Major League Baseball is a meritocracy, except when it comes to blue chip prospects. Instead of promoting the most talented young players when they are ready for the big leagues, many teams conveniently wait a few extra months. These clubs usually attribute the delay to “seasoning”, but in such cases, their patience isn’t a virtue. It’s blatant manipulation of the collective bargaining agreement (CBA).
Service time is the backbone of baseball’s current salary structure. For the first three years of a player’s major league career, his team holds the hammer. Regardless of performance, clubs can simply renew a player’s salary at the minimum amount required by the CBA (as Manny Machado found out this winter). All that changes, however, after three years and six years, when players earn the respective rights of salary arbitration and free agency.
As soon as a player is promoted to the big leagues, the clock starts ticking toward a big pay day. However, some teams do their best to slow down the advance. In a not so subtle way, these teams keep major league ready prospects in the minor leagues for an extended period. This ensures that a player will not accrue the needed service time to obtain arbitration eligibility and free agency in the standard three and six seasons (172 days of service time constitutes one year). Players who are manipulated in this manner are effectively denied arbitration until after four years and free agency until after seven (players who do not remain in the majors uninterrupted after their initial promotion often have to wait longer).
Estimated Super Two Cutoffs, 2009 to 2013
#Calculation based on assumption that player spent full 182 days in the major leagues in two subsequent seasons.
*Based on September 30 season end date; cutoff would apply to the player’s first season, or two years before the year listed.
Note: Estimate based on players who are promoted in year one and remain uninterrupted in the majors thereafter. A full year of service time is equivalent to 172 days; a full major league season is approximately 182 days.
Source: mlbtraderumors.com and.sbnation.com
In the 1980s, MLB owners weren’t very happy about sharing their wealth with the players. So, instead of paying market prices for talent, they actively sought ways to deflate salaries. The most notorious scheme was collusion, but service time manipulation was another tool. To counteract this practice, the Super Two system was implemented in 1990. This new wrinkle to arbitration, currently defined under Article VI; Section E of the CBA, ranked all players with between 2 and 3 years of service time and awarded an extra year of arbitration to those who: (1) had been active for 86 days in the prior season and (2) had combined service time in the top 17% of all applicable candidates. Unfortunately, this second stipulation inspired additional manipulation.
The advent of the Super Two designation created a game of chicken between teams. No longer could they stop a player’s service time clock by simply holding him out for the first two weeks of the season. Now, the determination of an extra year of arbitration would be based on an unknown number of days established years into the future. Not surprisingly, that led to more conservative assumptions, with teams deciding that it was better to be safe (i.e., longer delays) than sorry (i.e., face an extra year of arbitration, earlier free agency, etc.). When the current CBA upped the ante by awarding Super Two to eligible players with service time in the top 22% of the grouping, the incentive for longer holdouts was increased. The result has been a stifling of top prospects, many of whom are stashed in the minors for 2-3 months into the season.
It’s easy to see how players are negatively impacted by service time manipulation. Having arbitration and free agency delayed by a year or two can take a significant financial toll. However, there are many hidden effects. In addition to salary concerns, players earn the following privileges based on service time and, conversely, are denied them when manipulation occurs:
- Broader arbitration comps: In the cases of players with five years of service time, arbitrators are no longer directed to “give particular attention, for comparative salary purposes, to the contracts of Players with Major League service not exceeding one annual service group above the Player’s annual service group.”
- Spring Training allowances: For non-roster invitees, spring training allowances are based on service time (those with Super Two status or above are allotted full allowances).
- Rehab rights: Players with five years of service time are allotted several perks during a rehab assignment of at least 20 days at their team’s spring training facility, including “first-class jet air and hotel accommodations for his immediate family, and reimbursement for the cost of a family-size rental car.”
- Roster rights: Players with 10-years of service time (five with one team) are afforded no trade clauses. Players may also decline optional assignments to the minor leagues based on various service time thresholds. Players with at least Super Two status “may elect, in lieu of accepting such assignment, to become a free agent.”
