Brewers Farm Update

Building a Minor League System

Minor league baseball players deserve higher pay. That is the first structural fact that must be recognized in discussing the organizational aspects of player development. Minor league players are professional baseball players who participate in the process of producing a $10.5 (and growing) billion industry.

Stepping outside of the distributive justice of this question, there are numerous structural elements that currently give MLB clubs incentive to pay minor league players at a low rate. The first structural impediment is the MLB Draft slot system, which now forces MLB clubs to pay quite steep penalties for spending more than their allotted slot money on a given amateur draft. For example, Table One below approximates the historical value of losing a mid-round first pick versus spending approximately $600,000 to land a couple of over-slot signings that might have slipped beyond Round Ten. Basically, given the current MLB slot system rules, an MLB team would have to find a way to sign two Second-Round ceiling guys in the mid rounds in order to justify losing a first round pick; in reality, the bonuses an MLB team would be required to pay potential Second-Round ceilings that fell to the middle of the draft would likely be higher than the 10 percent overage penalty. This keeps players like Keston Hiura, who would be worth at least $20 million contracts on the open market, from earning that amount early in their respective careers.

Table One: Approximate Historical MLB Draft Surplus Value

Approximate Surplus Value (Pick 1-15) Approximate Surplus Value (Round 2-through-10)
$18.0M to $19.0M $8.0M to $8.5M
$3.5M to $4.0M
$2.0M to $2.3M
$0.7M to $1.0M
$0.2M to $0.7M

Additionally, if the bulk of professional careers end in the low levels of a system, MLB teams are most constrained by Minor League Baseball rules to deflate pay at the lowest levels (a Minor League player cannot earn more than $1,100 per month during their first contract year. According to Minor League Baseball, salaries are open to negotiation after that point). The ideal of a vertically aligned player development system essentially serves as a giant check on a player’s professional earning potential, and it may even exaggerate odds of a player reaching the MLB. After all, if one views the idea that a player can only reasonably reach the MLB out of Double-A or Triple-A affiliates, then one would be hard-pressed to expect most players to reach the MLB with fewer than four years of seasoning.

What is stunning about the structures of the Amateur Draft and Affiliated Minor League baseball system is their rigidity where no rigidity is required. Throughout a sizable portion of professional baseball history, the minor leagues were more of a frontier for MLB baseball than a proving ground, as competitive leagues across the USA often operated with players that would widely be viewed as MLB-equivalent. The Pacific Coast League of the early Twentieth Century is probably the most famous example of this level of talent (especially because those years occurred prior to MLB’s westward expansion), but it is surely not the lone example. Now, in an environment where many fans and analysts are obsessed with finding “the next market inefficiency,” the structure of Affiliated Minor League baseball itself may be worth realignment.

The beauty of Minor League structure is that any individual team could operate according to their own structural preference at any point in time. According to Minor League Baseball, “Major League organizations can promote players through the affiliated leagues, or directly to the Majors, as they wish.” What is fascinating about this idea is that an MLB club could simply keep their own players in complex ball for years, and then promote them to the MLB, or they could simply promote everyone to the MLB after signing out of the Amateur Draft (or any combination in-between). Additionally, contractual obligations after the first year are wide open for MLB clubs, giving them fantastic flexibility to sign minor league contracts to any deals they like.

Regarding contracts, then, a speculative opportunity for MLB teams, especially a relatively small market franchise like the Brewers, rests in the second, third, fourth, etc., years of minor league play. After an MLB team basically is forced to pay a minor leaguer approximately $7,000 during their first year of work, the club could settle any arrangement they like with a player. For example, consider a long-term development play like Tristen Lutz, or Carlos Herrera; the Brewers could conceivably have signed both players to four-year, $400,000 minor league development deals beginning with 2018. Keston Hiura could have been signed out of the draft with a three-year, minor league development deal worth $1,000,000, and so on and so forth. Where this logic leads is to a mechanism through which a club like the Brewers could exploit amateur draft slot rules by offering a player draft day bonuses that do not trigger the overage rules by using an understanding that the player would receive a well-priced development deal in their second year.

In terms of league structure, one wonders why an MLB team would not use their complex facilities to organize several teams’ worth of players to train within a closed organizational structure. On this systemic development, a team like the Brewers could sign anywhere between 200-to-300 players of varying talent levels, and operate eight-to-ten teams at the Complex Level. These teams could face one another, and essentially produce a league in which Milwaukee Brewers organizational strategies and development occurred within a relatively controlled circuit. This could also streamline coaching, training, and managerial functions, in order to ensure that the very best coaching talent receives the greatest reach in terms of impact; if a club can identify their best coaches and trainers, why shouldn’t they have leadership roles that impact 200-to-300 players instead of 20-to-30?

Additionally, is worth questioning whether the discrepancies between league environments actually provide developmental challenges to ascending prospects in a manner that actually prepares them for the MLB-levels of professional baseball; this question should not simply be raised given the difficult pitching environment for Triple-A Colorado Springs, which has claimed several Brewers pitching prospects from starting pitching roles thus far. This question could be raised about early-spring weather conditions in the Midwest League, offensive-suppressing environments in some advanced leagues, etc. This question can also be raised in terms of high-floor roles, as intriguing organizational depth prospect Thomas Jankins is proving after jumping from Class-A Midwest to Double-A Southern League, or Cardinals pitcher Jordan Hicks is proving after jumping from Advanced-A to MLB.

Table Two: Conventional Minor League Structure and One Speculative Alternative

Speculative Brewers Organizations (teams) Conventional Speculative Model
Level DSL (1) -
Level R (1) AZ Complex (2)
Level R+ (1) AZ Complex (2)
Level A (1) AZ Complex (2)
Level A+ (1) -
Level AA (1) AA (2)
Level AAA (1) AAA (2)

But mostly, if the Brewers were to suddenly restructure their complex ball to support its own league of intraorganizational ball, and the club poured between $25 to $50 million to support those efforts, the organization could potentially gain an advantage in reserving the rights of more minor league players through larger development contracts while also placing the players into an environment better suited to cushion the variance inherent in player development. Additionally, the Brewers could gain an advantage by organizing a new form of competitive player development by which players of varying talent levels are scouted, coached, taught, and cared for (in terms of diet, health care, etc.) within one locale. There could even be an advantage in playing related affiliates against one another, in order to view organizational strategies in competition with one another.

Yet this strategy of competitive player development need not occur solely at the complex level. The Brewers ought to scrutinize the best combination of affiliated clubs for the purposes of player development, which may not be a vertically aligned staircase (from Class-A to Advanced-A to Double-A and Triple-A). If the Carolina League is indeed a solid development environment, the Brewers should buy another Carolina League franchise, and maintain a second Advanced-A team in that locale. If the team continues to hope that a replacement-by-design, shuttle squad, high-floor, MLB depth role roster can be constructed (as the current 40-man roster and Advanced Minors are constructed), the team could benefit from having two Double-A clubs.

This is a rather speculative discussion, but it is worth emphasizing that if professional player development is non-linear, non-linear organizational structures could benefit the process. There is no reason to maintain the fiction of a progressing development staircase to the MLB when front office has the resources to make alternative modes of development work.

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