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I think the secret is out. Minor league players get paid very little. Not just a little bit compared to the millionaires they hope to become. They put in long hours and have a couple hundred dollars at the end of the month (plus some per diem) to show for it. In fact, there’s a lawsuit on the subject that’s been filed by some former minor leaguers, alleging that teams have broken federal minimum wage law. (I’ll leave the issue of legality to the courts.) Some end up eating poorly because they can’t afford nutritious food and have no means to cook it. They share small apartments with teammates. They sleep on the floor. Plenty retire because they can’t afford to chase the dream any more. I’m sure some retire because they get sick of living hand-to-mouth (which would be a balk).

Baseball can be cruel. Consider how hard a young man must work and how much he has to dream to get to a point where he’s one of the best 200 or so high school seniors in the country (because he’s number 193). He might get drafted in a single-digit round (maybe), but there are only 25 spots on the big league roster and draftees and international signings from so many other years who want them. His chances aren’t great for making the majors, but to him, it’s all he’s ever dreamed about. So, for him, it’s for the love of the game. He is a starving (sometimes literally?) artist for his craft. Until he gets cut.

That’s the romanticized notion. That players accept such poor living conditions because it’s part of “the hunger” (sometimes literally?) for the game. Teams accept these conditions for their players because, well, it’s cheap. Teams do hand out large bonuses to certain players, usually the high draftees and big-ticket international signings. Those are the guys the team brass believe will eventually make an impact on the MLB roster. Because of those bonuses, those guys have a cash reserve for supplementing that meager salary, and the rest of the team … they’re really just there to fill out numbers, aren’t they? Oh sure, if one develops into something nice, then that’s well and good, but teams seem to be of the opinion that they shouldn’t bother wasting resources on players who probably aren’t going to make any sort of difference.

What I most commonly hear from fans when they hear the truth about minor league life boils down to “You’re going to be making millions in a few years anyway” (most minor leaguers never get even the proverbial cup of coffee, much less a million dollars) or “You’re getting paid to play baseball, please stop whining. Why, if I had a chance to, I totally would trade places with you.” It’s not polite to complain. In fact, when I reached out to a few minor leaguers, none of them wanted to talk, even anonymously, about the issue. The words “rock the boat” were used and no, we weren’t talking about Guys and Dolls. The therapist in me always perks up when people are afraid to talk about something.

I hope you all have life jackets on.

What baseball has is a system where teams keep costs down, and the players accept that this is just the natural order of things. It’s not even Stockholm Syndrome. After all, if the dream is to play Major League Baseball, what other options do they have?

Is this a good system? I don’t ask that question as an exercise in moral philosophy with the poor pitiable minor leaguers cast as a vulnerable group in need of protection. I’m asking this from the other side. Is it smart for teams in Major League Baseball to willfully pay their minor leaguers so little? Aside from cost-savings and the moralizing, could teams actually have more success developing players if they opened their wallets a little wider?

Warning! Gory Mathematical Details Ahead!

Let’s dig into a little data. Lately, I’ve been studying the drafts between 2003 and 2008, because those players have had time to develop and we now know what they are. Not everyone enters baseball through the draft, but it’s a good place to start our investigation because we have good records for signing bonuses and we can match them up to what those players eventually became.

For this analysis, I grouped all players by the size of their signing bonus and saw what percentage of the time players in each group appeared in an MLB game, achieved 1 career WAR (to date), or 5 career WAR.

Bonus Group ($)

Appeared in MLB

One Career WAR

Five Career WAR

1,000 – 99,999

15.0%

5.4%

2.4%

100,000 – 249,999

26.1%

7.5%

3.2%

250,000 – 499,999

43.2%

15.4%

7.9%

500,000 – 999,999

53.1%

21.7%

12.0%

1,000,000 +

72.0%

42.5%

24.3%

This is about what we might expect. The better the player, the bigger the signing bonus, the better the chance that he will eventually do something useful for you. The guys in that low bonus group? They just didn’t have what it took.

Or is that really it?

There are two ways to look at that first group, the players who got a four- or five-figure bonus. Yes, only 15 percent made it to the big leagues. But then again, 15 percent made it! There are some guys in that group who have major league talent. What happened to the other 85 percent? In United States culture, we’re trained to believe that either those guys weren’t talented enough or they weren’t willing to work as hard. In other words, the blame is on them. It’s probably true for a good chunk of them. But are we overlooking something? What if the reason they didn’t make it was because of the bonus they received?

Think of a minor league player as a seed. The major league organization is the gardener. If a gardener waters the front row lovingly every day, but neglects to water the back row of the garden or weed it or put those tomato trellises up, then the seeds probably won’t grow very well. Maybe some will (it might rain), but the odds aren’t good. What if the gardener spent a little more time on that back row? Not all of those seeds would grow, but what if a few more did?

