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Why MLB’s record revenue shows absurdity of fight with MiLB

© Steve Mitchell-USA TODAY Sports

As marquee players cash in this offseason with record-breaking deals and jaw-dropping contracts, MLB is celebrating something of its own. The league made $10.7 billion in revenue from the 2019 season, shattering the previous record from 2018.

Of course, it won’t receive as much attention as agent Scott Boras landing his top clients more than $1 billion over the entirety of their negotiated deals. Which is perfect for MLB’s owners, that’s exactly how they want it.

There’s another convenient factor at play. These contracts upstaged the public dispute between MLB and Minor League Baseball surrounding negotiations for the Professional Baseball Agreement (PBA), which expires following the 2020 season.

There are many issues both sides are fighting over on the public stage. The most contentious among them is MLB commissioner Rob Manfred’s reported proposal to eliminate 42 minor-league teams.

As reported by Baseball America, MLB is unhappy with the current standards across the minors and believes it would be financially beneficial to potentially shutdown. When Manfred spoke to reporters in November, he cited four reasons why MLB is considering reducing the minor leagues.

  • Inadequate facilities
  • Untenable travel with 77 MiLB team relocations since 1990
  • Inadequate pay for minor leaguers
  • Drafting and signing players who don’t realistically have a shot at the minors

The fourth issue is, perhaps, the least cost-related reason. Of course, MLB wanted its First-Year Player draft to be 40 rounds, with over 1,200 players selected. After all, it provides teams with the cheapest and best talent available, allowing it to cut costs and still make money from its minor-league affiliates.

Yes, MLB signs plenty of players who will never reach the majors and many won’t even reach the Triple-A level. Yet, teams do it because it has been financially lucrative for them.

It brings us to MLB’s greatest issue with the minors. Coming off another season with record revenue, Manfred suggests the only way for MiLB issues to be addressed financially is a measure that takes access to baseball away from fans across the country.

The Proposed Reduction

As reported by The New York Times, the dramatic changes would sweep across the country. The proposal by owners wouldn’t impact their bottom line, but its damage would last for years for millions of people.

  • If MLB’s proposal moved forward, 22 states would lose their minor-league teams with access to professional baseball changing dramatically.
  • According to FanGraphs, 14 million people will be at least 50 miles away from a MiLB team under MLB’s proposal.
  • This comes at a time when many families see MiLB as an affordable alternative to MLB games, giving their kids a chance to enjoy baseball and experience it at an affordable cost.

Manfred expresses a desire to grow the game and connect with a younger audience to improve baseball’s future. Yet, this very proposal would take away access for those same fans and families to see the game up close.

Of course, this won’t only take away access to baseball and a chance to grow the support and strengthen its following. It will also result in thousands of people losing their jobs and a source of income.

  • It would eliminate more than 1,000 jobs for young athletes who are still living out their dream as professional baseball players.
  • MLB’s plan would also eliminate thousands of jobs across the 42 minor-league teams. Personnel in the front offices of each MiLB team, stadium vendors, security, the grounds crew, internships, cashiers and so many others. All of these jobs would be lost.

It’s not often more than 100 members of Congress come together on a shared belief. Yet, the incredibly damaging impact this proposal could have led to many members of Congress to reach across the aisle to create the “Save Minor League Baseball Task Force.”

  • Manfred took issue with Congress coming down on MLB for its proposal and seemed to dislike the idea of politicians getting involved.
  • Conveniently, Manfred’s stance ignores that MLB spent more than $1 million to lobby elected officials to pass the “Save America’s Pastime Act,” which was snuck onto page 1,967 of the Senate’s spending bill in 2018.
  • At the time, MLB argued that it needed to pay its minor leaguers below minimum wage or it risked potentially needing to reduce the number of MiLB teams and suffering financially.

You read that correctly. Just over a year after MLB owners suggested reducing the number of MiLB teams in a nightmare scenario where their athletes living below the poverty line were subject to federal labor laws, they now want to reduce the number of teams anyways.

Now, with the more current and former MiLB players coming forward with evidence of their inexcusable pay, owners are suggesting that changes can occur – if fans, players and minor-league teams take the hit.

The Financial Picture

MLB is practically printing money at this point. The league’s revenue is a result of absurd sponsorships and deals that make Gerrit Cole’s contract look like coins in the couch. Every year, owners find new ways to increase their profits.

