The Beginner’s Guide to Service Time

While there’s rightfully plenty of focus on the events on the field, teams and fans are also interested in getting the right players onto the roster in the first place. This is why there’s so much focus on free agency, the trade deadline, and the draft. Games are won and lost on the field, but it’s a whole lot easier to win if you’ve assembled a good roster. As a result, we spend a lot of time evaluating roster moves. We care about how well teams are using their resources to assemble a team. One of the important concepts to understand when evaluating these moves is service time.

Service time is exactly what it sounds like; the number of years and days of major league service a player has in their career. Typically, it’s written as Year.Days, so we would express a player with four years and one hundred and fifteen days of service time as 4.115. You earn a day of service time for every day you are on the 25-man roster or the major league disabled list during the regular season. If you’re called up on June 22 and you’re sent down after June 28, you’ve earned seven days of MLB service. Your team doesn’t have to play a game for you to accrue a service day.

There are usually about 183 days in an MLB season, but a player can only earn a maximum of 172 days per year. That means if you’re on the roster for 178 days, you earn 172 days. If you’re on the roster for 183 days, you also earn 172 days. Not surprisingly, 172 days of service is equal to one year of service.

Service time is, very simply, a running count of how long you’ve been a major league player. Why does this matter for roster construction?

It matters because of the way salaries are structured and free agency is granted. A team has the rights to a player until that player earns six full years of MLB service time (there are special rules for players who spend many years in the minors). In other words, as long as your team offers you a contract, you can play only for them until you hit six full years of service. Once you hit six full years, you can become a free agent and sign with any team you like.

This is particularly important because six full years of service means six full years of service. If you end the season at 5.171, your team has your rights for another entire season under the terms of the collective bargaining agreement (CBA) between the players’ association and the league. Generally speaking, this clearly defined cutoff point means that most players spend their first seven major league seasons with their original team (unless they are traded or released, of course) because teams know not to call a player up until they can no longer earn 172 service days in their first year.

Service time is also a key factor when it comes to pre-free agency salaries. For your first three years of service, you essentially have no bargaining power as a player and have to play for the major league minimum. Some teams will give modest raises each year, but in general, the first three years of service are worth just over $500,000 each for the player. For the next three years of service (years 4-6), the player may go through salary arbitration. This allows them to make more money based on their quality of play to date, although the structure does not allow them to make free agency level dollars and is based on somewhat imperfect methodologies.

Broadly speaking, teams have the rights to players for six full years (basically seven years) and can pay them the minimum for half that service time and arbitration level salaries for the rest. Much like there is a cutoff for free agency, there is a cutoff for when a player is eligible for arbitration instead of the league minimum salary. While free agency requires six full years, arbitration requires between two and three years of service time.

If you take all of the two year players each year, the top 22% when it comes to service time are designated as “Super Two” players and get to go to arbitration four times instead of three. So a non-Super Two player would play four seasons at the minimum and three under arbitration while a Super Two player would play three at the minimum and four at arbitration prices.

Why does all of this matter? Why should you care about service time?

Service time matters because players are not just their on-field abilities, they are also their contracts. A 4 WAR player making $20 million and a 4 WAR player making $4 million produce the same number of wins on the field, but if you have the second player, you have those 4 WAR and you have an extra $16 million to spend on another player who could help your team. Assuming every team has some type of budget and cares about the bottom line in some fashion, it’s better for teams to accumulate good players who have cheaper contracts.

Service time is a very important factor here. Players who have not reached free agency are cost-controlled. The collective bargaining agreement defines very clearly the terms of these pre-free agency players. They will make $1.5 to $2 million over their first four seasons and then they’ll make some fraction of their fair market value in each of the next three seasons. It wouldn’t be surprising for a good, young player to make under $40 million before hitting free agency even if they amassed 28 WAR over seven seasons. On the free agent market, a player like that might earn $200 million!

You can see the obvious appeal of players who haven’t reached free agency. There is almost no way, based on the terms of the CBA, that they will cost as much as similarly talented players who are available in free agency. In other words, these players are desirable because they are a most efficient way to spend a team’s finite resources.

When you are acquiring a player, you’re acquiring their contract. Players who haven’t reached free agency have cheaper contracts, allowing teams to get more for less.

Let’s talk about it practically. Imagine you have a player who is going to become a free agent after the upcoming season who makes $15 million per year and you think is roughly a 3 WAR player. Now imagine another team has a rookie who you think is a 1.5 WAR player. Would you trade your veteran for the rookie? It depends on a lot of factors, but we can say pretty clearly that your veteran is a better player right now. Even if you don’t think about the future value of either, there still might be reason to trade for the rookie. Why?

You might trade for the rookie because you would be freeing up about $14.5 million of salary and it’s possible that you could take that $14.5 million and use it to sign a player who is worth more than the 1.5 WAR you lost in the trade. And again, that’s before you consider the fact that the rookie has five or six additional years under contract after this year. Even if they never get better, that’s 9-10 WAR for much less than the free agent cost of those wins.

Understanding service time is important for evaluating roster moves because teams want to get as many wins as possible for as few dollars as possible. That’s just the nature of the beast. If you can find a way to win for less, you do it and teams use service time considerations to make that happen.

First, they make sure that they don’t call a player up too early in their first season so that they do not accumulate 172 service days in year one. That’s why teams call up top prospects after two or three weeks at the beginning of the season. If you want until mid April, you have bought yourself an entire seventh year of service at the cost of two or three weeks of play in year one.

Second, teams do their best to call up players after the “Super Two” date, which is usually about 60 days into a season. This means if you wait to call up a player until June of their first year, you’ve earned an extra year of team control and have minimized what a player can make in arbitration. It may not be the most labor friendly practice, but it’s the incentive structure the CBA supports.

Third, the whole idea of service time and players earning free agency through major league service limits the salaries of young players. This makes young players a more cost-effective way to build a roster. If you have $140 million to spend on players, you’d love to spend as little as possible on free agents because free agents make the most money. One way to do that is to have as many players as possible on your roster whose salaries are determined by things other than the market.

No matter what you think about the merits of the current system, understanding it is paramount to understanding the modern game. Cost-controlled players are popular because they allow teams to spend less in free agency and at the trade deadline. Once players become free agents, service time is less important. There are pension implications, and when players have earned 10 years of total service and five years of service with their current teams, they earn the right to veto any trade.

The key points to remember are that a year of service is 172 days and that you have to get to six full years to be a free agent. That basic fact drives the way teams value your performance because players are cheaper before free agency and teams are businesses trying to maximize their profits. There’s plenty of other angles to explore with respect to service time such as pre-free agency contract extensions and non-tenders, but we’ll leave those discussions for future posts.