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Why Minor League Teams May Hit Lottery In Next CBA

mlbgrossrev1995-2014

Image via Forbes

MLB has a bunch of money and they need to renegotiate their Collective Bargaining Agreement (CBA) in two months. My hope is the that some of the riches find their way to the Altoonas and Charlestons of the world, instead of owners’ pockets.

Why MLB has so much money

The reasons that MLB has so much money could be boiled down to two things:

1) New giant billion dollar local TV contracts

2) Its newish subsidiary called MLB Advanced Media (MLBAM)img_0738

The multi-billion dollar TV contracts for the Dodgers, Cubs, Yankees etc. are well understood by the common baseball fan but MLBAM (and its subsidiary BAMtech) is still that cute female that you’re not sure why is attending your family reunion.

Forbes reported that MLBAM itself could generate over $1B in 2016 and called it went as far as calling the company “the Biggest Media Company You’ve Never Heard Of”.  You could write an entire article on MLBAM and BAMtech but to summarize:

  • MLBAM provides MLB At-bat which is the most profitable app ever and has a loyal following that isn’t going away
  • MLBAM partners in streaming with Time Inc. (owner of Sports Illustrated), the NHL, the PGA Tour, NBA, NASCAR and college conferences, as well as World Cup and FIFA streaming content
  • BAMtech handles streaming for HBO, MLB, NHL and World Wrestling Entertainment and has partnered with Disney on many of the ESPN streaming products

To summarize, if you’re streaming anything that isn’t Netflix or Hulu, then MLB might be making money.

Players’ Revenue Share and Options to Distribute

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H/T Fangraphs.com

The players currently make less and less of the share of overall revenue than they did in the early 2000’s and are very aware of this fact.   During the next CBA  (the current one expires on December 2nd), they’ll gain back part of it in the negotiations.  But how?

One of the possible ways that MLB could keep the players happy about their share of the revenue pie is to start paying the elite players A LOT of money.   The Manny Machados and Kris Bryants would get $30M-$40M and some more than that.   Fangraphs’ Dave Cameron summarized why it would be hard for MLB owners to pay a player like Mike Trout $50M.    It’s almost as if there is a glass ceiling in the $30M range because it seems so absurdly high, but statistically a guy like Trout does warrant the crazy levels.

They’ll probably end up raising the league minimums at the ML level, raising 40-man salaries and raising the percentage of 2nd year players eligible for salary arbitration (Super Two).   This will still leave hundreds of millions of dollars that the Players Association won’t allow to go to the owners.

How much do Minor League players make?

So MLB has a lot of money, but let’s talk about the other end of the spectrum:  the pauper known as a minor league baseball player.  A minor leaguer doesn’t make much money until they are added to the 40-man roster.  Here’s a great summary provided by impressive baseball blogger Jeff Blank:

  • Until a minor league player is placed on a 40-man roster, monthly salaries are $1150 for the short season teams, $1300 for low A and $1500 for high A. For players repeating a year at the same level, the salary goes up $50 each year. For AA, the monthly salary is $1700 and it goes up $100 per month for subsequent years. For AAA, the monthly salary is $2150 per month and it goes up to $2400 the second year and $2700 the third year.
  • If a player becomes a minor league free agent, higher salaries can be negotiated.
  • A player must be placed on the team’s 40-man roster or be subject to the Rule 5 Draft at the end of his fourth season (if signed at age 19 or higher) or fifth season (if signed at age 18 or lower).
  • 40-man roster salaries for 2016: 1st Year on 40-man ($40,750), 2nd Year on 40-man ($81,500), 3rd Year on 40-man ($122,250)
  • Meal money is $25 per road day.
  • Minor league salary must be at least 60% of the player’s combined minor league and Major League salary in the preceding season.

So for most minor leaguers, the $40k+ that you make when added to the 40-man roster is a pay raise and a bit of exhale.   You wait to get called up and get some of the days of service time that determine how financially successful your baseball career will be.

When have you made it: The days that matter

A financially successful baseball career to each person is different.   To some, making it to AAA and parlaying that into a college coaching job would be successful.   Here’s some of the days that come into play:

  • 1 day service time – lifetime health care coverage through MLBPA
  • 43 days service time – lifetime pension of $34k a year occurring after career is over
  • 10 years service time – lifetime pension of $100k a year occurring after career is over

I was waiting for Wilfredo Boscan, to acquire his 43rd service day with the Pirates so I could have written an article to reinforce this occurrence, but alas he was acquired by the Braves.

Why it could end up in Altoona and lower

While minor leaguers aren’t in the MLBPA, the players know that these are the “players” that are the most in need of financial bump.

But why start in AA and not AAA?  This is because most of AAA players don’t fit the “poor minor leaguer” definition.

Poor Minor Leaguer – [poo r mahy-ner lee-ger] – noun – A minor league baseball player not on the 40-man roster, who never made the show and who hasn’t received a large enough bonus in the Rule 4 draft or international signings to facilitate making a small wage

In the Pirates’ organization there are only 6 players in Indianapolis that fit this definition (Osuna, Santana, Duncan, Haley, Medina and Ortiz) while there are 22 in Altoona and even more as you go down to single A.

How you would distribute to these players would be an interesting problem to solve.  Would they become members of the MLBPA, would you hand the money over to the minor league clubs and have them disperse more money or provide more services?   Do AA and AAA players need to ride in buses and have host families?

While figuring out how to get minor league players a part of the pie isn’t the easiest problem to solve, it’s definitely a problem worth solving.

About Michael Bradley (59 Articles)
Michael is a Pirates contributor to The Point of Pittsburgh. Michael is former submarine officer and Naval Academy grad. He now runs a small consulting firm and does veteran related job fairs. He is a SABR member and regularly attends Altoona Curve games to scout the Pirate prospects.
Contact: Twitter

2 Comments on Why Minor League Teams May Hit Lottery In Next CBA

  1. Farntholomeiu // October 2, 2016 at 2:58 PM //

    Excellent article, I think once you reach your 2ND year at any level of A ball or higher, you should get the health insurance for life given the inherit danger. it would likely dilute the power they have if the mlbpa let milb players be members so you would think they’d throw them a bone to keep them happy. Also they all had to go through it themselves as players.

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