“I don’t think it’s really a secret. You need to acquire, develop, and keep controllable young talent.”
Those words, uttered by David Stearns during his introductory press conference as GM of the Milwaukee Brewers last September, have become the mantra of the great Brewers’ rebuild. Taking a step back and building more intensively from within is how the goal was described by owner Mark Attanasio, and Stearns has gone to work bringing talent into the organization through just about every avenue possible: trades, free agency, the waiver wire, and within the next couple of weeks he’ll take part in his first draft with the Brewers. In conjunction with manager Craig Counsell, the club set up meetings with coaches from every level throughout the organization to make sure that the same approach was being preached by everyone, a sort of “Brewers’ Way.”
With such an organizational focus of developing and building around young talent, why aren’t the Brewers doing everything they can to ensure that those players have every competitive advantage to succeed?
I recently had the opportunity to discuss the difficulties of life in the minor leagues with two players who painted an equally distressing picture: low pay and lack of a quality diet are a significant stressors among minor leaguers. Players lose money on a monthly basis and are often times forced into living in cramped apartments and sharing bedrooms to cut down on housing costs. They maintain poor diets because fast food is cheap and they lack in choices of the restaurants that are open following the completion of their games. Some are forced to work other jobs in the offseason to make ends meet.
Major League Baseball is in the midst of an unprecedented economic windfall. According to Statista.com, the league generated a record-high $8.39 billion last season, up from $6.14 billion in 2010 and $3.58 billion in 2001. The Brewers themselves enjoyed revenue of $234 million last season despite the team’s awful performance. They brought in $226 million in 2014 and have topped $170 million in each season since 2008.
Big leaguers have enjoyed their piece of this revenue pie, seeing their average salary increase to $4.38 million in 2016. The major league minimum salary is currently $507,500 and has increased by nearly 40% since 2005. In the minor leagues, where players aren’t eligible for union membership and protection, the annual player salary averages about $6,000 according to a recent post at The Hardball Times. That’s roughly one percent of the big league minimum salary, and 0.14% of what the average major league player is earning this season.
The problem of low minor league pay causes other problems.
In all honesty, it shouldn’t therefore be surprising that players are tempted to turn to performance enhancing drugs in order to gain a competitive edge. The system is one that is stacked against them not only by ownership groups, but also the big league players who won’t allow them to unionize or fight for better working conditions down on the farm. There is little recourse for minor leaguers who are forced to live on incomes near poverty level while they chase the major leagues. Making it to The Show even for a few weeks can be life changing financially for these players. The minimum big league salary comes out to over $2,500 per day, or more than most of these guys make in a month. Not to mention qualifying for a lifetime of health insurance after just one day in the bigs and vesting in the pension program after 43 days. It’s hard to argue that whatever shame a player may have to endure for testing positive for PEDs and being labeled a “cheater” isn’t worth the financial benefits of making to the MLB for a player and his family. This temptation might be mitigated if minor leaguers actually made enough money to survive.
In the grand scheme of things, it wouldn’t take an altogether significant investment for Milwaukee or any club to pay their minor leaguers a living wage. Let’s say that an organization employs roughly 250 minor league players in a given season, or about 30 at each level from AAA through the Dominican Summer League plus 40 draft picks that are added during June. If each of these players earn an average of $6,000 annually, the organization is spending $1,500,000 annually on their salaries. Now, if we pay these players a living wage (assuming they are single and without children) of $21,500 before taxes, that number increases to $5,375,000. A marked growth to be sure, but that number itself is still only a shade more than the average salary of one major league player (or roughly 2% of the Brewers’ revenue).
By giving these players more financial peace of mind, an organization can allow them to focus solely on their development as ballplayers. According to a major leaguer I spoke with, the biggest difference once a player gets to the big leagues is the impact that having a steady and nutritious diet has on performance. A minor league player told me that he and his teammates argue with the training staff in regards to the inability to sustain a balanced diet. With increased salaries, minor league players would be able to afford to do actual grocery shopping for more healthy foods. They wouldn’t be forced to share bedrooms in cramped apartments during the season. They wouldn’t have to get second jobs in the offseason to make ends meet, and could dedicate their focus on training and improving for the upcoming season.
