Voice of experience represents owners Salary arbitration season means it's time for Tal Smith to make his pitch.

Posted: January 26, 2009

Sometimes you just get the feeling that things aren't going your way in a salary arbitration hearing.

Tal Smith had a good chuckle recalling such an event the other day.

In 1986, he was representing the Kansas City Royals in an arbitration case against pitcher Bret Saberhagen.

After both sides made their arguments, the arbitrator slid a piece of paper over to Saberhagen and requested an autograph.

"That sort of distressed us," Smith said in a telephone interview from his office in Houston, where he runs a consulting business and serves as president of baseball operations for the Astros. "Needless to say, we lost that one."

When it comes to salary arbitration in baseball, Smith has seen it all. He argued his first cases in 1974, the year baseball adopted the process, when he was an executive vice president with the New York Yankees.

Over the years, Smith and his staff have prepared more than 900 arbitration cases, with more than 160 going to a hearing.

Smith said he doesn't know what his record is, though it is over .500.

"I know we lost our last one," he said. "Before that, we won six in a row."

The last one took place 11 months ago. Smith represented the Phillies in a historic showdown against slugger Ryan Howard. The Phillies contended that Howard should be paid $7 million, a figure commensurate with what elite players in his service class made. Howard's advisers, led by agent Casey Close, argued that their man's special accomplishments made him worth $10 million.

Howard won the largest salary ever for a first-time arbitration-eligible player.

He added to his legend by leading the majors in homers and RBIs in 2008. Barring a settlement, Howard will head back to the arbitration table next month. (The date has not been made public.) Howard is seeking $18 million for 2009. The Phillies have once again hired Smith to argue; they contend that Howard is worth $14 million. If there's a hearing, an arbitration panel will pick one salary or the other.

Smith, who could not comment on the specifics of Howard's case, has a long history of representing the Phillies. He has argued seven of the eight cases the club has had during the arbitration era, winning all but Howard's.

The Phillies were actually players in Smith's getting into the business of preparing arbitration cases for clubs. He was the Astros' general manager from 1975 to 1980. He built a club that won 93 games in 1980 (the most in franchise history to that point) and was named Sporting News executive of the year. But Smith was fired after the Astros lost the National League Championship Series to the Phillies.

Before the 1981 season, the Oakland Athletics asked Smith to help them prepare arbitration cases against Mike Norris and Tony Armas. With Smith's help, the A's prevailed in both. Soon, other teams were enlisting Smith's services during arbitration season. His company, Tal Smith Enterprises, was born.

From 1981 to 1994, the company did consulting work for 26 teams, ranging from evaluating minor-league systems to finding prospective buyers for clubs. Since 1994, the company has handled only arbitration cases for teams.

When Drayton McLane bought the Astros in 1994, he recruited Smith back to the organization. Smith was leery to give up his consulting business, which over the years had a staff of as many as 10, including part-timers who worked during arbitration season. McLane said it would be OK for Smith to keep his consulting business, as long as his work was limited to arbitration cases. Smith was named president of baseball operations. He is 75 - although he looks years younger - and this will be his 52d year in pro ball.

Smith's role with the Astros has led to small amounts of criticism, particularly from the media, that his handling of other clubs' arbitration cases is a conflict of interest.

"People who raise that issue don't understand," Smith said. "When you represent a club in arbitration, you're acting in the best interests of ownership as a whole. If you prevail, it helps the salary structure for the entire industry.

"It is no more of a conflict than if a club official serves on an MLB-level committee that deals with ownership issues of another club, revenue sharing, or radio and TV rights that might have an impact on all clubs."

Rex Gary, a Philadelphia-based player agent who has argued more than 30 arbitration cases, has found himself across the table from Smith several times.

"I don't see it as a conflict of interest," Gary said. "There's no way Houston's interests diverge from another club's when Tal argues a case."

Gary added that Smith is "very good at what he does."

The Phillies agree.

"Tal has great experience in this area," GM Ruben Amaro Jr. said. "He's great because his approach is the same as ours - get an equitable deal done."

Smith has a background in scouting, and he is a longtime member of SABR, the Society for American Baseball Research. When he prepares and argues a case, he uses his observations as a baseball man, as well as statistical data.

"Contrary to what media and fans think, a hearing is rarely a demeaning or denigrating exercise," Smith said. "That's one of the great misunderstandings. It's a continuation of the same kind of negotiation and debate that the two sides have already had, except arguments take place in front of arbitrators.

"Stories of mudslinging are exaggerated. I've done over 160 cases and I can only think of two or three over the years where there was really animosity. If you point out a negative stat, you're not saying, 'This guy is not a good player.' If a guy hits .300 or has 20 wins, that's a fact that will be pointed out. By the same token, if a guy hits .218 or has a five-something ERA, that will be pointed out. But it's out there to begin with."

Smith said he and his staff have put in "several hundred" man-hours preparing Howard's case. At a hearing, the two sides can use exhibits, data and subjective analysis during their hourlong presentations in front of a three-person panel of American Arbitration Association members.

Smith is glad the days of the one-person arbitrator ended in 1993.

He recalled one arbitrator telling him how he made his decision.

"He'd always get a hotel room with two beds," Smith said. "The guy would lay out one side's information on one bed and the other side's on the other bed and make his call. I guess he used to sleep on the floor in the middle."

Smith has seen many changes in arbitration since it began in 1974. In the early days, sides would argue over $5,000. In 1986, Smith and his staff - which included Ed Wade, the former Phillies and current Astros GM - argued 25 cases. In recent years, as the spread on salary filings has reached the millions of dollars, the number of midpoint settlements has increased while the number of hearings has shrunk. Last year, there were just eight hearings.

At one time, 13 teams used Smith to prepare arbitration cases. This year, only the Phillies and Astros are using him. (Amaro would not say what the Phillies pay Smith.) As front-office staffs have grown, more teams handle their own preparations and arguments. In fact, Amaro said the Phillies would like to handle their own cases in-house in the coming seasons.

With 10 arbitration-eligible players at the start of the off-season, Amaro said, "we believed it was important to have Tal's support." Nine settlements have left the Phils with one remaining mega-case: Howard's.

Wade called Smith "one of the best competitors I've met in my life. He treats every case like it's the seventh game of the World Series."

Smith, who loves the mental challenge of a case, acknowledged that he does not like to lose, but he would not say whether he was eager to get back to the table and try to avenge last year's loss to Howard.

"I know it sounds contrived, but basically we're here to do what the club wants," he said. "The objective is to settle on a fair salary. If a hearing is needed, all I can say is we'll be prepared."

Contact staff writer Jim Salisbury at 215-854-4983 or jsalisbury@phillynews.com.

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