| Description |
This paper examines salaries given to arbitration eligible players in Major League Baseball from 2008-2013 and compares them to free agent contracts from the same period. Anecdotal evidence suggests that simpler statistics are more successful in Major League Baseball's final offer arbitration setting as legal experts tasked with handling the league's cases may not have a deep knowledge of player valuation. I examine the effects of wins above replacement, a complex but comprehensive metric, and traditional statistics, such as runs batted in, on salaries decided in both settings. Wins above replacement is significant in each case, but with a much higher coefficient in free agency suggesting a greater impact. There is no evidence of individual traditional statistics being especially significant in arbitration; I attribute this to parties framing their offers with whichever statistics portray them in the most favorable light. Finally, I look to statistics in the season following contracts to determine if either market is more effective in getting value at a low cost, but results are similar in each case and limitations with the data restrict the efficacy of conclusions in the section.
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