In this, year one of the rebuild, Milwaukee’s payroll is just a tad over $64 million, a drop of roughly $40 million from the start of 2015 and the lowest total in Major League Baseball. Obviously some of that surplus is negated by a loss of ticket revenue and merchandise sales and is being invested in things like the international free agent market. But given their revenue in recent years, I find it hard to believe that it would be difficult for the club to find another $4 million (or so) to augment their minor league wages. Reinvesting that money into the young, controllable players that the club itself has been so adamant about building around is something that the public would have no trouble throwing their support behind.
The game is richer today that it has ever been before. New television contracts and other revenue streams have been a windfall for major league owners, and we’re seeing larger and larger free agent contracts signed by players with each passing winter. For a smaller market team like our local nine, who doesn’t have the same ability to offer $200+ million to free agents on the open market like others do, having a strong player development pipeline is essential to fielding a competitive club.
According to the players themselves, their development process can be greatly improved through a small raise in pay and ensuring proper nutrition. Paying minor leaguers the suggested wage of $21,500 a year may not seem like much, but it would make a significant difference in their quality of life, giving the players the peace of mind of not having to paycheck-to-paycheck and being able to focus solely on their development. Having a more productive minor league pipeline would then help clubs like Milwaukee save money by filling personnel needs from within their own organization, rather than having to pay market value for free agents.
So what’s taking so long to address this issue?
How do we make sure someone in the Brewers org sees this. Honestly its ridiculous that teams dont do this. It’s such a small amount of money compared to whats spent on the major league club and free agents. I dont write the paychecks or run the club but this seems like a no brainer. A small investment that could easily pay off huge if it helps minor leaguers develop better and someday contribute to the big league club. Make it happen. Good article kyle.
Great article–and I’ve really enjoyed the couple other pieces you wrote covering similar topics.
Do you know if there is anything in the labor rules that would prohibit teams from doing something like this? One of the anonymous players you interviewed mentioned something about pay being preset for each level of the minors….is that baseball-wide or is there flexibility for each organization to set those budgets?
It seems like it could result in some sneaky maneuvering regarding draft signability (“We’ll offer you an under-slot bonus, but you’ll more than make up for it the next 3 years in the minors compared to being in another organization”).
To play devil’s advocate….what’s to stop the Yankees/Dodgers from paying all their farmhands $100k/year? Suddenly the draft bonus allotment doesn’t really matter to them. All the highly-rated players who get drafted later and would normally choose not to sign are now signing left and right…
That sounds like something the Brewers should exploit. I don’t see any issue paying players $100,000 in the minors of a $9 billion industry.
I definitely don’t have an issue with that either. What I was trying to say is that whatever level the Brewers can exploit this at, big market teams can exploit it 2x or 3x or 100x more. Which makes me wonder whether there is some fine print somewhere that keeps this from happening, since MLB is so concerned with competitive balance, etc.
Is this the new market inefficiency? If so, will this lead to a spending arms race in the minors? What do you project the lag time to be for such an arms race? This is fascinating, thrilling future for the Brewers (although the draft is not the most important part of rebuilding) if they can make headway here.
It’s not a market inefficiency, it’s exploitation of labor pure and simple. It’s low cost by design, not by mistake (which would be an “inefficiency”). It will be interesting to see how teams respond as this issue creates more noise.
Fair point. I guess I was misusing that phrase to mean a way to gain an advantage. In the past the Brewers have not been on the leading edge of things (analytics springs readily to mind) that create a temporary advantage for an otherwise disadvantaged team. Is there potential for this to create an advantage? If so, how large? Is this more a 5 win thing or a 2 run thing, in your opinion?
A few people best me to the punch. It doesn’t happen because it would lead to big money teams paying more and players wanting to get drafted by certain teams and holding out in others because they don’t get the same compensation. It would turn into a money battle just as in MLB. Doubt the teams want to deal with salary battles at minor league levels.
There are no rules stating what maximum salary a minor league baseball player can earn. The contract states what the minimum and maximum rates are. These are minimum rates. There is no rule stating a team cannot pay a player over the rates in the contract.