The decision whether to offer a player a contract by the December 13 deadline is automatic in most cases. Where it is not, or more accurately, when the team declines to offer a contract, it makes for an interesting statement on that player. "We don't want you, we'd rather have the roster spot." You can argue that in some cases the decision is designed to avoid an arbitration award that the team may deem excessive, but since an arbitration-determined salary is almost always below market value, that doesn't carry much water.
Baseball Prospectus
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