Opening day at Fenway Park is always a special day for me. The beginning of a new season. That time of the year when, in the words of former Yale University president and commissioner of Major League Baseball A. Bartlett Giamatti, we can “Take Time for Paradise.” This year’s at-home opener comes on April 5, pretty early in the new season.
As I spend time in the late winter boning up on the activities of my (and Giamatti’s) beloved Red Sox, I come to the intersection of two of my keenest interests: baseball and alternative dispute resolution. The point of intersection, of course, is the utilization of a particular brand of arbitration to resolve salary disputes.
Baseball arbitration, as it is known to sports fans, or “final offer” arbitration to many others, was utilized by the Red Sox only once this year, and that was in the case of Boston’s great outfielder Markus Betts, better known as “Mookie” to the baseball and sports world.
Baseball arbitration, in a nutshell, is that variety of arbitration where the disputing parties each make a final offer, and the task of the arbitrator is to select and award only one of those numbers. The theory behind final offer arbitration is that the disputing parties, knowing that the adjudicator will select only one of the two numbers submitted—presumably the most reasonable and appropriate one—will move toward the center and be more reasonable in their respective positions, fearing that the arbitrator will choose the opponents’ number if it seems even somewhat more reasonable.
Baseball arbitration comes in a number of varieties, one of the more interesting being “night baseball” arbitration. In that scenario, the arbitrator hears the presentations of the two parties but is not told of their last final offer numbers. The arbitrator then makes an independent assessment and selects the last final offer which is closest to the arbitrator’s number. Other variations also exist.
Of some 10 Red Sox players who were eligible for arbitration this year, nine agreed to terms and only Betts opted for an arbitration hearing. Betts, who was paid $950,000, in 2017 apparently valued his services more highly than the $7.5 million offered by the team. Betts’ demand was $10.5 million. A panel of arbitrators was convened and selected one of the two final offer numbers ($10.5 and $7.5 million in this case). Betts emerged victorious with an award of $10.5 million. It has been reported that teams won eight of 15 decisions last winter and 302 of some 526 arbitrations since the system was started in the mid-1970s.
Betts chose to attend the hearing and seemed pleased with what he saw and heard. To its credit and business acumen, the team apparently did not seek to disparage the star outfielder but rather made an analytical presentation with statistical comparisons and evaluations of Betts compared to other players considered to be of similar ability and status.
The Red Sox experience with its arbitration eligible players this past year (and in general) seems to me very telling as to how this form of arbitration can optimally work. In my judgment, the real benefit of the process is that it forces the parties to become much more reasonable in their offers and demands, knowing that the arbitration panel must select only from one of the two numbers. Neither party wants its number to be perceived as more unreasonable than its counterparts.
A number of ADR experts commented on the baseball arbitration technique on a prominent ADR Listserv discussion recently. A recurring theme was indeed that baseball arbitration is as much an effective negotiation tool as it is an adjudicatory tool.
Still, the use of final offer arbitration in baseball is not universally acclaimed. A 2017 article by Dillon Reid in Dispute Resolution Journal argues that mediation, either facilitative or evaluative, is far better than the arbitration model now employed. A major shortcoming cited is the danger of a breakdown in positive relationships between the player and the team. As pointed out above, however, comments by Betts after the arbitration process were quite favorable and showed no signs of a damaged relationship with the team, but then again, he won!
While baseball arbitration has enjoyed only limited utilization in non-baseball and other situations, it is a useful option to consider in those contexts: I suggested in a previous column on the topic that it is certainly worth a “tryout” in other settings. Admittedly, it is most effective in a distributive setting where the dispute is primarily monetary. Nonetheless, it is a process to consider where the parties are looking for efficiency, do not necessarily need a reasoned award and are willing to consider continued negotiations after the process is elected. The fact that the Red Sox avoided arbitration with so many of its arbitration eligible players this year attests to its effectiveness as a useful negotiating process.
Now that the salary issues are resolved, the only thing left to deal with is whether the Red Sox can repeat as Eastern Division champions. Knowing that the readership of this publication consists of both New York Yankees and Red Sox fans (as well as others), I will opine no further on that topic.
Harry N. Mazadoorian is a commercial arbitrator and mediator and a member of the American Arbitration Association’s Master Mediator Panel. He is the distinguished senior fellow in the Center for Dispute Resolution at Quinnipiac University School of Law.