On the issue of compensation at baseball’s minor league level

Major league baseball is taking steps to preserve their pay system for minor leaguers, which results in sub-minimum wages for the large majority of their lower-level employees. An excellent article on Fangraphs by Sheryl Ring (read here - it is very good) summarizes the consequences of adding the “Save America’s Pastime Act” as a line item in an omnibus spending bill. Lindsey Adler’s tweet summarizes:

MLB is attempting to preempt action that could force an upgrade in the treatment of their “supply chain”. As the above tweet points out, minor league baseball players could become exempt from federal labor laws. That would mean that MLB and its individual clubs could continue to cash in on the dreams of young players who form the large majority of their farm systems. The small percentage of minor leaguers that make the major leagues can do well financially; major league minimums are significant, and even more importantly 43 days of service in the big leagues gives those players full vesting in the Major League Pension System.

However, according to Chasing the Dream, about 10% of minor league players play at least one day in the major leagues (which qualifies them for health insurance for life). Of course, the number that get to that minimum requirement (43 days) to qualify for a full pension is much smaller. Let’s be generous and say that half of them make it. That leaves 95% of minor leaguers who are basically toiling for sub-minimum wage to underwrite the major leagues’ development system. A system that handsomely rewards successful players (and I have no problem with that) and even more handsomely rewards owners and ownership groups who purchase teams, use public funds to build and maintain stadiums and infrastructure, use creative bookkeeping and friendly tax laws to write off expenses and hide income, then sell their franchises for incredible profits.

Some owners are more blatant than others. The Miami Marlins (formerly the Florida Marlins) used public financing to build Marlins Park, which opened in 2012. Despite several legal challenges to the public financing, the project moved forward because it did not use General Fund taxes, but rather used money from tourist funds specifically allocated for projects of this type. Setting up funds like this takes great foresight.

Shortly after the completion of the publicly funded park, Marlins owner Jeffrey Loria had his franchise up for sale. Last off season the team was sold for $1.2 billion dollars to an ownership group including former Yankee star Derek Jeter. Loria then attempted to renege on an agreement with Miami-Dade County that a percentage of the profits from the sale of the team after the publicly funded ballpark was approved would go back to the county. Loria’s bookkeeping showed, of course, that he hadn’t made any money on the sale. The county sued and litigation will undoubtedly continue for many years. The first decision in the case actually favored the county, so perhaps they will recoup some of the taxpayer (tourists are people too!) windfall provided to Loria.

This is the level of chicanery that minor league players are facing in their quest for an equitable share of the incredible amounts of money generated by major league professional baseball - now being estimated at more than $10 billion per season.

The Players Union is the obvious vehicle for minor league players to improve their standing, except that they aren’t members. It seems unlikely that major league players and their union are going to be willing to take up this cause because they will be focused on remedying the current CBA (Collective Bargaining Agreement) that has allowed teams the upper hand in dealing with free agents, a situation that has brought forth claims of collusion by teams in signing free agent players in an offseason that has seen a drastic drop in the amount paid to free agents, with terms significantly lower both in amount and length than previous years. These savings could go to bolster the sub-minimum wages of minor league baseball players, but they won’t.

Our own Kyle Lesniewski, in June of 2016 (in this article in Baseball Prospectus), set the pay levels of low level minor leaguers at $6000 per year. Other estimates place pay between $6000 and $7000 per year. Kyle further described the situation thusly:

The system is one that is stacked against them not only by ownership groups, but also the big league players who won’t allow them to unionize or fight for better working conditions down on the farm. There is little recourse for minor leaguers who are forced to live on incomes near poverty level while they chase the major leagues. Making it to The Show even for a few weeks can be life changing financially for these players. The minimum big league salary comes out to over $2,500 per day, or more than most of these guys make in a month. Not to mention qualifying for a lifetime of health insurance after just one day in the bigs and vesting in the pension program after 43 days.

Becoming a major sport athlete requires full time development, but minor league baseball players must either rely on the support of others (parents, spouses) and pick up other jobs in the offseason to meet poverty levels of income. Pay levels for minor leaguers are at about half of the level of fast food workers. Of course, these players can opt to leave baseball and get “ordinary” jobs. What will major league baseball do if this becomes common? Will it hurt the level of play?

The logical move for the various team ownerships and the offices of major league baseball would be to avoid lawsuits about their treatment of their lowest paid employees (after all, I expect that ushers and concession workers at minor league parks are paid at the minimum wage, if not higher) by formulating a plan that compensates them fairly, or at least more fairly. Logic doesn’t seem to enter into it, though, and it will most likely take legal action by individual minor league players to make it happen. Unless our federal government enters into collusion with baseball to make it impossible. Laws made to protect and enhance the wealth of the wealthy? Well, some things never change. It looks extremely petty, though, because it is.