Suppose you’re a guy who gets a $50,000 bonus. First off, your “advisor” takes a little. (I asked BP’s in-house certified agent Joshua Kusnick how much the standard cut is. He said that it’s 1 to 5 percent, depending on the agent.) Then Uncle Sam takes a chunk. Even if you save all of the remainder for living expenses in the minors, you’re talking about a cash reserve of $40,000 or so. Your net take-home pay is a few hundred bucks per month and you’re going to be in the minors for a few years. There are ways to pick up a couple bucks here and there (minor endorsement/sponsorship deals, appearance fees) and the team does provide some help, but unless you have some other income stream—and remember that you’re playing baseball full-time, so it can’t be a job—you’re eventually going to run out of money and be living that starving artist life. How long could you hold out?

I know that you, reader who can afford a $40 annual subscription to a baseball website, might be tempted to say that you could hold out forever. Try it. I’ll call you in three months to see if you stand by that. Even if a player can get enough calories, he still has to spend a lot of his time worrying about food. Then there’s the issue of housing and utilities. Sure, you can live with roommates and sleep on the floor, but is that going to be adequate sleep? And there’s relaxing after a stressful day. No matter your job, that’s universal. Baseball is a daily grind and players need a space to relax. Sometimes that’s calling home, wherever home is. Sometimes that’s going out for a little bit after a game. That costs money too.

What if a player wants to get married? What if he wants to become a dad? How long will he postpone that? More importantly, how many players walked away from baseball before they had a chance to develop into something that could be useful for the parent club?

Not only that, but while a player is sticking it out, he’s probably not in the best position to learn. Minor leaguers have a lot to learn, no matter how good they are at age 18. There’s a reason just about everyone spends time in the minors. All of these players are very gifted athletes, but they need to learn the mental side of the game too. How to maintain consistent mechanics. How to recognize (and respond to) big-league stuff. How to play the strategic game of baseball. How to re-learn part of your swing to incorporate a minor change in that thing you do with your left elbow, the one that makes all the difference in the world.

The problem with lack of food or lack of sleep is that even if they aren’t having obvious physical effects, they will have mental effects. I’ve written before about the effect poor sleep has on an area of the brain known as the prefrontal cortex (PFC), the part that deals with high-level thinking and learning. Poor nutrition has an effect as well, both directly (the PFC needs a steady stream of glucose) and indirectly (it’s hard to sleep well when you haven’t eaten well). Constant worry builds levels of chemicals called corticoids in the bloodstream, which can trigger anxiety even when there is no reason to be anxious. Anxiety diverts resources away from the PFC to other areas of the brain.

Not only that, but contrary to ideas that “adulthood” begins at 18, the brain, especially the PFC, continues to develop during a person’s 20s and into the early 30s. (The same people who were moshing at high school dances in the mid-90s are only now reaching their full neurological maturity.) The skills that develop during that time are the high-order ones that are critical to taking someone from being just an athlete to being a fully developed player. That development does not take place in a nice linear pattern. In fact, most development happens in fits and starts. People really do wake up one morning and have “eureka!” moments. At the same time teams are relying on players learning skills that are centered in the PFC, they are simultaneously providing those same players with suboptimal conditions for that development. Sure, the players will learn, but are they learning everything that they can?

Let me put this bluntly. By placing minor leaguers in a situation where they are food insecure, and have limited resources to access other stress-relieving techniques, major league teams are poisoning one of their potential pools of talent. Some potential players probably walk away before they have a chance to have a breakthrough moment. (And no, teams can’t possibly keep everyone around forever, but why have someone walk away before you are ready to be done with them?) Some probably spend time they could be learning to tell a ball from a strike worrying about where they will get dinner.

Giving It the Old College Try

So let’s do a little more math. I propose that a team voluntarily increase the base salary for all minor league players to $50,000 per year. I picked that number because it’s a round number that puts a player around the median household income in the United States. On that salary, a player could provide decent housing for himself, not fear the checkout line at the local grocery store, and, if he chose, support a family. He will not live in the lap of luxury, but there would be no worries about basic needs. There’s no guarantee that he would be responsible with the money (we’ll talk about that in a moment). Assuming that players are paid zero dollars now (not true), and that teams had 30 players on seven affiliates to pay, this would represent a new outlay of 10.5 million dollars. In reality, there would be adjustments one way and the other, but that’s the correct order of magnitude.

For this to make sense, a team would have to believe this money would return more value here than in any other use. Using the standard “7 million per win” on the free agent market, a team could return a win and a half with 10.5 million dollars. Putting extra money into draft signing bonuses is no longer an option with the new CBA. International signing bonuses are also (sorta) constrained.

