Service-time structure a major sticking point as MLB lockout begins

The process for determining free agency and arbitration eligibility figures to be among the more contentious aspects of collective bargaining negotiations transpiring over the coming weeks. The MLB Players Association is expected to push for an overhaul of the existing system to get more money to players earlier in their careers.

Under the current structure, players are first eligible for free agency after logging six full seasons of big league service. Most play their first three seasons on salaries right around the league minimum, first qualifying for arbitration after three years. (The top 22% of players in the two-plus year service bucket also reach arbitration via the Super Two exception).

Jeff Passan of ESPN wrote earlier this week the MLBPA is hoping for players to reach free agency after six years of service or after five years of service and 29.5 years of age, whichever comes first. The Athletic reported in August they were also seeking arbitration eligibility after two seasons. The former ask would be an unprecedented development. Since the 1975 abolition of the reserve clause, every collective bargaining agreement has set a six-year service threshold for free agency qualification. There is some precedent for the latter proposal, though. Between 1973 and 1987, players only needed two years of service to reach arbitration.

The league, unsurprisingly, hasn’t been keen on either idea. Over the summer, MLB proposed scrapping service time considerations altogether and making players first eligible for free agency at 29.5 years old. That was unsurprisingly a non-starter for the MLBPA.

While an age-based threshold would certainly be of benefit to some late-bloomers (hence the MLBPA’s desire to incorporate age into the equation to some extent), it’d also have a negative effect on many of the game’s top young stars. Carlos Correa and Corey Seager — each of whom is either expected to command or already has commanded one of the largest deals in major league history this offseason — would still be multiple years out from free agency under that kind of setup.

An age-based system would, however, address another concern players have expressed: service time manipulation. Calling up a player just days after the threshold passes for a player to earn a full season of service can give clubs a de facto seventh year of control, a loophole multiple teams have exploited when deciding when to promote their top prospects. That would no longer be a relevant consideration under an age-based system, but even the MLBPA’s modified “age/service time hybrid” proposal could lead to gaming of players’ service clocks.

Evan Drellich of the Athletic wrote Wednesday that the MLBPA has resigned itself to the potential for manipulation in any system with service time considerations. As a means of somewhat offsetting that issue, Drellich writes they’ve considered more creative ways of players “earning” service time beyond simply counting days. He floats the idea of a player who narrowly missed a service time threshold picking up additional service credit depending upon All-Star nominations or MVP voting.

Regardless of the specific form it takes, it’s clear that getting more money to early-career players is a priority for the MLBPA. Last week, Mets right-hander Max Scherzer — a member of the Players Association’s eight-person player subcommittee — told Drellich “unless this CBA completely addresses the competition (issues) and younger players getting paid, that’s the only way I’m going to put my name on it.”

Earlier free agency eligibility seems to be a non-starter for the league, however. Drellich wrote Wednesday that the league refused to make a counter-offer to the MLBPA’s proposals on service time and luxury tax issues unless the union dropped its push for earlier free agency. Drellich reported Thursday morning that the league has been similarly steadfast in its objections to arbitration eligibility after two years.

MLB has shown a willingness to revamp arbitration, albeit not in a manner the MLBPA has found acceptable. Over the summer, MLB proposed abolishing arbitration altogether and replacing it with a revenue-based pool system to be distributed to younger players based on performance. In MLB’s vision, salaries would be fixed based on objective performance metrics — likely some form of Wins Above Replacement statistic.

At a press conference this morning, Commissioner Rob Manfred reaffirmed the league’s objection to earlier free agency and arbitration eligibility (link via Bob Nightengale of USA Today). Manfred argued that the league “already (has) teams in smaller markets that struggle to compete. Shortening the period of time that they can control players makes it even harder for them to compete. It’s also bad for fans in those markets. The most negative reaction we have is when a player leaves via free agency. We don’t see that making it earlier, available earlier, we don’t see that as a positive. Things like a shortened reserve period … and salary arbitration for the whole two-year class are bad for the sport, bad for the fans and bad for competitive balance.”

Manfred echoed competitive balance concerns in pointing to another issue of contention: revenue sharing. The MLBPA has sought to cut back on the amount of money being distributed from higher-revenue franchises to their lower-revenue counterparts, believing the reallocation “goes too far in keeping teams afloat without having to invest in players.”

The MLBPA has expressed concern about whether smaller-market clubs adequately reinvest those funds, filing grievances against teams like the Pirates, Rays, A’s and Marlins in years past. The 2016-21 CBA required teams to use revenue sharing money “to improve its performance on the field,” but investments in such things as scouting and player development staffs fit that criteria without offering direct financial benefits to players.

Manfred implied this morning that the MLBPA has expressed a desire to reduce revenue sharing by around $100M, a development he said would further harm small-market clubs’ ability to compete. How significantly those proposals would harm competitive integrity is up for debate. MLBPA negotiator Bruce Meyer argued they’d have the opposite effect.

“Our proposals would positively affect competitive balance, competitive integrity,” Meyer told Drellich.

There’s little question that shrinking teams’ windows of contractual control would get more money to younger players. Unless paired with a drop in spending on older veterans, that’d raise the players’ overall share of revenues — a development with which Manfred and league ownership groups certainly wouldn’t be enamored.