Minor League Baseball’s Major Contract Problem

Tweet

Fall signals the arrival of colder weather, brown leaves, and pumpkins.  It also brings one of the best times to be a sports fan with the National Hockey League (NHL) and National Basketball Association (NBA) starting new seasons, the National Football League (NFL) in full swing, and postseason Major League Baseball (MLB).

In 2021, the Atlanta Braves were the MLB Champions after they defeated the Houston Astros in the World Series.  For the twenty-six players on each team, winning the World Series is a career accomplishment that ensures their place in baseball history. Many of those playing in the World Series make millions of dollars per year.  But what about the 3,500 players in MLB’s developmental league, Minor League Baseball (MiLB)?

Minor League Baseball is comprised of five leagues:  Rookie League, Low Single-A (A-), High Single-A (A+), Double-A (AA) and Triple-A (AAA).  These five leagues are made up of players scouted, drafted, and signed by MLB teams who have an affiliate team in each league.  The players in each league are more skillful than the last in ascending order from Rookie League to AAA.  Once an MLB team signs a player to a contract, the team can assign said player to any of its five minor league teams for the purpose of player development and improvement.  The goal is for the player to improve enough to play in the majors.  Over this period, an organization can promote the player from one level to the next if he is playing well, or, demote the player if he is playing poorly.

The Uniform Contract

All Minor League players sign the same uniform contract per MLB Rule 3(a)(1)(A)(ii).  MLB claims in Rule 3(B)(2) that all contracts are uniform to “preserve morale among Minor League players and to produce the similarity of conditions necessary for keen competition.”  This contract lasts for seven championship seasons, which is any Minor League season where the player is not injured or suspended for the entire season.

The player must acknowledge that a salary will only be paid during the championship season.  Therefore, a player is paid for the five months that make up a Minor League Season, which is typically from April to September.

Exactly how much a player is paid depends on what league a player is currently playing in.  Prior to 2021, each week, minor leaguers earned: $290 in Rookie, A-, and A+ leagues; $350 in AA; and $502 in AAA.  After pressure from fans, the media, and the players, Major League Baseball decided to give the players a raise before the 2021 season.  This change saw Rookie and A- players’ weekly earnings increase to $400, A+ players’ weekly earnings to $500, AA players’ weekly earnings to $600, and AAA players’ weekly earnings to $700.

The Signing Bonus Myth and Other Problems

The uniform contract and its terms have been the focus of serious negotiations between players and the league and problems still exist with the terms.

First, terms in the contract are measured in “seasons” instead of years which accords MLB teams appreciable power to control a player.  If a pitcher needed Tommy John surgery, which typically requires a year of recovery, the MLB team would control the player for eight seasons.  Tommy John surgery is common amongst pitchers.  In 2014, one-third of all pitchers underwent the procedure, which repairs a torn ulnar collateral ligament in the elbow.  If the contract term was in years, players would have more control over their own careers if they wish to leave their current team.

Second, the players are only paid five months per year.  Players do not get paid for mandatory participation in Spring Training, which starts in February, or in any other fall or winter activities.  The same contract requires a player to maintain a high standard of conditioning throughout the entire year and requires a player to be physically prepared for a long season.  Every player’s goal is to be physically prepared so they can advance through the minor league system and reach the majors.  Major League players can afford personal trainers, nutritionists, and personal chefs to help keep their bodies in peak physical condition.  Meanwhile, minor leaguers must try to scrape by off the income earned during the season, or they must get a job in the offseason.  This makes life especially difficult, particularly for players with families.

A five-month salary could be sustainable, but the third issue with the MiLB uniform contract is the pay itself.  As mentioned above, the players’ weekly salaries recently increased prior to the 2021 season.  It is estimated that the yearly salaries of Rookie and A- players is about $8,000; A+ players will earn about $10,000; AA players will earn about $12,000; and AAA players will earn about $14,000.  These salaries are much lower than the minimum salaries paid to G-League players, the NBA’s developmental league, who make $35,000 over a five-month season and American Hockey League (AHL) players, the NHL’s developmental league, who make $52,000.

In the United States, the poverty line for a single person is $12,880.  Therefore, most minor leaguers must live below the poverty line and some work jobs in oil fields or construction in the offseason.  Many are forced to share apartments with multiple teammates, with some having to sleep in trailers or in their cars.  Because a player can be sent to another team anywhere in the country at the MLB team’s discretion, rental situations may be drastically inefficient and frustrating.  However, in October 2021, MLB decided to require each of its 30 teams to provide housing for their minor league players, which greatly reduces the burden on players to find apartments to rent in a short amount of time and spend what little money they have on rent.  While some minor league teams are in small, country towns where rent may be well below the national average, there are minor league teams in San Jose, California, and Brooklyn, New York where rent is far above the national average.  Thus, this decision is very important to the players.

The next step for MLB is to increase minor leaguers per diem.  When Minor League teams are on road trips to play other teams, players receive a per diem of $25 each day to spend on meals.  This is even less than the per diem of Division 1 baseball players and less than the per diem of the G-League at $50 and the AHL at $81.  If a minor league player eats three meals per day, that allows a player to spend $8.33 per meal.  With a per diem this low, it is near impossible for these athletes to purchase healthy, nutritious meals.  A player does not receive a per diem when playing at his home ballpark but does have to pay clubhouse dues, out of pocket.  These consist of payment to the clubhouse manager or “clubby” who will arrange for meals, do laundry, and make sure players have the equipment they need.  Not all players have endorsement deals that give a player equipment.  Players in lower leagues may have poor endorsement deals, or none at all, and have to pay out of pocket for equipment needed to do their jobs.