As some sort of comparison group, let’s go back to the initial chart.

Bonus Group

Appeared in MLB

One Career WAR

Five Career WAR

1,000 – 99,999

15.0%

5.4%

2.4%

250,000 – 499,999

43.2%

15.4%

7.9%

These are the same figures as above, just highlighting these two rows. The first row is the group we are most concerned about. The second is a group who received a bigger bonus, and over five years in the minors could supplement their wages with their bonus to the tune of roughly $50,000 per year. Those in the second group probably are better players to start out with, although that’s debatable, as we’ve seen that once teams get past the first round (where slot values now are usually north of a million and a half) they do not seem to be very good at picking the eventually good from the eventually bad. We see that in the low-bonus group, 1 in 18 make it to the majors and put up one WAR, and 1 in 40 produces 5 career WAR. We see that in the bigger bonus group, an extra 10 percent of that group produces one WAR and an extra 5.5 percent puts up at least 5 career WAR.

Let’s assume for a moment (falsely) that the reason low-bonus guys don’t succeed as often is entirely because of money issues. If they had money like the bigger bonus group, they’d succeed at the same rate. Assuming there are 100 or so low-bonus players in the system, increasing their salary would yield an extra five or six players who are capable of putting up 5 career WAR. (Perhaps we could roughly estimate that these would be 1-WAR-per-year players during their cost-controlled time?) In this fantasy world, where salary drives results, a team could clear 5 extra WAR by beefing up its minor league salaries. Sounds like a good deal, but of course based on a flawed premise. How flawed?

Let’s grant that the two groups are not equal in their talent and that teams are somewhat (but not perfectly) skilled at handing out bonuses to better players. The reason that Smith got $400,000 and Jones got $40,000 when they were signing was that Smith has a better chance of being a good player than Jones. (Seems a reasonable assumption, no?) Let’s also assume that my theory—that low salary combined with no bonus to supplement it hinders development—is at least somewhat true.

Statistically, we’re now playing an R-squared game. How much of the difference between those results is because better players get bigger bonuses and how much of it is because the low bonus group is hungry? If assuming that 100 percent of the variance can be explained by hunger nets us five or six wins per season, it doesn’t have to actually maintain all that much explanatory power for it to still look like a winning bet.

Want to make it a better bet? A $40,000 per player base salary would cost a team $8.4 million. Worried that the money would largely be wasted? I’ve estimated that full catering services for lunch and dinner across a minor league system would cost somewhere around $1.3 million. Renting 20 apartments (some guys live with roommates) with furnishings and utilities, even assuming that each would cost $1,500 per month (probably high in what are, by definition, minor league towns) would cost 2.5 million a year. Directly taking care of the two big basic needs (food and shelter) would run somewhere in the neighborhood of 4 million dollars. It buys a lot of peace of mind for players so that mind can focus on getting better at baseball. It doesn’t buy a lot on the free agent market.

If that reminds anyone of the college room-and-board model, well … yeah.

Drafting and Developing

I know. Sorry about your lawn.

The basic minor league pay structure makes little sense. If the goal is to produce Major League–ready players (who are cost-controlled), then why would teams pay minor leaguers in a way that is counter-productive to the development it seeks? If teams are going to swear that they are “draft and develop” organizations, they shouldn’t do the job halfway.

The most common retort to the “hunger hypothesis” would probably be that the harsh conditions weed out those who really #want to be major leaguers. (A billion extra credit points to someone who uses the term “spoiled” in their answer.) The Great American Novel must be written by a starving artist! Frankly, neither the scoreboard, nor the strike zone, nor the laws of gravity that you must fight against to get the ball 400 feet from home plate and over a wall care whether you suffered for your craft. Baseball teams should not be in the business of writing the Great American Novel.

The model of low wages for minor leaguers, the hunger games if you will, is guilty of one of two things. Maybe both. One is that it misunderstands basic principles of human development. The other is that it assumes that talent will shine through no matter what the circumstances, and that all teams should be concerned about is buying talent. It’s all nature and no nurture. No one seems ready to invest in the idea that nurture might be a very powerful force. Instead of a frantic search for “talent,” teams could harness the power of understanding human development at a very deep level and develop value that way. Okay, so the search for talent will never not be frantic, but a team could improve the return on that search.

I’d argue that there’s plenty of good, solid science already backing up the idea that teams are actually shooting themselves in the foot with their policy of paying so little to minor leaguers. Yes, it will require a lot of money, but might I make the case that it would be a wise investment? I think this is another one of those blind spots in baseball where ideas of how things should be have trumped the science of how things work best. If there’s something that’s shown to be a recipe for a market inefficiency over the years, it’s that.

