The first arbitration case of 2018 was resolved Wednesday afternoon.
The Boston Red Sox and Mookie Betts went to a hearing Tuesday and it was reported Wednesday that Betts won the hearing and will earn $10.5 million in 2018.
A big win for Mookie Betts in arbitration, at $10.5 million. Repped by Steve Veltman and Ed Cerulo of Legacy.
— Buster Olney (@Buster_ESPN) January 31, 2018
Betts filed for $10.5 million before last month's deadline while the Red Sox countered with $7.5 million. At the hearing, each side makes an argument supporting their salary figure and the three-person arbitration panel picks either the salary the player filed or the salary the team filed. Nothing in between.
The 25-year-old Betts went into his first arbitration year with a strong case. He's a career .292/.351/.488 (120 OPS+) hitter with 78 home runs and 80 steals in 508 games, and is a standout defensive right fielder. Betts is a two-time All-Star, a two-time Gold Glover and he has received MVP votes in three seasons. That includes finishing second in the 2016 MVP voting.
Arbitration hearings are not the sexiest days on the baseball calendar, though they are pretty important. Here is everything you need to know about Betts beating the Red Sox in arbitration, and what it means going forward:
Betts almost set an arbitration record
The $10.5 million salary is nearly a record for a player in his first year of arbitration eligibility. Cubs third baseman Kris Bryant holds the record. He signed for $10.85 million last month. Here are the three largest salaries for players in their first season of arbitration eligibility:
- Kris Bryant, 2018 Cubs: $10.85 million
- Mookie Betts, 2018 Red Sox: $10.5 million
- Ryan Howard, 2008 Phillies: $10 million
It's worth noting Bryant and the Cubs agreed to a contract before filing salary arbitration figures whereas Betts had to go to a hearing to get his big payday. Also, both Bryant and Howard went into arbitration with a Rookie of the Year and an MVP award. Betts had neither, and he still cashed in big.
This will cost the Red Sox more in the future
Arbitration uses the player's previous salary as a baseline, so by winning his arbitration case this year, Betts will earn more in the future. Here are estimated salary scenarios for his three arbitration seasons:
| Betts wins 2018 hearing | Betts loses 2018 hearing | |
|---|---|---|
2018 | $10.5 million | $7.5 million |
2019 | $17 million | $13 million |
2020 | $25 million | $20 million |
Total | $52.5 million | $40.5 million |
By winning his hearing, Betts will make $3 million more than the team filed in 2018. And that $3 million will carry over into his next two arbitration years, giving him a higher baseline and put him in position to receive larger raises. This was not a $3 million decision only. Wednesday's decision could earn Betts an additional $10 million or more from 2018-20.
The Red Sox are in the luxury tax danger zone
According to Cot's Baseball Contracts, the Red Sox have a $205.2 million payroll for luxury tax purposes in 2018 after Betts' arbitration win. That includes estimates for players in their pre-arbitration years, and players on the 40-man roster but not in the big leagues. It does not include midseason additions. Every player who gets called up from the minors or acquired at the trade deadline counts against the luxury tax payroll.
The luxury tax threshold is $197 million this coming season and, realistically, there's no way for the Red Sox to get under the threshold. Not unless they find someone to take Hanley Ramirez's entire contract, or do something crazy like salary-dump Craig Kimbrel. They're paying luxury this year. The question is how much? Because the more they go over, the harder they get hit. Here are the luxury tax tiers Boston, a first-time offender, is facing:
- $197 million to $217 million payroll: 20 percent tax on overage
- $217 million to $237 million payroll: 32 percent on overage plus first-round draft pick moves back 10 spots
- $237 million payroll and above: 62.5 percent on overage plus first-round draft pick moves back 10 spots
The Red Sox are at $205.2 million, so they're in the first tier. If they were, however, to sign a big bat like J.D. Martinez, it would surely push them up into the second tier, raising their tax rate and pushing back their first-round pick.
Losing to Betts in arbitration probably won't be the difference between staying in the first tier and jumping into the second if the Red Sox sign Martinez or a comparable free agent, but it is $3 million in real money. It's more than that, really, since the team has to pay luxury tax on that $3 million.
Arbitration hearings don't have to create bad blood
By and large, arbitration hearings are an unpleasant experience. The player sits in a room and listens to his team detail his shortcomings, explaining why he should receive a lower salary than he feels he deserves. It can create some animosity, for sure. I'll always remember what Vinnie Pestano told MLB.com's Jordan Bastian about his arbitration hearing experience:
"You're being honest and accountable and saying the right things and being there," Pestano said, "and then later you find your own words in the paper, and somebody is trying to use your words against you to drive your value down. Whether that played a big role in the decision, I don't know.