  • The Los Angeles Dodgers receive roughly $200 million per year from their television deal.
  • In 2017, MLB received $1.58 billion from Disney for the sale of its streaming technology (BAMTech). That’s $52 million for each team to pocket. It’s money they don’t have to give to the players.
  • Meanwhile, MLB’s sponsorship deals with companies like Chevrolet, Coca Cola, Gatorade, Google and Budweiser conveniently disclose the money MLB receives from each.

MLB teams spent less on MLB and MiLB player compensation in 2018 than in previous seasons despite record revenue, according to Forbes.com. The trend almost certainly continued for the 2019 season and the league’s new record revenue numbers.

As The Athletic’s Levi Weaver detailed in-depth in April, the raises MLB promoted as part of the “Save America’s Pastime Act” were misleading. For many players, especially in the lower levels, the increase in pay was minuscule.

  • Players in High-A and Low-A ball still only make between $1,100-$1,500 a month, which amounts to $6,000-8,000 per year.
  • Athletes fortunate enough to reach the Double-A level, make only $1,700 per month for roughly $9,400 per year.
  • Triple-A players, some of whom already have MLB experience or might reach it one day, make $2,150 each month in their first year, $2,400 per month in their second year and $2,700 each month if they play a third season at the Triple-A level.

Now, it’s essential to keep in mind two factors. According to the U.S.’s 2019 poverty guidelines, an individual lives below the poverty line if they make under $12,490 per year. Meanwhile, minor-league players often work 60-plus hours each week during the season. Oh, they also don’t receive any pay during spring training.

Of course, owners would argue that paying each of their minor-league players a livable wage would come at a cost to them. They are correct. As Weaver calculated, paying every MiLB player $40,000 per year would cost each team $6.815 million. That’s roughly half of the additional $13.3 million each owner received from the boosted revenue this season.

The Solution

MLB is correct saying there are many minor-league facilities across the country that are in poor condition and that the schedules for MiLB teams need to be reworked to make for more comfortable travel.

Of course, as MiLB pointed out in a statement, their facilities are up to the PBA’s current standard and minor-league owners have repeatedly offered to negotiate new standards and upgrade facilities. Much like with the yearly schedule and travel arrangements, MLB hasn’t shown an interest in making changes until it became a convenient issue to put out publicly during negotiations.

There are two solutions to all of this that can avoid thousands losing their jobs and professional baseball being ripped away from their communities.

First, MLB owners realize that investing more money in the minor-league infrastructure can provide them with a long-term competitive advantage.

  • Paying minor-league players more will make that organization more appealing to free agents.
  • It will also result in the athletes not dealing with the pressure of living below the poverty line, struggling to find additional jobs and allow them to focus on baseball. It will make the game better and create greater competition across all levels.
  • Investing additional resources in better travel, nutrition and living will result in far better wellness for these players. Mental health, physical health and emotional health should all be treated as equals. When everything is in balance, people perform and feel better.
  • Upgrading facilities gives coaches greater resources to develop young players. Naturally, this will make players better at every level and baseball will improve from it.

Of course, this would cost owners some money. Given the ugliness of their current dispute with MiLB (along with the future feud with the MLBPA), it’s unlikely that they take any significant steps willingly. That’s where elected officials step in to make a change.

MLB has benefited from its antitrust exemption, established in “Federal Baseball Club vs. National League,” (1922), which gave it exemption from the Sherman Antitrust Act (1890).

Taking that exemption away, thus putting the threat of potential competition to MLB being in place, could force Manfred and the owners he represents to finally make the changes this sport desperately needs.

While many don’t like when sports and politics cross, especially when Congress gets involved in sports issues, MLB has clearly shown a willingness to bring the two together before.

If the changes from owners won’t come willingly, then it might be time for Congress to step in and give the league a taste of its own medicine. It’s a dramatic step, but one that thousands of athletes and millions of people will benefit from.

Manfred has said repeatedly how much he loves baseball, wants to grow the game and take care of its players. If any of that is true, which seems increasingly doubtful, then it’s time for him to prove it. Otherwise, Manfred’s plan shows he doesn’t have the sport’s best interest at heart and his desire to make owners money will further bring down America’s pastime.

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