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mschieve
7/15
Would it be possible to create the MiLBPA to ensure that these players are receiving a fair wage? I imagine the owners might not like to battle two unions. Perhaps the MiLBPA could be an arm of the MLBPA.
ErikBFlom
7/15
Minor leaguers have off-season jobs that pay more, UPS in particular being famous for giving athletes flexible schedule jobs with decent pay. It would be interesting for you to talk to a GM for a minor league team about the finances of the team itself. I don't know if Cal Ripken would take your call on the matter as owner of his own team. If minor league baseball were a profitable business in an operating sense, then higher pay would make more sense. So how much money are we talking about... 6 levels x 25 players x $100 = $15,000 for one major league club is an increment.
TheArtfulDodger
7/15
Presumably any time dedicated to an off-season job is time that could be spent playing winter or fall ball, and if you're not doing that, do you *really* want it? (I don't buy this line of reasoning of course, but it's certainly out there). Additionally, the financial viability of minor league baseball teams shouldn't have a bearing on this as the MLB team is the one that cuts the checks for the players. Any increase in their pay wouldn't be coming from the minor league owner/operator, as is my understanding.
apbadogs
7/15
This topic seems to be gaining momentum...there was also a recent article in Sports Illustrated I believe (or it may have been ESPN The Mag). I honestly did not know their pay was this bad, very eye opening.
Rockshu
7/15
The poor wages are bad, but the fact these organizations worth hundreds of millions of dollars make these kids buy their own gloves/bats/cleats is downright embarassing.
anderson721
7/15
My initial reaction to your comment was: have you spoken to a teacher lately? we spend an average of $500 plus on materials that districts should be providing. But upon reflection, that's just getting in the race to the bottom that hurts everybody. So, yeah, it is shameful. No owner is going to go broke buying bats and gloves.
alfredeinstein
7/15
Great article Russell; I'm glad you're paying attention to these big problems. I'm wondering if BP would be willing to take this article out from behind the paywall so that a lot more eyes could see it. The plight of a lot of minor league players is real and more attention paid to it might help a movement to mitigate their circumstances.
BillJohnson
7/15
The flaw in this reasoning is the assumption that teams want all of their prospects to become major leaguers. They can't. Something approaching 50 guys enter a farm system every year, between the amateur draft and IFA signings, and even if every last one of them manages to play at the major-league replacement level (no small accomplishment), there will still be no more than 7 or 8 on average who actually reach the Show. There just isn't room for more. The huge majority of the guys who are signed down-draft serve their organizations not by becoming major leaguers, but by providing the rest of a minor-league team so the the fortunate few who do have what it takes can actually play games. What they get out of it is a meager living plus the ability to say "hey, I played rookie-league ball with Joe Superstar in East Poison Spider, Wyoming!" when they cash it in and go back home to live their lives and tell stories. This is no small thing, those who have that privilege are enriched by it, and in my experience, they are uniformly grateful to their former team for letting them play with Mike Trout or Albert Pujols or Greg Maddux. But paying them more than the bare minimum is not necessarily in a team's best interest.
frqtflyr
7/15
Interesting spin. Minor leagues as essentially the equivalent of sparring partners in boxing. Or backroom brawlers for those who prefer a bread and circuses model. Nonetheless, fascinating article, Russell.
Dubey89
7/15
I disagree somewhat. If a team could consistently generate MLB ready talent at a higher level than other teams, the benefits are huge, even just as trading chips. I agree that if minor leaguers across the board are increasing in quality and this is happening for every team, there is no advantage, as there are only a set number of roster spots available in the major leagues.
okteds
7/15
But the flaw in THIS reasoning, is that teams assume to have a fixed number of viable major league talent in their system, and the rest are just "sparring partners". If, with proper nurturing, a team can elevate just one or two more career-minor league guys a year to replacement-level major leaguers, then the investment would pay for itself.
BillJohnson
7/15
I don't see it. The whole point of replacement-level players is that there are more of them around than there is room for on major-league rosters. I'd guess that at any given time, about two thirds of all active players with skill levels that are replacement-level to plus or minus, say, half a game over a season, are in the minors rather than the majors -- maybe (pure guess) 5 in the majors, 8 or 9 at AAA, and maybe one oddball stuck at AA. What good does it do a team to raise that 8-or-9 figure to 13-or-15? Not obvious that it's enough to justify the cost. Of course, the story changes if greater spending in the minors produces two or three additional guys a year who are clearly better than replacement level. However, I don't see that happening. As far as I can tell, very few players with >1-WAR talent call it quits in the low minors because they're so poorly paid -- but I may be wrong.
doncoffin
7/17
