When Major League Baseball and the Players Association ratified the current Collective Bargaining Agreement before the 2022 season, one-year contracts for arbitration-eligible players became fully guaranteed for the first time.
Unless salaries for such contracts are awarded through a hearing. In that case, such contracts are not guaranteed.
The San Francisco Giants took advantage of this loophole after taking J.D. Davis to a hearing in February. Even though the corner infielder won a $6.9 million salary in that hearing, the Giants released him in mid-March, just a few weeks before Opening Day. With San Francisco only on the hook for $1.1 million in termination pay, Davis suddenly found himself on a winding path that led him to the Athletics and then the Yankees.
“I can’t really do much about it now,” Davis told the Daily News. “I just hope it’s not a trend in the long run.”
Davis said that he and his agent, Matt Hannaford, received just one offer from the Giants prior to the deadline to file salary figures to be presented at a hearing. He said that offer was for $6.39 million.
It came about 45 minutes before the deadline.
“They described it as a file and trial kind of case. And just like anything, you’re not really willing to take their worst bullet,” said Davis, who played for the Giants in 2022 and 2023. “It was an easy no.”
After consulting his agent and the union, Davis said his “sweet spot” was between $6.6 million and $6.8 million. He wasn’t going to agree to anything less than $6.5 million “for the sake of the market and for the sake of future players.”
Davis said that his agent called the Giants back about eight minutes before the deadline hoping to negotiate. However, they said they were standing firm at $6.39 million.
Then the Giants filed at $6.55 million, $160,000 more than their only offer prior to the deadline.
“Which had us head scratching, because they never offered that,” Davis said. “I would have taken $6.5 million, but they filed at $6.55 million. So it was kinda out of the blue. It was out of nowhere.”
Davis added that he was “giddy” when the Giants filed at $6.55 million and he filed at $6.9 million. Either way, he figured he would get more than the bottom line he had set for himself. He knew about the loophole, but he thought there was a “very low percentage” the Giants would exercise it.
In retrospect, he now feels the Giants dared him into a hearing just so they could take advantage of the provision.
“I can’t really sit here and give you my opinion on exactly what happened because we don’t really know exactly what happened,” Davis said. “However, it’s one of those things where it almost made it seem like they wanted to go to arbitration just for this loophole.”
After releasing the righty-swinging Davis, Giants president of baseball operations Farhan Zaidi said that the decision came down to roster logistics. The team had signed Gold Glove third baseman Matt Chapman the previous week. It also planned on using fellow righty-swingers Wilmer Flores and Jorge Soler at first base and DH.
Zaidi said that the Giants tried to trade Davis before his release, but no suitors emerged for the player’s $6.9 million salary so late in spring training. He signed with the A’s a few days later. Oakland then traded him to the Yankees on June 23. Davis has played in just five games for New York and is hitting .077 since the trade.
“As soon as we got the word he went unclaimed on outright waivers, we decided to make this move,” Zaidi said after releasing Davis, per The Athletic. “It just boils down to role and other guys we had ahead of J.D. in terms of at-bats. If we had a 28- or 30-man roster, we’d keep everybody. But given the reality of our roster constraints, this was just the move we decided to make.
Added the executive: “Everything we’ve done in this case is well within our rights as a team. And that’s recognized. It’s very cut and dried in the CBA.”
While that may be, Davis believes that what the Giants did violated the spirit of arbitration, which is already an often-contentious process. Now he worries that more teams will look to do what San Francisco did, which he likened to Lucy van Pelt pulling a football away from Charlie Brown at the last second.
“I hope that more teams don’t use this loophole, because I don’t know, I just feel it’s wrong,” Davis said. “You’re incentivizing and motivating players to do better. And then if they do better, in the long run, what? They don’t get rewarded for it?
“It’s not that players aren’t being greedy in a sense. I wouldn’t say that. I think every player is trying to get every penny that they can and any organization is trying to save a penny. But I just hope that this doesn’t become the norm in a sense.”
While Davis was essentially replaced by a high-paid veteran, he reasoned that teams could use the loophole to swap out pricier contracts for younger players making minimal money. Either way, teams can use a hearing-awarded salary as an insurance policy if they wish to wait on a free agent or see what they have in a cheap prospect during spring training.
Now Davis wants to make sure more players are aware of the escape that teams have. He said most surely do since his story made headlines, but understanding it is different.
Davis played for the Mets when the current CBA was negotiated. He said that he was not in favor of it, and that the Mets “were one of the teams that wanted to holdout” until players got more of what they wanted.
Asked if players should have caught this exploitable language during negotiations, Davis said “yes and no.” He noted that ballplayers are not lawyers and that actual attorneys were in the room representing the union and the league.
“It’s one of those things that I guess just slipped through the cracks. I can’t put a finger on it,” Davis said. “I just hope it doesn’t keep a trend for how arbitration works.”