Players aren’t the only ones hurt by service time manipulation. Teams that are committed to fielding a winning a team are also penalized. Whenever these teams promote a player early in the season, they are all but ensuring he will be granted Super Two. Because the criteria ensures a set percentage of players will be given that status, someone has to pay the price, and the ones footing the bill are the teams who don’t allow service time to dictate their roster construction.
It’s worth noting that service time manipulation is more than just a labor issue. By delaying the debuts of star talent, baseball is not only denying rights to certain players, it is also depriving its fans. Baseball teams thrive on fan loyalty, but it’s easy to see how that might erode when owners make decisions that put their wallet above winning.
Owners’ attempts to manipulate service time not only work against the best interests of baseball and individual teams, but they also violate the spirit of the CBA. In both cases, the commissioner of baseball is empowered to act. Unfortunately, Bud Selig has shown little interest in challenging a practice that has become a small market staple. Instead of exercising the same broad authority he has used to strong arm players (PEDs) and owners (relocation and financing) on pet project issues, Selig has allowed the sport to victimize players and owners who play by the spirit of the rules and potentially alienate fans who get frustrated by the shady dealings.
So, what should Selig do about the service time shell game? At the very least, the commissioner should be prodding the owners to make roster decisions based on merit and consider the economic impact of actually trying to win games. Jason Heyward is a perfect illustration of this dynamic. In 2010, the Braves had a choice: promote the talented young outfielder or hold him out for two months to extract an extra year of team control. Atlanta put competitiveness over frugality, and the team was rewarded as Heyward compiled a WAR over 6.0 and helped the Braves squeak into the playoffs by one game. Would the Braves have made the postseason without Heyward? Will the extra revenue derived from having a playoff team in 2010 offset the overall cost attributable to Heyward’s extra arbitration year? Teams should at least be asking themselves these questions before deciding to hold back a player who can help them win now. And, the commissioner should make sure they are.
If emphasizing the carrot proves futile, the stick should come out. Selig loves committees, so his next one should be a panel created to assess the validity of decisions that seem to be based on service time concerns. If the panel decides that manipulation exists, the team could be fined and the player awarded lost service time. Although subjective, baseball hasn’t been shy about assigning discipline to players based on circumstantial evidence, so it should have no qualms about holding owners to the same loose standard.
The best way to eliminate service time manipulation is an overhaul of the system. When the CBA comes up for renewal, the MLBPA and owners should cobble together a new structure based on compromises, starting with the elimination of arbitration. In the past, owners have unsuccessfully tried to rid themselves of the system, but players have fought them every step of the way. The reason the MLBPA has been so protective of arbitration is because it has worked in tandem with free agency to increase salaries. By limiting the number of players on the open market at any one time, free agency inflates contracts, which in turn become benchmarks for arbitration salaries (and vice versa). However, in today’s game, more and more players are opting to sign long-term deals well before free agency. This has effectively limited supply, so, perhaps, the MLBPA would be more amendable to giving up on arbitration.
In exchange for the players’ concession, the owners could lower the service time threshold for free agency to four years. Also, to avoid further manipulation, the first full season of service time would be lowered to 86 days, with each subsequent season remaining at 172 days. Finally, players with three consecutive seasons of full service time would automatically become free agents after their fourth season, which would further prevent first year manipulation. These measures might not eliminate manipulation, but they would significantly reduce the financial incentives.
Is arbitration a fair trade off for earlier free agency and more liberal service time requirements? If that exchange seems too one-side in favor of the MLBPA, it could consider capping guaranteed contracts at seven years for free agents and 10 years for players already under control (this measure would also help teams retain talent). Whatever the compromises offered, the goals should be to eliminate unfairness, emphasize competiveness and re-establish a meritocracy. It’s time to return baseball decisions to the talent evaluators. The accountants should be busy enough keeping track of the sport’s growing coffers.