I don't think Russell thinks every player in the minors can make the majors--and I don't think it's reasonable to read this post as an argument that every player in the minors can make the majors. It's an argument that for a small annual investment a major league team is likely to earn a positive return. It may be just one additional player who makes the majors and contributes--over his MLB career--5-10 WAR (and that's all it would take, I think). To the issues raised here, I'd add one more thing--the need to improve coaching at the minor league level. I know that coaching in the minors has improved, dramatically, over the last 50 years. Teams now have roving pitching, hitting, and fielding instructors (1-2 of each). For another fairly small investment, teams could easily double their minor league coaching staffs.
cdt719
7/17
Downvoting comments like the above is really pathetic. I don't know if I agree with the line of reasoning, but it's a reasonable, non-trolling counterpoint.
jfranco77
7/15
Isn't this just a prisoner's dilemma? Or maybe the opposite where everyone is better off not cooperating? If I'm Billy Beane and I think my team is 10% better at developing players than my competition, am I going to lose my advantage if I invest this 5mil and everyone else does too? Now on the flip side if I'm Brian Cashman and I'm pretty sure I'm 10% WORSE than everyone else, maybe I should do it. Then again, maybe that takes away my advantage of being able to spend in free agency.
johnnynyc
7/15
Most of this takes perspective that players are self (non-)sufficient. Some minor leaguers I have known had their families support them in their minor league years. It's a long shot, and most don't hang around very long trying. It's a life choice.
Dubey89
7/15
I think this is a situation where a single team, or a few teams, could gain themselves an advantage, for a time, by increasing minor league salaries. Eventually, if it showed good results, the rest of the league would catch on, and any percieved advantage would be lost. Quality of minor league play across the board would increase, but if every team is doing it, nobody is gaining a distinct advantage, and the teams would not be realizing any additional value for their dollars spent.
Shawnykid23
7/15
But isn't that how most competitive advantages end up? While only temporary, it's still an advantage for a period of time. While the other teams are catching up, the pioneering team could focus their efforts on the next competitive advantage. If teams decide to do this, then it may not be a huge advantage, but it may create a disadvantage for a team that doesn't do it. Also, it causes teams to spend money- money they in theory may not have to spend elsewhere. Not to mention if the sole result of this is a better quality of life for minor leaguers, I think that's a good thing.
jdeich
7/15
A hypothetical system where all minor leaguers are trained extremely well would raise the level of play at both the major and minor league levels. Given the fraction of each team's income derived from selling tickets and merchandise, that's in the interest of every owner, even in the unlikely scenario where adoption is league-wide and simultaneous. In practice, of course, not all teams innovate at the same rate, and those that did this early could create a competitive advantage for a few years. With wins priced at $5-7M on the free agent market, this is a possible path to cheaper wins, and it doesn't even cost you draft picks.
joshturnes
7/15
Interesting how people (comment section) see this as a labor issue. I read this as something an innovative owner and general manager of the MLB team would try in order improve their chances of developing Major League talent. An MiLBPA would only serve as a detriment to the minor league affiliate and it's ownership.
oloughla
7/15
The problem you are describing (young people whose income stream is insufficient to cover living expenses) extends far beyond baseball. Given how quickly the cost of education has increased without an accompanying increase in starting salaries, a very large portion of recent college graduates are in the same position, unable to cover living expenses after deducting the cost of their student loans. It's a huge problem for our economy moving forward.
escroll
7/15
If I'm not mistaken, some teams do this already in a limited fashion, the first example coming to mind being Pirate City in Bradenton; dorm-style living and cafeteria for player in the Pirates' GCL, A+ and extended spring training teams. Additionally, one should account of the fact that salaries increase as one moves up the ladder; IIRC some players in AAA make 50 or 60K per year (permitting them to become career minor leaguers).
Dodger300
7/15
Spoiled owners! (Thank you for the billion extra credit points, Russell.) I find it demoralizing that most of these comments focus on whether this would give a team a competitive advantage, and that many believe it would be a pointless waste of money if it does not. Only one comment comes close to alluding that providing ones employees with a decent living is the right thing to do. That such corporate greed has become the accepted standard in America today, even among the workers, and across all class lines, speaks to the number one challenge confronting our country.
Dubey89
7/15
It's a business. Business owners in every single industry look to maximize profits and reduce costs. Business owners in this society aren't raising salaries to be charitable. They are raising (or lowering) salaries because tha is what the job Market demands. The Job Market may not be truly efficient, but it is still a market, and prices (Salaries) are determined by the market conditions. In the case of MiLB salaries, the market is such that there is little or no viable alternative path to the Major leagues other than MiLB. There is also a long, long history of players accepting poor wages and not really complaining, or making a stink about it. There has certainly been very little negative press given to MiLB salaries over the years. Therefore, all of the power is in the hands of the owners currently, and the only way a change is going to happen is if the MiLB were to unionize somehow, or the owners could realize a financial gain from increasing MiLB salaries. While it may be romantic to envision a scenario where MLB owners truly care enough about their players/employees to cough up several million dollars per year without realizing a future financial gain from it, it is probably not realistic. Therefore, it is natural for the discussion to gravitate towards the cost/benefit analysis that has unfolded here.
