The bizarre world of arbitration — and the ace whose record raise could rock the system

Major League Baseball’s salary arbitration system occupies a fascinating space in the sport’s larger labor landscape. Starting this morning, agents will discuss with teams the salaries of around 170 players for the 2026 season. The formal deadline to reach a deal is 1 p.m. ET. The real deadline is 8 p.m. Most will come to an agreement. Some will not. Those players will file a number they want to be paid. The teams will counter with a lower number — sometimes hilariously lower, such as the mere $25,000 spread that nearly sent Casey Mize and the Detroit Tigers to a hearing in 2024. And, yes, if the sides don’t settle, they actually go in front of a three-person panel that witnesses the team talk about all of the things the player doesn’t do well in front of the player himself. It is tremendous theater — and on its stage today happens to be the best pitcher in the world.

The league wants to shutter salary arbitration, erase the potential acrimony and replace it with a formula that pays players for performance — similar to the pre-arbitration bonus system put into place in 2023 that awards those who have yet to accrue enough service time (typically three-plus years) to reap the relative riches of arbitration. Beyond the league’s derision, front offices generally abhor the time spent on a process that winds up, they argue, very close to where it would in a formula-based system. It is, team executives say, wildly inefficient, particularly for such a low-leverage proposition, to spend that many man hours for a few million dollars here and there. Everyone has better things to do.

And yet, despite the kernel of truth that may exist in that position, the players hold firmly on to arbitration not out of deference to landmark wins in the Major League Baseball Players Association’s past, but because it has real, tangible value to them. When a team drafts a player, he negotiates his signing bonus (many of which mirror pre-slotted figures in the amateur entry system), then goes into a minor league system where salaries are prescribed, heads to the big leagues where his first three years of pay are ultimately determined by teams and only then reaches arbitration. Already it’s a long path. Remove arbitration, and the average player would go more than a decade without being able to say a single word to his employer about what it’s paying him.

Nobody in any walk of life would want to work for 10 years without at least being able to negotiate a raise — particularly when arbitration has demonstrably lifted the salaries of the players who have gone through the system. Forget the size of their paychecks for a moment, because, yes, people who do things that others can’t and draw 75 million people annually to watch their exploits in person get rewarded with a share of the profits in a capitalistic society. This is about agency in employment — the privilege of quite literally making a case for yourself.

The system, for all its idiosyncrasies, is rather neat. Comparables rule arbitration. And with its birth in 1973, two years before free agency was won by Catfish Hunter, Andy Messersmith and Dave McNally, the arbitration system has more than a half-century of history in which each side determines a player’s statistically similar predecessors and uses their salaries to make the case on what a player should be paid.

Every big win at a hearing or strong settlement for a player helps his positional peers. Conversely, the losses force future players to consider the wisdom of another challenge, and bad settlements set off brushfires. Whereas all 30 MLB teams report their ongoing discussions to the league’s labor relations department, the MLBPA serves as a clearinghouse for agents and tries best it can to coalesce them. The inherent nature of infighting among the agent class — for grievances past, present and almost always petty — makes doing so markedly more difficult for the union than for the league’s well-oiled machine, which used to award a plastic championship belt to the team it felt best depressed arbitration salaries before a story on the tradition in The Athletic embarrassed MLB enough to retire it.

Against this backdrop stands the most riveting case in years, one that could go in any number of directions. Tarik Skubal, the aforementioned best pitcher in the world, is the two-time reigning American League Cy Young Award winner. He is entering his sixth season with the Tigers and is in his third and final time through arbitration before reaching free agency, where he is angling to become the first $400 million pitcher in baseball history.

Before that, he will set another record as the highest-paid pitcher in arbitration. To what extent depends on Skubal’s risk tolerance and desire to lean on the wide berth the system offers its best players to push boundaries. Because as much as salary arbitration is rooted in comparables, its rules give leeway to the elite to test limits, even if the hazard in doing so scares most off.

Here are the pertinent numbers in Skubal’s case: He made $10 million last year. The largest arbitration raise for a starting pitcher belongs to Jacob deGrom in 2019 at $9.6 million (jumping from $7.4 million to $17 million in salary coming off his own Cy Young season). The biggest arbitration salary for a starter is David Price in 2015 at $19.75 million. Whether he settles or goes to a hearing, Skubal will best both of those numbers.

