Tag Archive: Collective Bargaining Agreement

Jan 30

Minor Leaguers, Minor Wages, Major Problems

By Joseph Gentile.

Major League Baseball (“MLB”) and the Major League Baseball Players Association (“MLBPA”) recently came to terms on a new collective bargaining agreement (“CBA”), which will last through the 2021 MLB season. This means that, by the end of the next CBA, the MLB will have gone twenty-six consecutive seasons without a work stoppage.

The MLBPA represents players designated on the forty-man major league roster; so what does that mean for Minor League Baseball players who fell short of making the forty-man roster? Another year of making less than minimum wage.

Minor Leaguers are not entitled to minimum wage or overtime because of an exemption in Section 213 of the FLSA. It provides that minimum wage and overtime provisions do not apply to employees of an “amusement or recreational establishment” if the establishment does not operate more than seven months per year, or if the employer can prove that total revenue in one-half of the preceding year was less than one-third of the total revenue in the other half of the same preceding year.

At the lowest level of the Minor Leagues, players earn wages that amount to less than $4 per hour if players received their regular hourly wage for the first forty hours of the week and time-and-a-half for the remaining 20 hours. At the highest level of the Minor Leagues, players earn a salary that puts them barely above minimum wage.

Unionization is one possible way to combat this problem, but asking minor leaguers to pay union dues out of their already-miniscule salaries is asking a lot. Additionally, the ultimate goal of these minor leaguers is to get out of the Minor Leagues as quickly as possible, which makes it difficult to gain momentum in the effort to unionize Minor Leagues.

There have been efforts to unionize the Minor Leagues in the past, but no real progress was made. The only hope would be fore a large union to come in and organize, but the players are more likely to want to remain quiet while trying to advance to the Major Leagues. If a Major League team were to promote an advocate for Minor League unionization, it would surely cause more distractions than the Major League team may be willing to handle.

It seems as if Minor Leaguers will continue to earn less than minimum wage until MLB owners are ready to step in, which, unfortunately, does not seem likely to happen soon.

Mar 15

MLB in Trouble

By Miller Lulow.

Just for a minute, let’s put ourselves in the shoes of Tony Clark, Executive Director of the Major League Baseball Players’ Association (the “MLBPA” or “Players”). The current Collective Bargaining Agreement (“CBA”) governing the relationship between the MLBPA and the Clubs expires December 1, 2016. Calculated speculation suggests that Bryce Harper, Right Fielder for the Washington Nationals, may be able to sign a $500M free agent contract in the winter of 2019. With Harper’s free agency lurking and the MLB seeing its most fruitful dividends in history, the MLBPA is going to be licking its chops going into the renewal of the CBA. When the MLBPA sits down with the MLB to restructure the CBA, the two positions butting heads will be: “We want a bigger piece of that pie” against “You’ve already had dessert.”

These conflicting positions raise an interesting debate: How much of the rising revenue are Players entitled to receive? The Clubs will assert that the rise in revenue is attributable to smart business decisions that capitalize on, and enhance, the product that the Players put out on the field. Conversely, the Players will argue that there would be no product to capitalize on if it were not for them. Thus, how can the Clubs overcome the Players’ argument that without the Players, the Clubs would not be owners?—they don’t. Instead, they agree and say, “Of course, you’re right, that’s why we pay you so much to begin with!”

The 2016 minimum salary in MLB will be $507,500. Tony Clark’s argument in favor of higher minimum salaries is that MLB players are employed 24/7/365. They are always on the company’s time. Even during the offseason, players are expected to work hard, become better at their craft, and get into better physical shape. Clark’s argument is very powerful once you consider that paying somebody $507,500 for 8,760 hours (1 year) of work means you are paying them $58 per hour. Though there are not many people who would turn down work for $58 an hour, think about working twelve to fourteen hours a day, traveling all over the country, rarely sleeping at home or seeing your family, and rarely getting more than five hours of sleep. Maybe $58 an hour does not seem all that great anymore. This goes to show the difficulty surrounding the impending restructuring of the CBA. As is the case every four years, the Players want more and the Clubs want more. How can we find common ground?

Maury Brown of Forbes.com says that MLB’s revenue grew $500M this year, bringing the total revenue close to $9.5 billion. So, if Harper signs a $500M contract, while he would not be paid all $500M up front, he would be signing a contract for 5.3% of the total MLB revenue. This idea is certain to make Clubs in smaller markets quiver. Harper has just about made it publicly clear that his intention is to be a Yankee—the Yankees have a rapidly declining payroll obligation that will culminate in the 2019 offseason to a mere $45.1M. Though all signs seem to point to the Yankees, because of the free agency system, the prices continue to drive themselves up.

So what ripple effect will a 10 year/$500M contract have on the rest of the players, or perhaps, on the rest of the Clubs? For one, do not think that the Players are ever rooting against each other in salary negotiations. The more money Player X signs for, the more money Player Y signs for, especially if they play the same position. But one player signing for $500M affects everybody, even the 6th-inning middle relievers, because the ripple is so massive. Therefore, the Players are rooting for Harper to sign as big of a deal as possible. On the other side of the table, while there are some Clubs that will pay that money for Harper, the overwhelming majority will not acquiesce. Such an amount would put a lot of pressure on the MLB to continue to raise its gross revenue.

Is it conceivable that one player could sign a contract worth $500M? It certainly looks like Bryce Harper will be that player in 2019. Indeed, this will pose some uncomfortable issues to be hashed out and hopefully agreed upon by the Players and the Clubs in the new CBA. It is interesting to see what kind of trouble it will bring for the MLB.