A thought experiment: Imagine you’re 27 years old, having just finished your fifth year of employment after graduating college.
A couple of years into your first entry-level position, your supervisor is promoted, and over time, you’ve gradually been given some of his responsibilities—but without the pay increase that would get from having your supervisor’s title. You go to your management and ask for a promotion and a raise that pays you more in line with the value you produce to your company. Before you do, you apply for similar promotions in other companies, and because of your track record, you receive job offers. When you finally approach your boss about that promotion, you bring these job offers in as leverage. If your company wants to keep you, they need to pay you what you deserve.
But let’s pretend for a second that you don’t get to get any offers from other companies, not because they don’t want you to work for them—they really wish you would—but because they’re not allowed to make you offers. Instead, you have to argue with your boss over your perceived value to your company with a third party, and hope that you can convince them that you deserve the raise. That doesn’t seem like a system designed with the best interests of everybody in mind.
And that’s why arbitration is stupid, and we should be thankful that the Yankees avoided it with all their players in 2020.
Our fictitious scenario accurately describes the situation that Yankees catcher Gary Sanchez found himself this winter, his first trip through arbitration. Had Sanchez and the Yankees not agreed to a $5 million contract for 2020, they would have gone to an arbitration hearing, with each side arguing why their proposed salary figure should be the one payed to the player.
Throughout the process, the team has every incentive to criticize their own player as much as possible, as he has no choice but to play for the team that season. In fact, the only leverage a player has in these negotiations is the threat to walk in free agency after their final year of arbitration, a threat that may not even matter to the team.
Going to arbitration does nothing but foster anger by players towards management. As Yankees fans may remember from three years ago, Dellin Betance had a disastrous trip through the process. “They take me in a room and they trash me for about an hour and a half,” he told Bryan Hoch. “I thought that wasn’t fair.” He vowed to remember it when free agency hit, although his injury-riddled 2019 season prevented us from seeing whether he would follow through with the threat.
All of this is why the Yankees are fortunate to avoid arbitration at all this year, with all players on the 40-man roster agreeing to contracts with the team. They avoid an awkward confrontation with a dozen players, including star players like Aaron Judge, James Paxton, and Sanchez.
Arbitration is a terrible and unfair system, to be sure, but it is the one that currently exists, and the one that both the players and the organization must navigate. Fortunately for the Yankees, it is one that they don’t need to worry about this winter.