tion, players who resisted signing were effectively "blacklisted" and forced out of major league baseball.
In 1974, players and owners agreed to two significant changes in salary negotiations. First, players with more than six years experience and not currently under contract to a team could choose to be free agents. Teams could competitively bid for free agents. Second, players with between three and six years experience could settle salary disputes through arbitration. Players with less than three years experience continued to be subject to the "reserve clause," while players with more than six years experience could invoke arbitration, although only with the consensus of the team.
The form of arbitration used in major league baseball is final offer arbitration. Final-offer arbitration is where the third-party arbitrator settles disputes by selecting one of the final offers submitted by the disputing parties as a binding arbitration award. There can be no compromise between the salary figures. Under the process used in baseball, the player and owner must submit final salary figures before a hearing is scheduled before a single arbitrator. This arbitrator is selected from a panel chosen by the Major League Baseball Players Association and the owners' Player Relations Committee. Both organizations jointly assign individual arbitrators to particular cases. Negotiations can continue during this time and the case may be withdrawn from arbitration if an agreement is reached prior to the hearing. In deciding the case before him, an arbitrator
can consider only a limited range of criteria in making a decision: the player's performance during the past year, length and consistency of the player's career, salaries of comparable players, and the on-field success and public attendance enjoyed by the team. The profitability and market size of the team cannot be considered by the arbitrator. Neither can the arbitrator cons...