Does “File and Trial” Strategy Pay Off for Rays, Blue Jays, Braves, White Sox, and Marlins?

When it comes to negotiating with their arbitration-eligible players, each team in baseball has a different strategy. But on one issue, when negotiations end, the dividing line is pretty clear-cut. This past Friday was the deadline for teams and their arbitration-eligible players to exchange salary figures in advance of a possible hearing- but by no means was it the last day for teams to negotiate with their arbitration eligibles before the hearing took place. Every year, only a small percentage of arbitration hearings that are filed for actually happen because most of the time agreements are reached beforehand. But for five teams, the Tampa Bay Rays, the Atlanta  Braves, the Toronto Blue Jays, the Chicago White Sox, and Miami Marlins, if they don’t agree to a deal with one of their players prior to the deadline to exchange figures, they refuse to negotiate with that player further and always go to a hearing, a strategy that is known as “File and Trial.”

What’s the logic behind refusing to negotiate following the deadline to exchange figures? According to MLB Trade Rumors and a quote that Blue Jays GM Alex Anthopolous made to MLB.com’s Jordan Bastian, the reasoning is to get deals done as quickly as possible and take all possible steps to avoid a hearing. That sounds good in theory, but what impact does it make when push comes to shove? To try to ascertain that, let’s look at the data for arbitration hearings from 1998, which we’ll use since it’s when the Rays first came into being, up to and including the hearings from 2012 (we won’t use this year because we still don’t know which players will actually have hearings and which ones will agree to deals beforehand). We’ll compare how the five “File and Trial” teams have done versus the rest of baseball in two categories: the average number of hearings, since teams want to go through as few hearings as possible, and winning percentage when cases do go to hearings, and see whether the “File and Trial” strategy truly makes an impact.

Since 1998, there have been 106 arbitration hearings between the 30 MLB teams. The average number of hearings per team was 3.53. Among the “File and Trial” teams, though, the average was actually higher, coming in at 3.8 hearings per team. Since 1998, teams have won 70 hearings and lost 36, a .660 winning percentage. For the five “File and Trial” teams, their winning percentage was just .579. Looking at that data, it seems clear that while the “File and Trial” theory seems to make sense on paper, it doesn’t actually work in practice and in fact makes the teams that employ it do worse. But before we conclude that, let’s look at this table, which lists the arbitration statistics for each MLB team from 1998 to 2012 (the “File and Trial” teams have their names written in black).

Looking at the teams in black, one immediately sticks out: the Marlins. While the other four “File and Trial” teams averaged just 2.5 hearings per team, the Marlins had 9, second in all of baseball to only the Washington Nationals (who had been the Montreal Expos before 2005). And while the other four teams went a combined 8-2, the Marlins went just 3-6, the worst record of any team that had more than three cases go to a hearing. A common sentiment the past several years is that the Marlins have run their team in a “questionable fashion.” This appears to be another example of exactly that. They stubbornly keep this strategy going even though it hasn’t worked for them and seemingly are unafraid to go to hearings despite losing far more often then they win.

Moving on, are the results of the other four “File and Trial” significantly better than the rest of MLB? The answer is that it’s too soon to tell. The sample size is so small (we’re talking about just 10 hearings from these four teams) and the probability of them doing as well as they did if their true average number of hearings and true winning percentage was really the same as the MLB average was .246 for mean number of hearings and .175 for winning percentage, meaning results as different as what these four teams have recorded are uncommon but still within the range of normal. But even among these four teams, we see a difference between the Rays and the other three teams. The Blue Jays, Braves, and White Sox combined for just 5 hearings between them, an average of 1.67 hearings that is pretty significant, occurring in just 6.5% of samples of the true average should have been 3.53 (although it isn’t significant on an α=.95 significance level). The Blue Jays were just two teams (the Indians were the other) that didn’t go to a single hearing, while the White Sox joined them as one of eight who went through one or less. However, they went just 2-2 when they did go to hearings, which, while far from significant, is noticeably less than the overall winning percentage of .660 by the 30 MLB teams. The Rays, on the other hand, went to 6 hearings, nearly double the average, but won all six, which is significantly better than the .660 MLB proportion and would have 25-to-1 odds of occurring if they really should have won 66% of the time. It seems that while the Blue Jays, Braves, and White Sox focus on avoiding hearings whenever possible to make things easier for them and the players, the Rays take a different approach. Essentially, as the deadline to exchange salary figures approaches, the Rays tell their players something like this: “Here’s our final offer. You don’t have to take it and we can go to hearing, but know that if you do that, we’ll beat you and you’ll regret not taking this offer.” When players have obstinately refused, the Rays have blown them away every time. When I talked about what I thought Matt Joyce and Ryan Roberts should receive in arbitration, I guessed a few thousand dollars too high on both of them. While that could have been simply luck, I later noticed something I had mistakenly assumed, that the Rays would give them a little bit more money in order to avoid a hearing. The truth was, in fact, the exact opposite- Joyce and Roberts took less from the Rays knowing that the Rays were going to beat them at the hearing if they didn’t.

The “FIle and Trial” strategy regarding arbitration-eligible players does not work for every MLB team (Marlins, we’re looking at you). For most teams, the concept of purposely losing time where you could be continuing to negotiate doesn’t seem to make much sense. However, for teams that want to do everything possible to avoid hearings or, in the case of the Rays, want to use the seemingly inevitable conclusion of the players losing in hearings to try to get them to sign for less money, the early returns appear to show that it’s a viable method. Sometimes even the best-laid plans go to waste- the Braves are set to go to arbitration with Martin Prado this year after not agreeing to a deal before the exchange of figures deadline- but in the hands of the right teams and the right front office personnel, it can pay dividends in the long-term.