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Nine Royals players prepare for the arbitration process

Those cheap, young players ain't so cheap and young anymore.

John Rieger-USA TODAY Sports

The great thing about building a team through young, home-grown players is that you can build the core of your team with cheap, cost-controlled players, leaving financial flexibility to fill the holes with veteran free agents. However, after a few years, those cheap players aren't so cheap anymore. Why? Arbitration.

Arbitration is the alternate dispute resolution process most sports fans are familiar with. The arbitration process was originally instituted in 1974 as a way of keeping the players from continuing to push for free agency, which they ultimately won the right for in 1976. Now, arbitration is part of the Collective Bargaining Agreement (CBA), and allows players with three years of service time (and in some cases for "Super-Two" players, less than three years) the right to negotiate a higher salary with their clubs, with the threat of an arbitration hearing if the two sides are unable to agree on terms.

If the case goes to arbitration, it is heard before a panel of three arbitrators who will hear both the player's case and the club's case. The panel will then select either the player's requested salary or the club's requested salary. They cannot split the difference.

Clubs had to decide whether or not they would tender a contract to arbitration-eligible players by December 2. By January 13, players who have not come to terms can file for arbitration. By January 16, players and clubs will exchange figures and arbitration hearings are scheduled some time during the first three weeks of February.

Arbitrators consider a player's service time (players with four years of service are paid more than players with three years of service, for example) and a player's performance. Players cannot have their salary cut more than 20% from the previous season and in nearly every case, the player earns some sort of raise. Arbitrators tend to rely more on old school statistics, although this may be changing as more advanced stats personnel are hired to make cases on both sides (Bill James got his start in baseball working on arbitration cases)

Arbitration hearings used to be quite commonplace, but clubs and players have more recently sought to avoid them as the conflict in an arbitrator's hearing can create animosity between the two sides. The Royals have never had an arbitration hearing under Dayton Moore, the last arbitration hearing in Royals history taking place in February of 2006, when Emil Brown won his case.

The nine Royals player eligible for arbitration are Lorenzo Cain, Louis Coleman, Tim Collins, Danny Duffy, Jarrod Dyson, Kelvin Herrera, Greg Holland, Eric Hosmer, and Mike Moustakas. Erik Kratz just missed the "Super-Two" cutoff for service time.  MLB Trade Rumors estimates their arbitration salaries here.

Player Service Time Estimated Salary
Greg Holland 4.028 $9,300,000
Eric Hosmer 3.146 $5,200,000
Mike Moustakas 3.111 $2,700,000
Danny Duffy 3.085 $2,600,000
Lorenzo Cain 3.074 $2,300,000
Tim Collins 3.097 $1,500,000
Kelvin Herrera 2.157 $1,500,000
Jarrod Dyson 3.088 $1,300,000
Louis Coleman 2.162 $700,000

Service time should be read as "Years.Days" in the Major Leagues. So Greg Holland (4.028) has been in the big leagues for four years and 28 days.

So much of the savings from the departure of Billy Butler and James Shields are already gobbled up by the raises due to our young core. Its a good thing David Glass is so obsessed with winning that he'd raise payroll to pay for free agents like Kendrys Morales, Alex Rios, and Edinson Volquez.