Dodger300
7/15
Thank you for giving a number of reasons that support the need for having a minimum wage, and ultimately, the need for it to be raised significantly. Including for baseball players, NFL cheerleaders, and many more desirable occupations. I agree that the vast majority of the benighted "job creators" couldn't care less about how their employees must live.
markpadden
7/16
Like any other union, the MLBPA is designed solely to line the pockets of its most senior members, at the expense of junior member, non-members and the union's employers. Who do you think is paying for guaranteed contracts of aging veteran players? It's the guys in the minors, and those MLBers who get washed out or injured before hitting free agency. It's essentially financial hazing in a fraternity where < 5% of the rushees get in. If it sounds like an unfair deal, it is. But I highly doubt it will ever change.
doctawojo
7/16
Whatever your personal beliefs on the matter, that is not what a union is "designed solely" to do.
markpadden
7/16
Publicly, of course not. Privately and functionally, it is. It's not my "personal belief"; it's how the majority of present-day unions operate in practice.
Dodger300
7/17
I think you"ve got the wrong adversary there, evo. Would you actually deny that the primary purpose of a labor union is to extract the nest possible working conditions, wages, and benefits from the owner/management of the company or government where the union members work? Seriously?
Plucky
7/15
This kind of pay structure is ubiquitous in pretty much all entertainment industries-not just pro sports, but music and acting and the like. The basic reason is that enormous numbers of people want to do it and only comparatively few will 'make it', and the value produced by the people that don't is extremely low. There has to be some meachnism to weed out the people that won't make it and low pay is part of it. Is it fair or just? It's pretty easy to say 'no', but on the other hand, insisting the world owes you a middle class wage at age 20-22 for something with minimal economic value while you chase your dream is also a bit rich. The average starting salary of college graduates nowadays is only $35k. On the intrinsic economics of the matter, the relevent group for this article is really only the <$100k bonus group (which of course is the majority of minor leaguers)- For players getting north of 100k bonuses, the implicit arrangement is that your bonus ought to be enough for you to avoid poverty and deprivation for at least 2-3 years, at which point it's time for you to be moving up or moving on. Players in the 100-250 bucket would of course want to live frugally since that has to last them until they either wash out or make it, but that ought to be sufficient to avoid any serious deprivation for a couple years. On the table above, the difference in percentage of players who produce >1 WAR between the <$100k group and the $100-$250k group is only 2.1 pct points. At a 5-WAR threshold it's only 0.8 pct points. If we were to assume that entire difference was due to detrimental effects of low pay (i.e. that teams collectively have no skill whatsoever evaulating the potential talent between the two groups), then the payoff from the 'investment' model (i.e. that paying them more will make them better) is that percentage increase times the WAR the team captures below FA market rates conditional on the player making it. If that's say 4 WAR, then your expected value payoff for that 2% chance is only 0.08 WAR. 0.08 WAR is not worth $10m. For the investment model to work at a cost of $10m, you have to assume that you are increasing the odds of players making it on the order of at least 10-15 pct points, and that the players that make it will be real contributors rather than marginal bench/bullpen guys. In order to do that, you also have to assume based on the table above that the detrimental effects from low pay extend to guys who got $200k bonuses, which seems like a stretch.
Plucky
7/15
Before people rip me, I did notice a logical error- I mixed aggregate vs individual costs. the 0.08 WAR is of course individual and the 10m is aggregate. 0.08 WAR would be worth about %560k at $7m/WAR, or basically th eLM min While that is massively higher that what they are paid, that number assume the entirety of the discrepancy in outcome is the reult of low pay, which is ludicrous. To get to a $50k salary, you would have to impute 10% of the discrepancy to that effect. This is plausiblee, but certainly not obvious
Dodger300
7/16
Plucky, where did you come up with the .08 WAR figure? Please explain. The only thing I see close is the increase of players who contribute 5 WAR from 2.4% to 3.2 %, which is an increase of .8 % of the players, or .08. But that represents .8% PLAYERS, not .8% WAR. I don't know how many players that would be, do you? But at $7 million per WAR, each one of those players would add $28 million in value to their team over the ones who contributed only 1 WAR. At that rate, it the system would need top produce one additional 5 WAR players every 2.8 years to break even. But if it also adds more 1.0 WAR players, the break even number would even would be less than that.
Plucky
7/16
