Pay Inequality in the Minors - A deeper dive

To start this article, I want to point out that I’m not an attorney, I have numerous facts and figures and the associated sources I pulled them from, but I do not guarantee any of this information, it’s as factually accurate as I was able to put together but I can’t claim it’s accuracy other than that I found what I believe to be reputable sources. There will probably be numerous corrections (looking at you WMT).

On January 7th, Forbes.com (and tons of other sources) reported that the MLB posted record revenues of $10.3 Billion last year, and that there is a major deal in the horizon which will expand that. This is a great thing, I love baseball, and more fans, sponsorship, and viewership resulting in more money is a great thing.

But this only exacerbated an issue to me. March of last year, Major League Baseball lobbied for Congress on behalf of the “Save America’s Pastime Act”, for minor league players to be seen as seasonal employees and not covered by Fair Labor Standards Acts. It removes their ability to earn overtime (even in the event of games on 6 or 7 days straight), It also removes the need to pay for players attending Spring Training which shocked me. The MLB increased their spend on lobbying congress by over close to $1 Million per year (according to APNews to combat a lawsuit brought forward on a claim looking for pay based on hours worked.

According to the LA Times The maximum allowable monthly wage for a 1st year player is $1,075, and in AAA the minimum salary is $10,750 per year. (Other sources note salary minimum of $2,150 in AAA for the ~6 month season totaling roughly $12,900). Once a player is added to the 40 man roster, their salary bumps up to roughly $40k/year.

So let’s look at the interesting dynamic that surrounds Minor League Baseball players that most people do not understand. First off, until they are part of the 40-man roster of a professional baseball team, they are NOT represented in any way by the MLB Player’s Association. The MLBPA does not have any fiduciary responsibilities for these players and thus have an obligation to be less concerned in regards to rules made that effect minor leaguers. This is why the MLBPA does not fight for them. Additionally, as anyone knows, when they negotiate, their purpose is to do the best for their members. If they were to push owners to “give” more to the minor league players, there would be leverage for the owners to request to “take” something from them, which obviously is against the best interest of their members. Here is an interesting quote expressing the same point:

“In negotiations, everything is essentially traded dollar for dollar,” Andrew Miller said. “There might be a possibility for us to pressure the MLB side to raise wages on the minor league side. However, we would probably be sacrificing, say, arbitration, or some sort of dollars that are being spent on us elsewhere. That is just the reality of the deal.” (Andrew Miller is MLBPA Executive Board Member)

As you dig deeper, it gets a bit more convoluted, with the relationship between the MLB and minor league teams being dictated by the PBA (Professional Baseball Agreement). Minor League Teams are independently owned and operated, thus all profit/loss is on the owner of the minor league team. Interestingly though, the players and coaches are paid for by the associated MLB team. The expenses for the minor league club owner are related to front office personnel, expenses related to the stadium, equipment, travel, etc. (Basically MLB provides the team, you own everything else that has to meet their standards). The owners of the minor league teams have no control of the pay of the minor leaguers.

You may be starting to sense a pattern, the Owners in the MLB, the Owners in MiLB, the MLBPA all would be personally negatively affected if they pushed for higher wages in the minor leagues. The President of Minor League Baseball had this to say:

”people want to debate about the fact that McDonald’s worker make more than minor league baseball players, and that’s a fact. But I don’t think that somewhere there’s a major league in French fry prep that makes $550,000 (as its) minimum wage or starting wage.” - Pat O’Conner in an interview with Baseball Prospectus

There’s some arguments against minor league players being paid a higher salary, which I think warrant being discussed. The first is generally in regards to the bonuses that players receive upon being drafted. This argument makes sense as people generally discuss the top few rounds and their outrageous signing bonuses. The issue I have with this is two-fold, first there is a majority of players received minimal bonuses (between $10k-$100k generally), and secondly in 2012 the MLBPA and owners agreed to limit the amounts spent in the draft, further reducing the spend teams could make.

Obviously, there’s a ton of articles out there in regards to this topic, but as I was doing research, I stumbled upon this quote from CBS Sports:

“Keep in mind that, at any given moment during the season, there are about 4,500 players on minor-league rosters. Paying each of them an extra $300 per month would equal another $8.1 million total for the season. “

I want to take a step back and look at that figure, because to me $8.1 Million spread across 30 teams is such an insignificant amount in the game of baseball. This assumes that there are 150 minor league players per team, which does not seem out of line. The 300 * 4,500 * 6 months of baseball - adds to the $8.1 mil / year, the math at least on a high level seems to check out.

What would it take to make it change happen?

Honestly, either the MiLB players joining the MLBPA or unionizing themselves. It’s interesting, Hockey, a sport with less than half the overall revenue (reported to be just under $4.5 Mil for 2016/17) has the PHPA (Professional Hockey Player’s Assocation) and provides a leauge minimum of around $50,000 with health benefits and educational support. There are understandable counter arguments as the number of players in each sport and injury risk, but the MiLB to me is still far below the comparative salary.

So why haven’t the minor leaguers unionized? SBNation did a whole article on it, and to sum it up in one word: Fear. I’d recommend reading the article but here is the quote from Garrett Broshuis, a former player turned labor lawyer:

”“Fear is the predominant issue for players,” Garrett Broshuis recently told SB Nation. “When I was talking to players [about organizing], it’s not that they didn’t recognize the benefits of a union, but they were scared. They looked at me as if I might as well have been asking them to jump off of a cliff with me. They are so fearful of those owners, and what they might think about it, and how the owners might judge that decision to act collectively.”

They’re afraid that joining the union would be career suicide and all but eliminate their chances of ever advancing to the major leagues. A scary thought for a person willing to pursue their dream even at below minimum wage.

My Summary and Thoughts:

This whole topic makes me sad. It makes sense, both on how we got to where we are today, and even why it’s a challenge to get it fixed. It’s in everyone but the players being hurt by the situation’s best interest to not change it.

The most shocking part to me is the dollars and scale that we are talking about. The $8.1 Million that is noted above. That’s $270,000 per team. I’m a General Manager of a business, I can understand why no one would want to spend an additional $270k. But that’s 1/2 the cost of a league minimum player.

I have seen discussions and proposals in regards to adding a 26th man to the active roster. Adding a 26th man to the roster would be equivalent to paying an extra $600/month for every single player in the minor leagues, and never once have I heard the argument that it would hurt MLB teams financially.

I can understand why it’s so difficult for changes to happen, especially as revenue is not spread equally though organizations. To me it feels like this has gone too far and has to be fixed. There’s a looming threat of a strike as player salaries are not escalating as they had been previously, and while that’s an important matter, the pay of minor league players dwarfs that in the need for attention.

Let me know your thoughts on the matter. What did I miss? What do you think minor league players should be paid?