to handle these matters. Therehave been two major cases concerning injury grievances and termination.Both of these cases had to balance the right of the player not to beterminated for an employment-related injury against the right of the teamto terminate a player who is not skillful enough. Casanova) (October 17, 1975),cited in Ensor, supra note 27, at 157.[xxx]Id. Their ultimate goal was the elimination of salaryarbitration. Since1974, final offer arbitration has been used to resolve salary disputes.Final offer arbitration has been used because most believe that it willinduce players and owners to present realistic negotiation offers, out offear that an unrealistic offer will cause the arbitrator to select theother offer. This part will include a discussionof examples involving injury grievances. Theappeal is sent to the Players Relations Committee, which then must discussthe appeal within 1 days of its receipt. The arbitratoracknowledged that the team may have been motivated by the player's age andplaying ability; however, under the facts presented, the injury and theplayer's resulting "inability to throw must have been an importantingredient" in the decision. Prior to the regular season, the team put him onwaivers and terminated his contract, but agreed to pay for any requiredsurgery. In 1974, the owners and players in major league baseball agreed touse salary arbitration as the means of setting players' pay. These salaries have increased every year. Thedecision of the arbitration panel is regarded as a "full, final andcomplete disposition of the Grievance." The jurisdiction of thearbitration panel is limited in that it may not "add to, detract from, oralter in any way the provisions of . Players with less than three years experience continued to besubject to the "reserve clause," while players with more than six yearsexperience could invoke arbitration, although only with the consensus ofthe team.[iii] The form of arbitration used in major league baseball is final offerarbitration. A 12-year veteran beganexperiencing pain in his throwing arm during spring training and eventuallywas unable to throw. The "reserve clause"prohibited the player from selling his services to any other team than theone that drafted him, if he did not sign the contract. There are three possible reasons for this.First, baseball arbitrators do not provide written explanations of theirdecisions, but simply write the binding offer into the player's contract.Second, final offer arbitration eligibility results in very substantial payincreases for players and the exact increase expected for a player may bedifficult to determine. The studysought to discover whether negotiated settlements differed from arbitratedsettlements under final-offer arbitration. The profitability and marketsize of the team cannot be considered by the arbitrator. This occurred in spite of thefact that there was an abundant amount of information available to bothsides in baseball arbitration. This fear is supposed to narrow salary positions andincrease the likelihood of negotiated settlements without arbitration.[vi] In contrast, conventional arbitration tends to produce a divergenteffect on bargaining, since there is an incentive maintaining excessivedemands in the hope that the arbitrator will "split the difference" andmake a favorable award. Jennings, and Frank S. Dispute Resolution 159, 167.[xiii]Fizel, supra note 1, at 44-45.[xiv]Id. The largest salary gains came in 199 , the first yearafter the end of free agency collusion. Casanova and the Atlanta Braves,[xxix] however, thearbitrator ruled in favor of the team. In 1993, players' salary requests were 63% higher thanowners' offers. During the first five years of arbitration, thefiling rate was 15%; in the middle five years the rate increased to 51%;between 1988 and 1994, 83% of the players eligible for arbitration filedfor it. Beckert) (October 2, 1975), cited in Ensor,Comparison of Arbitration Decisions Involving Termination in Major LeagueBaseball, the National Basketball Association, and the National FootballLeague, 32 St. Both organizations jointly assignindividual arbitrators to particular cases. Since they can sell theirservices to any major league team, they can determine what their marketvalue is and can usually receive salaries which reflect this marketvalue.[xvi] Besides salary arbitration, the other major type of arbitration inmajor league baseball is that dealing with player grievances. There can be nocompromise between the salary figures. Thus, the playercould be permanently tied to one team unless the team traded him or soldhis contract to another team. . on Dispute Resolution243, 255 (1987).[v]Fizel, supra note 1, at 43.[vi]Dworkin, supra note 2, at 65.[vii]Id.
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