.08 is an expected value, which was explained in the first post. You get it if you assume 1) The entire difference in performance between the <$100k bonus group and $100-250k bonus group is due to low pay 2) The $100-250k bonus group does not suffer low-pay effects 3) That of the players in the <$100k group who eventually produce >1 WAR, the average career WAR captured by the team below open market cost is 4. I invented this 4 WAR number by asssuming actual production would be 5 WAR (based on the % who produce >5 WAR and >1 WAR, 5 seems about the median) and that the amount captured by the team would be a little less (i.e. that under team control the player woudl get paid for some of that production). Under these assumptions, the expected value of paying your <100k bonus guys enough to avoid detrimental effects is the increase inprobability they produce non-negligible WAR for the team times the expected WAR the team captures conditional on the player being a non-neglible WAR producer. That would be 2% (from the table) * 4 WAR (my assumption, which can be argued but is quite reasonable) = .08 WAR. Given that assumption 1) above is flat-out silly, I would think this .08 WAR estimate (which is an individual player figure) would be essentially the maximum possible benefit. If you take the realistic view that teams have some scouting skill and the intrinsic talent of the 100-250k bonus group (which based on slot values means mid 6th through maybe the 12th round) is higher than the <$100k bonus group, that .08 expected WAR figure would drop A last note is that if you are looking at player level rather than aggregate, the investment model is not 'pay him 50k more one time, get .08 expected WAR' but rather 'pay him 50k more every year he's in the minors, get .08 WAR'. For college draftees it typically takes 3 years to crack the roster, for high schoolers 4-5. If you are applying this model to a HS draftee, your total cost gets up to $250k. If you are a fully bought-in believer that low pay accounts for more of the difference in outcomes than intrinsic ability, you can make a plausible economic case for the investment model. That's a real stretch though. "Plausible if you make extreme assumptions" is generally not a good enough threshold to get organizations to spend $10m on, and probably why none of them have
Dodger300
7/16
Thank you for your response. You explained your calculations perfectly when you wrote: "I invented this..."
Plucky
7/17
Thanks for replying with substance rather than snark. If you don't like that number, you are of course free to argue for another one. I gave a reason for using the number I did, if you're going to be that way at least come up with a reason you think it's wrong
Dodger300
7/17
I have no desire to play games by "inventing" a number like you did. Rather, I reject your entire thesis.
mmcma007
7/15
We do this with our military. Food, shelter, medical, everything is covered and the only expectation of you is to put 100% focus in learning your job and how to be a soldier. Seems to be pretty effective.
oltarzewskt1
7/15
I would think that better access to nutrition, either through higher salaries or team sponsored food-access, would help prevent players from risking eating food that has .... SPOILED. I'll take my extra credit points now, thank you.
manbearpig9789
7/15
One simple solution would be for the draft to be only 3 rounds and just pay these players well so they don't worry about where they will lay their head down at night and whether or not they can afford Outback. Seriously, why do you need to field six affiliates when three would be more then enough to develop your players? Also, you could pay these players well and some are going to miss manage their money to the point they would be better off with a 15 dollar a day per diem. For some of these players, being broke is keeping them out of trouble.
Dodger300
7/15
Wow, did you just discover the solution to the crime problem? Keeping people in poverty will keep them out of trouble. It's genius!
wonkothesane1
7/16
When the player gets to the majors he's going to have to deal with the fact that he has enough money to get him in trouble. Those years of being broke and staying out of trouble will not have turned over any lessons. Better for the youngster to learn how to manage money like at least a lower middle class person than a below-the-poverty-line person.
Dodger300
7/16
How offensive of you to assume that the problem with people living below the poverty level is their inability to manage money, rather than the fact that they don't have enough money in the first place. I would submit that paying the rent, feeding the kids, and paying the bills takes an incredible amount of skill when one has very little money to work with. That some can't pull it off is to be expected, considering that there are plenty of middle class and wealthy people who can't keep up with their bills either. To assume that most people in their 20s have not yet learned how to stay out of trouble and are in need of several years of being broke is utterly ridiculous. Next, I expect someone to try to pass on the myth that poor people don't work and live the easy life, rather than acknowledging that most work very hard for long hours at difficult jobs for very little pay.
therealn0d
7/15
Very thought provoking article, Russell. A lot of good questions come to mind after reading this. That's what I like about a lot of your articles. Sometimes the answer IS the question.
oldbopper
7/15
I was shocked that these professional baseball players had to buy their own equipment. I have taught and coached, another sport, golf, for over 50 years. Presently one of my pupils is playing professionally at the lower level of the PGA Tour family of tours on the PGA Tour Latin America. He has everything provided to him. Equipment companies outfit him with anything he wants, 2 dozen balls and 3 gloves are in his locker when he arrives at each event. A lavish food spread is available throughout the tournaments and courtesy transportation is also free. Travel and lodging, a considerable expense, are the players responsibility but the point is, even at the lowest level of the PGA ladder everything is first class. MLB should be ashamed for putting these very young adults in this situation.
