Will Shortened Season Mean Shortened Salaries? An Overview of COVID-19’s Impact on MLB Salary Arbitration

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Sometimes you win, sometimes you lose, sometimes it rains, and sometimes a global pandemic postpones the season. Major League Baseball’s (MLB) 2020 Spring Training was canceled after only three weeks on March 12, 2020, and Opening Day delayed two weeks due to the COVID-19 pandemic. As the impact of COVID-19 began to settle, MLB realized a two-week delay was going to turn into months. MLB planned for July 4th to be the new Opening Day date, but a return to labor warfare between the league and the MLB Player’s Association (MLBPA) stalled the return of America’s pastime for months and even threatened the entirety of the season. The 2021 season also currently stands in the balance as MLB and MLBPA began discussions for another delayed season.

Opening Day was initially scheduled to occur on March 26th but was postponed initially for two weeks only to be delayed for four months until July 24th. Instead of throwing out the first pitch on March 26th, representatives from the MLBPA and MLB reached an initial settlement agreement. This March 26th agreement outlined that there would be a season and other items but did not provide precisely how many games or when the season would start. While this March 26th agreement addressed arbitration issues in case there was not a 2020 season, it did not address how to handle salary arbitration if a season happened.

After months of various rejected offers by both sides, MLB finally announced a 60 game season and agreement with MLBPA on June 23, 2020. While the players were guaranteed pro-rated salaries at 37% of their full wages and a full year of service time, there was no agreement about handling arbitration following the season. This is an issue because the main focus of arbitration hearings is the players’ previous year’s statistics^[1] and currently, there is no formal agreement between MLB and MLBPA on how to evaluate performance during a shortened season.

Basics of Baseball Salary Arbitration

Essentially, the process works as follows: if an arbitration-eligible player has not agreed to a contract with his team by the filing deadline (typically the 3rd Friday in January, this year it was January 15th) then the player files for what he believes he should be paid next season. Then the team counters with that they believe the player should be paid. The parties can come to an agreement following this deadline as the arbitration hearings will not occur until mid-February.

Service-time determines when players are eligible for salary arbitration. All players with at least three (but less than six) years of service time become eligible for salary arbitration. Basically, each day on an MLB roster earns a player one day of service time.  A player on a roster (or a team’s injured list) for at least 172 days in a given year is entitled to a year of service time. On the service-time front, the players and owners agreed that even if the season was abbreviated or altogether canceled because of the virus, the 2020 season will still count for purposes of calculating players’ service time. Under the March agreement, MLB and MLBPA agreed to pro-rate player service time for the 2020 season. Essentially every day of service time in 2020 was equivalent to 2.77 days of actual Major League service.

The Last Men Standing

The filing deadline for MLB salary arbitration was 1:00 pm EST Friday, January 15th. While more than 100 arbitration-eligible players remained unsigned on Thursday, January 14th, only thirteen players remained unsigned after the deadline. Those thirteen players were unable to come to terms after exchanging salary figures with their clubs by 1:00 pm on the 15th.  The list of all thirteen players and their filing numbers are as follows:

1. Austin Barnes ($2M), Dodgers ($1.5M)
2. Walker Buehler ($4.15M), Dodgers ($3.3M)
3. Ji-Man Choi ($2.45M), Rays ($1.85M)
4. Carlos Correa ($12.5M), Astros ($9.75M)
5. J.D. Davis ($2.475M), Mets ($2.1M)
6. Jack Flaherty ($3.9M), Cardinals ($3M)
7. Ian Happ ($4.1M), Cubs ($3.25M)
8. Shohei Ohtani ($3.3M), Angels ($2.5M)
9. Anthony Santander ($2.475M), Orioles ($2.1M)
10. Donovan Solano ($3.9M), Giants ($3.25M)
11. Mike Soroka ($2.8M), Braves ($2.1M)
12. Dansby Swanson ($6.7M), Braves ($6M)
13. Ryan Yarbrough ($3.1M), Rays ($2.3M)

Notably, shortstop, Francisco Lindor avoided arbitration by agreeing to a record-breaking $22.3 million deal that set the record for arbitration-eligible shortstops as well as the record deal for all 2021 eligible players. The next highest deal to avoid arbitration was a $19.5 million deal between Kris Bryant and the Chicago Cubs. To follow along with all of the agreements and arbitration deals made this offseason be sure to check the MLB arbitration tracker.

Uncertainty Surrounding Player Evaluation

The number of players headed towards arbitration this offseason is lower than last year’s 22. This lower number is likely due to the uncertainty surrounding how this year’s arbitration hearings will be conducted and how to properly evaluate player value after only a 60-game season.

Some player representatives, such as super-agent Scott Boras,  have suggested that multipliers should be used to project what full-season statistics would’ve been. The argument here is that players shouldn’t be punished for the shortened season by having their future compensation reduced. However, Boras will not have to put his multiplier theory to test at an arbitration panel as his three arbitration-eligible clients, Juan Soto, Matt Chapman, and Rhys Hoskins, all agreed to salary settlements before the filing deadline.

While player representatives may be taking the Boras approach and developing formulas to project what full-season statistics would have looked like, clubs will likely take the opposite approach. According to Mark Feintad of MLB.com, the clubs’ plan will be to argue, “Here’s what this player did in 60 games, and this is what 60 games is worth.”

One would think that this dispute over how to evaluate players on a 60-game season could be resolved by utilizing performance predictive statistics, such as Statcast ratings that have become widely popular across the league. Statcast would be very helpful in evaluating player’s performances because it could predict trends for players and help project what a full 162 game season would have looked like based on those trends. However, per the current Collective Bargaining Agreement (CBA) Article VI, Section 10, Subsection (c) “Statistics and data generated through the use of performance technology, wearable technology, or “STATCAST”, whether publicly available or not, shall not be admissible.” Without the use of Statcast and predictive statistics, players and clubs will be left arguing over formulas that equate a 60 game season into 162 games.

Notable Numbers: Diners, Drive-Ins, and Deals?

The most notable player of the thirteen headed towards arbitration is Houston Astros shortstop, Carolos Correa. Correa filed for $12.5 million, while the Astros countered at $9.75 million. The $2.75 million difference between the two sides is the largest of the thirteen exchanges this arbitration season.

Last offseason Correa parted ways with his former agent and signed with the William Morris Endeavor (WME) talent agency. This is important to note in context with his upcoming arbitration hearing because WME is more of the typical Entourage talent agency without a staff of MLBPA certified agents. Most of WME’s clients turn recipes into cookbooks instead of turning double plays as most are Food Network stars, such as Rachel Ray and Bobby Flay. The lack of experience in dealing with baseball arbitrations from Correa’s representation may have very well been the Astros motivation for not coming to an agreement prior to the filing deadline. It will be interesting to see what both sides can cook up leading up to the hearing.

^[1] MLB Collective Bargaining Agreement Article VI, E(10)(a)