"That was the only thing that I didn't care for. I definitely think it'll affect how I see things going forward. I don't really know if I can be as honest and up-front anymore. I've got three more years of arbitration left. I don't know what they'll pick to use against me next year or two years from now."
As unpleasant as the arbitration hearing might be, it doesn't automatically have to create bad blood between the team and player. Last year Dellin Betances and the Yankees went to a hearing, and after the Yankees won, team president Randy Levine infamously ripped Betances on a conference call with reporters. This year Betances and the Yankees hammered out a contract before the arbitration salary filing deadline, so last year's hearing didn't stand in the way of a deal this year. The Yankees also went to arbitration hearings with Derek Jeter and Mariano Rivera over the years. Their relationships survived.
Betts is, obviously, a core member of the Red Sox and they don't want to upset him. I imagine some fans are worried the arbitration hearing created some bad blood and might push Betts to sign with another team when he becomes a free agent in three years. It could happen. That's part of the risk. The hearing does not necessarily mean the two sides are on bad terms, however. It is part of the business and both the Red Sox and Betts will work together to maintain a good relationship long-term.
Sabermetrics making way into the arbitration process?
The arbitration process is archaic. Old school stats typically reign supreme. Wins, saves, RBI, so on and so forth. That stuff pays. That's why one-dimensional sluggers always do well in arbitration. They rack up homers and RBI, but deficiencies in their on-base percentage and defense don't hurt them.
Betts' win might be a sign the tide is changing. There are guidelines in the collective bargaining agreement about what stats are and are not allowed in hearings. Publicly available stats like those used by FanGraphs and Baseball Prospectus are allowed. Statcast data, curiously, is not.
As I mentioned before, Betts now has the second-highest salary for a first-year arbitration salary, between Bryant and Howard. Consider their career offensive numbers going into their first arbitration year:
- Betts: .292/.351/.488 (120 OPS+) with 78 homers and 310 RBI
- Bryant: .288/.388/.527 (142 OPS+) with 94 homers and 294 RBI
- Howard: .291/.397/.610 (151 OPS+) with 129 home runs and 353 RBI
Betts was an objectively inferior hitter to Bryant and Howard at the same point of their careers. Both Bryant and Howard had a Rookie of the Year and an MVP award to their credit as well, remember. Betts had neither.
And yet, Betts still won the hearing and received a huge first-year arbitration salary. Did he and his agent successfully argue their case using his defensive stats? Some 2015-17 defensive numbers for Betts:
- Defensive Runs Saved: +64 (3rd among all players, 2nd among outfielders, 1st among right fielders)
- Ultimate Zone Rating: +36.6 (7th among all players, 4th among outfielders, 2nd among right fielders)
- Defensive WAR: +6.9 (6th among all players, 3rd among outfielders, 1st among right fielders)
Betts has very good offensive numbers, no doubt about it, but he is a premium defender. One of the best in baseball at any position. DRS, UZR and dWAR are all publicly available too. They're admissible in an arbitration hearing.
Based on his offensive numbers, Mookie's performance isn't on par with the two other players who received $10 million-plus in their first arbitration year. Add in his defense though, and Betts is worthy of that salary. His hearing win could be a sign players with lots of defensive value are finally going to get their due during the arbitration process.
Many more arbitration cases remain
There are 24 pending arbitration cases around baseball. It's possible some of those 24 will be settled before a hearing -- Felipe Rivero and the Pirates filed salary figures, then worked out a four-year extension to avoid a hearing -- but most will go to a hearing. Lots of teams use a "file and trial" approach, meaning as soon as the two sides file salary figures, the team cuts off contract talks and they go to a hearing. It's designed to put pressure on the player.
Here are the most notable arbitration cases still pending:
| Player Filed | Team Filed | |
|---|---|---|
$6.525 million | $5.3 million | |
$6.225 million | $5.3 million | |
$4.6 million | $4.2 million | |
$6.3 million | $6.05 million | |
$5.8 million | $5.3 million | |
J.T. Realmuto, Marlins | $3.5 million | $2.9 million |
Jonathan Schoop, Orioles | $9 million | $7.5 million |
George Springer, Astros | $10.5 million | $8.5 million |
Marcus Stroman, Blue Jays | $6.9 million | $5.5 million |
Arbitration hearings will take place throughout February, possibly even after the start of spring. The two sides can agree to a contract of any size prior to a hearing, but again, most teams are "file and trial" these days.
