It seems misleadingly phrased by Merloni, like of course they’re blind bids (doesn’t seem like the right term) until the other party sees them. But then there must be some time to try to agree before today, otherwise how would so many agreements be reached today?
I've participated in some mock MLB Arbitration stuff* (Mark Feinsand was my judge once!) and you're right to be suspicious of how Merloni said this. It is technically true that the formal numbers submitted by each side to the arb board are "blind." But both sides are basing their submission largely off of past awards-- precedent is big with the arb judges, apparently -- and so it's pretty much known what the range is to all bidders.
But that's the arb process. That's what just began here. Until now, there's been nothing to prevent them from totally normal negotiations, and it would seem obvious to at least attempt such negotiation before moving to the formal proposals. Indeed, that's how the other deals must have been reached.
So Loomer is not
wrong-- a $500k arb offer difference does not mean they decided to fight over $500k. If you wanted to look for a more charitable explanation, it seems plausible to me that Duran was pushing for a multiyear deal, maybe even playing hardball and exclusively discussing that, because the loss prospect of ending up with the "bad" arb deal is not that much worse than getting a "good" arb deal, whereas if the tactic works and they extend Duran, he's set for life.
But your intuition is correct: normal bargaining can happen without issue, and everyone knows what the one year deal would look like because its based off precedent, so you all know the neighborhood you're shopping in, so failing to reach a deal is still a reflection of bad work and pinching pennies, IMO. You should come to him at 11:59 and say "sorry we couldn't agree on a 3 year deal, let's just say [number that's a little too high based on precedent]." But that's easy for me to say from outside, there are innumerable ways these conversations can complicate.
Anyway my rambling point is, you're right to be suspicious of Lou's characterization, though he's technically correct. And while failure to reach a one year deal always smells like penny pinching to me, whatever you think of it, it's probably not quite as awful as "we decided to fight him over $500k". It's at least marginally more complicated than that.
I too will be rooting for Duran to win, even though I'm still mad at him about the slur.
*(I haven't done it in three years now so mea culpa in advance if the rules have changed in some way that's not obvious to me and makes me sound dumb here.)