Welcome to the latest round in the bout for higher minimum wages. Already we have seen large protests on behalf of fast food workers, and large minimum wage increases in cities such as Seattle and Los Angeles. Now the fight has moved on to our national pastime.
Advocates are targeting professional baseball, and predictably the unintended consequences haven’t been thought through. If successful, the people who are supposed to be helped, may find that now they won’t even get opportunity to play professional baseball in the first place.
To understand how divergent the pay scale is in professional baseball, think of players like actors. Those on the top of the pyramid, Major League players, make eye popping sums of money, just like those on the top of the acting profession. But the base of the pyramid, those playing minor league baseball, just like a majority of actors make very little.
Since 1996 only two amateur players have gone directly to the Major Leagues, and minor league baseball with several different levels based on skill and experience, is the proving ground for players to demonstrate that they have what it takes to play in the big leagues. From a business perspective, minor league baseball is a necessary evil to a Major League team as it provides them little in revenue and a lot in development costs. It should also be noted that only a small percentage of minor league players will make the Major Leagues, and everyone understands that being a minor league baseball player isn’t a lifelong career. If you haven’t advanced to the Major Leagues well before you are 30 years old, you are most likely washed up.
It is true minor league baseball players aren’t big earners. Below are the approximate monthly wages a player can earn at each level:
Rookie: $2,850 (Three-month season)
Short A: $3,450 (Three-month season)
Low A: $6,500 (Five-month season)
Hi A: $7,500 (Five-month season)
AA: $8,500 (Five-month season)
AAA: $12,000 (Five-month season)
The current pay system is used as evidence that players are being exploited and treated unfairly. But this disregards several key factors. The foremost being supply and demand and the matter of free will. Only the best of the best amateur players has the opportunity to turn pro, and the competition is fierce to get a professional contract. Many amateur players would jump at the chance to play minor league baseball for less than the current rate. If minor leagues players are truly being exploited, there is a never-ending line of young men who would pine for the opportunity to be exploited as well.
Additionally, the reported salary minor league players earn can, in some cases, be deceiving. Some players, the ones in high demand when they sign their first professional contract, can receive multimillion dollar signing bonuses. Also, not calculated in this is the players get a per diem for food when the team is on the road, and other tangible benefits such as top flight medical care.
Approximately over one-third of all minor league players are foreign nationals from places like the Dominican Republic, and the salary they earn playing professional baseball most likely exceeds what they could have earned in their home countries at their young age.
Then we have the matter of how would work time for a minimum hourly wage even be calculated for a professional baseball player in the first place? Would it be based on the length of the game? Include practice hours? Travel time busing to the games? How about if a hitter wants to come in early for extra BP because he is in a slump, would he get compensated for that also? Off season conditioning? Quickly one sees the absurdity of the entire argument for an hourly minimum wage for playing baseball.
Finally, we have the misconception by most minimum wage increase supporters that those paying the bill won’t alter how they operate to offload the increased expense, an easy misconception to make when it is not your money. A hefty pay increase for minor league players could lead to less minor league teams and fewer opportunities for players to play professional baseball.
Consider that in the low minor leagues, which is the entry level for new players, a Major League team may stock an entire roster and, if lucky, produce one or two Major League players out of the bunch. If you make the return on the investment steeper, what is to stop Major League teams from merging their lower minor leagues with other Major League teams to save on costs?
This is exactly what Pat O’Conner, President of Minor League Baseball, is warning, “To me, it’s fairly simple. If Major League Baseball experiences a tremendous increase in its cost of labor, it will reduce the number of players it offers to Minor League Baseball, or it will come to Minor League Baseball and expect us to pay a portion of that increase in cost. Either one of those are catastrophic to our business model.”
“If the cost of that talent is doubled or tripled, which could happen under an FLSA basis, MLB is not going to pay that much money for the talent. They’re not going to pay. They’re going to do one of two things: They’re going to say, ‘If 160 (minor league) teams is going to cost (this much), we’re just going to cut down on the number of teams. We’re not going to pay for 160. We’ll pay for 80. We’ll pay for 100.’
The FLSA that O’Conner references is the Fair Labor Standard Act which has governed the minimum wage laws since 1938. During this latest push for a minimum wage for players, Congress just passed the "Save America's Pastime Act," which for now will continue to exempt minor league players from FLSA and the minimum wage requirements.
But make no mistake, despite Congress passing "Save America's Pastime Act,” minimum wage advocates will be back again trying to raise the wages of minor league players, as political victories are often seen as being more important than the impact they have on people’s lives.
Matthew Kastel is a 25-year veteran of working as an executive in the world of sports, including professional teams, organizations, and some of the largest vendors in the industry. Matt has also written two novels and teaches and lectures at universities on the business of sports. For more information you can visit his website at thirdstrikeproductions.com. To read more of his reports — Click Here Now.
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