In-season, a player might have games six or seven days a week.  A game day might include a morning batting practice session for about two or three hours, arriving to the stadium two or three hours before the game, a three-to-four-hour game, and finally, an hour or two of weightlifting and recovery after the game.  A game day could equal approximately ten to twelve working hours.  In a five-month season, a team will typically play about 140 games. A conservative estimate might equal 1,680 hours at the ballpark in a typical season, not to mention any extra time spent preparing for the season or working out.  Even the AAA player–the highest paid of all minor league players–would earn only $8.33 per hour if he worked 1,680 hours.  To be clear, that wage is per hour, in season.  That does not include a month or more of preseason spring training, or other off-season activities.  The exclusion of other activities means even less earnings for the player.

It is generally well known that players can receive a signing bonus in the form of a lump sum payment when they sign a uniform contract with a team.  Players with high potential can receive signing bonuses worth millions of dollars.  However, this is atypical.  Most players do receive some sort of signing bonus, unless they are seniors in college or have below-average grades.  This is because these older players have less leverage than younger players and have nowhere else to go play.  Typically, 60% receive less than $100,000.  40% of players receive less than $10,000.  Players receive a signing bonus only once with their uniform contract, so it is crucial that players try to make their bonus last with how little they are paid.

Meager minor league pay is worth the wait for players called up to the majors.  Major Leaguers can receive contracts valued from the mid-to-high six-figures all the way to contracts valued at hundreds of millions of dollars.  The unfortunate reality is that typically less than 20% of players who sign a minor league contract will ever be called up to the majors.  Players must decide if the prolonged abuses and mistreatment of minor league baseball players, is worth a 20% chance of having their dreams come true to play in “The Show.”  The journey for those who make it will say it is worth it, but the rest are forgotten.

Past Lobbying and Litigation

In 2016, the MLB lobbied Congress to pass the “Save America’s Pastime Act.”  The act allows the MLB to circumvent the Fair Labor Standards Act (FLSA) which establishes a federal minimum wage as well as overtime pay requirements to protect employees.  The MLB argued that the players are seasonal employees because they work only five months per year.  This is despite the uniform contract stating otherwise by requiring players to participate in Spring Training and other offseason activities, such as the Arizona Fall League (AFL) and winter workouts.  Seasonal employees are exempt from the FLSA and do not need to receive minimum wage or overtime pay.

In 2014, a group of minor league players filed a class action lawsuit in a U.S. District Court against Major League Baseball teams, alleging their below minimum wage pay is illegal.  Since 2014, the MLB has been challenging the players’ lawsuit.  The most relevant challenges MLB made involved class certification and FLSA certification.  The district court allowed the class certification to continue, and the MLB filed a petition for a writ of certiorari to the Supreme Court of the United States in an attempt to have the Court overturn the district court’s decision.  However, in 2020, the Supreme Court denied the petition, thus, allowing the players to continue.

To meet class certification standards, the players limited their lawsuit to players on California teams, since the lawsuit was filed in the Northern District Court of California, and players who went to spring training in Arizona and Florida.  In July 2021, the court denied certification in-part for the class representative of the lawsuit.  The court stated the class representative did have standing against the MLB but did not have standing in California, but did in Arizona and Florida, Ultimately, the court granted certification in-part because the typicality requirement was met as class membership was limited to the Arizona and Florida spring training participants.

Future

With the most recent lawsuit still pending for the players, it is only a matter of time until the court decides the case.  If the decision does not favor the players, it may not be long before another group of players bring another suit.  Although MLB has made some small changes, such as a slight pay raise and paying for housing, there is still much work to be done.

Presently, MLB and the Major League Baseball Players Association (MLBPA) are in a lockout.  A lockout “locks out” MLB players from participating with their respective teams in any capacity and does not allow for free agents to sign with teams.  The lockout began on December 3, 2021, because the Collective Bargaining Agreement (CBA) expired.  The CBA is a set of rules and regulations followed by MLB teams and their owners as well as the players.  The MLBPA has active players represent all the players in negotiations for the CBA.  These representatives lobby for changes that MLB players–as well as MiLB–want to see in the game, on and off the field, such as revenue sharing and rights for minor leaguers.  After the start of negotiations was delayed, the initial offers and counteroffers between the MLB and the MLBPA were rejected.  The two sides currently sit in a stalemate.  If the two sides cannot agree, the season could be shortened or canceled entirely.  Because Spring Training was slated to begin on February 16, 2022, the 2022 season is officially delayed.  As of March 1, 2022, the first two series (typically 6 or 7 games) were canceled by MLB Commissioner Rob Manfred.  MLB is set to delay more games if a new deal is not agreed to by March 8[1].  If a new CBA is enacted, MiLB players may have some of their problems solved.

 

 

 

[1] On Thursday, March 10, 2022, the MLB and the Players’ Association finally agreed on a new deal, ending the lockout after 99 days.  Players began reporting to Spring Training on March 11 and the 2022 season is set to begin on April 7.