ironcityguys
7/15
I'm not sure the object is to produce more and more stars, but this idea might just speed the learning curve a bit. If you've read John Feinstein's newest book, "Where Nobody Knows Your Name" you've already heard from career fringe players that organizations do very little for their development as young men after signing day. They pretty much go from teenagers rolling out of the rack each day, skipping high school classes, and playing baseball all fall, spring, and summer to being paid "professionals" with no discernible change in mentality. It's pretty well known that they know nothing about living on their own, cooking, shopping, or (most importantly) having a career. If the team only taught them about proper nutrition and how to care for their bodies (workout routines, core strengthening, etc.)you'd see an uptick in the production of the farm system. Even the high-end bonus babies are responsible for their food and workouts. You take these kids away from their homes and families, plunk them in some podunk town, and tell them to hone their craft. We've all seen cases of this where they become "didn't he used to be ...?" Maybe in order to reduce the cost, the teams could pick up on this idea at AA ball once those who "want it" more have separated themselves from the rest. Overall, this isn't likely to yield a massive windfall of star players for anyone ... it might help those fringe guys get to the Show and stay there instead of riding the shuttle back and forth to some AAA shangri-la for several seasons before finding the "right situation" for them to hang on and eke out an existence at the ML level. Maybe it would let your favorite club acquire a better LOOGY at the deadline. But it might also show those guys who really don't have it the door quicker (yes, it might mean fewer "organizational soldiers") thus producing about the same number of MLers as they get now and not necessarily clogging up the farm systems. A good follow-up to this article would be how much cash are the big clubs throwing at young players and them letting them fend for themselves in the wilds of wherever, most of which never attain their potential and die on the vine? Are you listening Jesse Biddle??
drmorris75
7/16
I think this might be one of the most important articles I've read on BP in my 10 years as a reader.
sldetckl16
7/16
If this proposed construct of increased wages and franchise investment proves profitable, I have no doubt that it will become the norm. I've never understood the dichotomy of those who insist that 'corporate America' is a bunch of money-hungry greed mongers but then marvel when the evil empire doesn't act in the most greed mongery fashion they are suggesting. BP has graduated staff to inside baseball positions, if this is a logical leap, then plenty of ears will be bent by its advantages. And to those who rant and rave against the 'job-creators' - please, for the love of God, go out and start a business, employ 50+ people, manage the ins and out of governmental compliance, provide a product that consumers find valuable now and in the sustainable long-run, and then come back to me and say everyone you employ should make a 'livable' wage (whatever subjective number that may be) or else you are a capitalist hack and we'll talk. Your tune will have changed. But then again, we'll never talk because you're all emotional drivel and no real-world experience.
Scartore
7/16
Remember folks, only the experience of the job creators counts as "real world experience". Those 50 plus employees evidently perform their labor on some lower level of the space time continuum that doesnt count as reality. Whether their wages are sufficient to live on is a squishy, emotional subjective number, not a hard strong manly logical number like a robust cost/benefit analysis.
sldetckl16
7/16
So enlighten me, what counts as a "livable wage"? And who gets the privilege to determine this subjective (by nature) number? Let's create a whole federal agency that can sit around determining what amount of fresh produce someone should be able to purchase with their wages to eat an adequately nutritious diet, adjusted seasonally by region and expected price fluctuations. If someone is 18 and lives in mom's basement, does he get paid less because he requires less to "live" than the 40 year old with three children and a mortgage doing the same job? And yes, a cost/benefit (or profit and loss) is actually, shockingly, objective numbers that tell a story. Read the Jeter article from today. Do you tend to favor metrics or do you like a good story line and buy into romantic notions? I'm pretty sure I know where we both fall.
Scartore
7/16
Seriously, you don't get to accuse people of attacking a straw man if they come upon you halfway through the second verse of "If I only had a Brain".
rawagman
7/16
I think there will eventually be change in the wages - or at least the living conditions - of minor leaguers, but $50K across the board will never happen in the current inflation era. If the current - or a future similar - case gains traction, MLB will place a value of some kind on the training provided to players, thereby deducting that from the minimum stipulated by the courts, or agreed upon in any settlement. They will also likely find a cost benefit to providing better food to its players, again with some kind of deduction to the minimum. And more clubs will eventually take the step taken by Pittsburgh as described in a comment above, to provide living space for its players, at least through the low minors (likely up through High A ball). Once those elements are accounted for, and deducted from salaries accordingly, players may see a small, but not insignificant, raise in their salaries during the months of the season. Also, while this was not mentioned in the article, nor in any of the comments, how is it that players do not get paid during spring training?