The Reds front office has had a busy winter. They’ve signed free agent contracts with several players, totaling more than $100 million. If you believe half the rumors you see, Dick Williams and crew have also been working on a bunch of trades. A few weeks ago, they had to make “tender” decisions on players who didn’t have contracts. That’s when the team “non-tendered” Jose Peraza and Kevin Gausman, letting the two players go. Most of the players who were tendered have fewer than three years of service time, so the team gets to set those salaries without player input or rights, other than the salary floor established by the league Collective Bargaining Agreement.
But a handful of players have earned labor rights to have input on their salary through binding arbitration. Amidst the free agent and trade wrangling, the front office also has to conduct negotiations with each of these players to see if they can reach an agreement on salary. Otherwise, a formal arbitration process begins.
The Collective Bargaining Agreement between Major League Baseball and the MLB Player’s Association lays out the process for how players get compensated. It includes 28 articles and countless sub-articles covering everything about the employment relationship. You’ll find topics like the length of season, salary, expense accounts, health and safety, revenue sharing, competitive balance tax and much more.
Section VI governs Salaries and sub-section (E) under that deals with arbitration. The topic of arbitration takes up six pages (pp.18-23) of the 373-page document.
Here’s a reminder of which players qualify for arbitration and how it works:
Once a player accrues three years* of service time, he earns the right to salary arbitration. If the club and the player don’t reach a salary agreement by mid-January (this year the date is Jan. 10), they enter into a formal arbitration process. The club and the player then exchange salary figures.
*A small percentage of players with 2+ years of service time earn the right to an extra year of arbitration. They are referred to as Super Two players. Most players go through arbitration three times. Super Two players can go through the process four times.
Five Reds players remain eligible for arbitration: Trevor Bauer, Anthony DeSclafani, Michael Lorenzen, Curt Casali and Matt Bowman.
Eligibility for binding arbitration is an important labor right. But that doesn’t mean every player who qualifies for arbitration ends up in a hearing with the team. The two sides are free to negotiate whenever they want to reach an agreement on salary.
The CBA (VI, E, 2) identifies the date for each season by which a salary agreement must be struck to avoid the onset of the formal arbitration process. This season, the date is today, Jan. 10 (p. 19).
If the two sides haven’t reached agreement, they each must submit (“exchange”) a salary figure. That marks the beginning of the formal process. A hearing in front of a panel of three federal arbitrators is scheduled for February.
If the process reaches a hearing, the arbitrator panel listens to arguments and data from both sides and then, based on comparable players who have signed contracts in recent years, the panel selects either the player’s number or the club’s number. The arbitrators can’t compromise, they choose whichever figure they believe best represents how similar players are being compensated throughout the league. That structure gives both sides an incentive to make a reasonable offer.
The sides are allowed to negotiate right up until the start of the hearing. If they reach an agreement, the hearing is cancelled. Once the two figures are submitted, if there isn’t a huge gap between them, the two sides could agree to split the difference and settle. This used to be a common outcome. But no more. All the teams have adopted a “file and trial” approach. That means if negotiations get to the stage where the two parties file a number, there will be no more negotiations and a hearing (“trial”) is pursued.
In 2018, the Reds went to arbitration hearings with Scooter Gennett (player won) and Eugenio Suarez (team won). On March 16, 2018, Suárez signed a seven-year $66 million agreement with the Reds.
In 2019, on Jan. 11, the Reds announced agreements with Curt Casali, Michael Lorenzen, Jose Peraza, Anthony DeSclafani, Yasiel Puig and Scooter Gennett.
The only player the Reds didn’t reach agreement with in 2019 was Alex Wood. Wood submitted a salary of $9.65 million to arbitrators and the Reds submitted the salary of $8.7 million. The arbitrators chose Wood’s number.
Here are ballpark estimates for each of the 2020 arbitration-eligible Reds players based on the average of projections from Cots Contracts and MLBTR. Numbers in parentheses are the player’s 2019 salary.
- Trevor Bauer – $18.3 million ($13 mil)
- Anthony DeSclafani – $5 million ($2.125 mil)
- Michael Lorenzen – $4.2 million ($1.95 mil)
- Curt Casali – $1.8 million ($950,000)
- Matt Bowman – $900,000 (MLB min.)
Travis Jankowski was eligible for arbitration. The Reds negotiated a deal with him at the time they signed him. Jankowski agreed to $1.05 million, a decrease in arbitration award from his $1.165 million salary the year before.
The news today won’t be momentous. Not worth breathless individual blog posts. These five players will be on the payroll one way or another. The Reds agreed to offer contracts in the tendering process. All that’s left to decide are the salaries and that’s usually within a fairly narrow range. Millionaires and billionaires dividing up the pie.
Check back here to read about the developments as the day progresses.
UPDATE: These amounts were agreed up by the players and the Reds
- Trevor Bauer – $17.5 million
- Anthony DeSclafani – $5.975 million
- Michael Lorenzen – $3.75 million
- Curt Casali – $1.4625 million
- Matt Bowman – $865,000