Players won the right to salary arbitration in 1973, predating even free agency. The right allows players with three years of service time (or less if they qualify as “Super-Twos”) not eligible for free agency to gain some leverage by allowing their salary to be determined through arbitration if no deal is reached.
For unsigned arbitration-eligible players, they are expected to exchange figures with clubs by this Friday, January 12, with hearings to be scheduled from January 29 to February 17. The Royals have just three such players this year - Kelvin Herrera, Brandon Maurer, and Nate Karns. Mike Morin was also eligible for arbitration, but reached agreement on a deal with the Royals last fall and was claimed off waivers by the Mariners.
MLB Trade Rumors annually provides arbitration-estimates using models based on historical numbers. They project Herrera to receive $8.3 million in his final year of arbitration, up from his 2017 salary of $5.325 million. Brandon Maurer, who struggled last year as one of the worst relievers in baseball, is projected to receive $3.8 million in his second year of arbitration, up from the $1.9 million he received last year. Karns, who is arbitration-eligible for the first time, is projected to receive $1.4 million.
The teams and players will exchange numbers by the end of the week, although they are still free to come to terms after that. If they cannot come to agreement, each side will make their case at a hearing in front of an arbitration panel. Among the factors considered by the panel includes on- and off-the field contributions, the length and consistency of the player’s career, past compensation, physical injuries, team performance, and comparative salaries. Past salaries and service time weigh heavily as considerations, and typically mainstream stats are used as opposed to advanced stats to avoid alienating the panel.
Players almost always get a pay raise, and the panel must award them a salary of at least 80% of their previous salary (with some exceptions). The panel will either side with the player or the team, they cannot split the difference.
The Royals are reportedly a “file-and-trial” team, meaning that once numbers are exchanged and the player files for arbitration, the team is done negotiating. However this has not been the case in recent years. They came to terms with Herrera last February, although according to Jeff Passan, the Royals were motivated to come to terms in the wake of the tragic death of Yordano Ventura.
In 2016, they came to terms with Mike Moustakas in mid-February, after exchanging numbers. In 2015, the Royals were just two hours away from having a hearing with Eric Hosmer, only to reach agreement on a two-year deal. In fact, the Royals have successfully avoided having a single arbitration hearing under Dayton Moore. The last case in franchise history came in 2006, when Emil Brown defeated the club to earn a salary of $1.775 million.
Teams and players generally like to avoid the actual hearing, as it can be a very contentious experience, with the club providing as much negative information on the player as possible. The number of hearings has dropped dramatically since the late 90s, and owners have won more than half the cases since arbitration hearings began in 1974.