By how much is the question — and where it gets really interesting. Working in Skubal’s favor are his so-called “special accomplishments,” which any player who has set records or won awards can cite. Back-to-back Cy Youngs — including one in his most recent season, with recency rewarded — alongside the sorts of numbers he has posted gives Skubal a case where it’s impossible to argue the negatives because there aren’t any.

On top of that is a rarely used provision that allows players with more than five years of service time to compare themselves not only to past arbitration-eligible players but to everyone in baseball. Meaning that if Skubal were to choose, say, peak Max Scherzer ($43.3 million a year) or Zach Wheeler ($42 million) as his comparables, he could make the case in front of an arbitration panel that because of his special achievements and consistent performance, he is worthy of a salary similar to theirs.

Arbitration, of course, is not free agency and never was intended to be, so Skubal trying to shoot the moon is a long shot. And because precedent matters, perhaps even the arbitration record — $31 million, set by Juan Soto two years ago — is too dicey to pursue. But it’s an option. And if anyone has the motivation, it might be Skubal. He’s not merely the best pitcher in the world. He’s also on the MLBPA’s eight-man executive subcommittee, the most powerful group of players in the game. It’s a formidable bunch, filled with accomplished veterans (Marcus Semien, Chris Bassitt, Pete Fairbanks, Jake Cronenworth, Cedric Mullins, Brent Suter) and another superstar: Pittsburgh Pirates ace Paul Skenes. With the current collective bargaining agreement set to expire Dec. 1 and reforming arbitration again expected to be on MLB’s priority list, Skubal looking to stretch the limits of the system would be a poignant message to not only the league but also fellow players.

At the same time, the truth is that the biggest cases almost always end in settlements. Not just for Soto, but for Shohei Ohtani the year before that at $30 million, even with his special accomplishment genuinely inimitable. Every case of at least $20 million or more has been settled. The largest salary decided in a hearing came in 2024, when Vladimir Guerrero Jr. beat the Toronto Blue Jays for $19.9 million.

The wide variety of potential approaches by Skubal and his agent, Scott Boras, leaves the Tigers playing a guessing game. They could get a sense, in the negotiations leading up to 1 p.m. (the official deadline) or 8 p.m. (the time at which the parties agree to exchange numbers), where Skubal stands. There is incentive for Detroit to get a deal done and avoid any consternation. If one isn’t struck, though, does the Tigers’ filing number reflect past precedent and lean closer to a marginal raise, or will they worry that with the largest raise seven years old and the biggest salary more than a decade ago that a panel could entertain the idea that Skubal really is a system-breaking case?

The Tigers are a file-and-trial team, a sobriquet used to describe organizations that treat 8 p.m. as a hard line: If there isn’t a deal in place and numbers are exchanged, they will go to a hearing. Although they’ve made exceptions — Mize, with the $25,000 spread, avoided it when he agreed to a deal that tacked on a club option — Skubal is signing a one-year deal, period. And the evolution of arbitration, which used to operate with more urgency rather than waiting until deadline day to spur action, makes the hours this morning that much more exigent.

Détente typically wins the day. The salary arbitration deadline annually ends with 15 to 25 unsettled cases in which the sides exchange numbers. A few of those get settled after the deadline, particularly if the spread is small enough to find common ground. The rest head to hearings, in which each side presents an hourlong case and is given 30 minutes for rebuttals.

History suggests that there will be a settlement, both parties will move on, and Skubal will report to spring training without significant consternation. Moving the top of the market would help someone like Skenes, sure, but it’s not as if there would be a significant waterfall effect that lifts up every starting pitcher going forward. Any win, whether via settlement or in a hearing, would be mostly symbolic. Baltimore Orioles shortstop Gunnar Henderson setting a new threshold in his first year of eligibility, for example, could have a more palpable effect on more players.

And yet that’s not the point. To players, it’s more about what arbitration offers: possibility outside the constraints of a fixed system. Flexibility in their approach, whether it’s $43.3 million or $31.5 million or even $20 million. The ability to decide a strategy and execute it rather than have a formula tell them what they’re worth. It’s a microcosm of where the game is now: efficiency a god, performance boiled down to a single number of wins above replacement, the human element excised.

All of it leads to the manic day where about 20% of big leaguers will learn what they’ll be paid this year. The theater is open. Just sit back and enjoy the show.