Archive for Business

New FanGraphs T-Shirts and Apparel!

Recently, we started running out of t-shirts. As such, we thought it was high time to design some new ones. And design them we did. But we didn’t just stop at t-shirts. Oh no, constant reader, we went the extra mile this time. In addition to t-shirts, which now are available in both men’s and women’s sizes, we now have raglan t-shirts (again, both men’s and woman’s kinds), zip hoodie sweatshirts, baby onesies and hats. You might think of this as the holiday season come many months earlier than normal. And you’d be right.

The person we have to thank for all of this shiny new garb is Aaron Gershman of Creative Sentencing, who you should absolutely hire for your next design project.

Let’s take a look at the designs, which are available for purchase at this very moment.

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MLB Scores Big Win in Minor-League Wage Lawsuit

Last October, the plaintiffs in the lawsuit challenging Major League Baseball’s minor-league pay practices scored an important, albeit preliminary, victory when the court tentatively certified the case as a collective-action lawsuit. As I noted at the time, this meant that rather than have to file individual lawsuits for every player allegedly denied the minimum wage or overtime, current and former minor-league players could instead opt-in to the existing litigation and have their claims against MLB tried together in the existing case (a much more efficient and less costly proposition).

As I also noted at the time, however, this initial victory was potentially short-lived. Under the applicable legal rules, even though the court had preliminarily certified the minor leaguers’ case as a collective action, the court withheld a final judgment on the matter until after the parties had gathered more evidence regarding the extent to which the players’ legal claims were “similarly situated” to one another’s (i.e., whether the work experiences and legal claims of the plaintiffs already named in the lawsuit were roughly equivalent to those of the rest of the players who might join the case).

That additional evidence has now been collected and, on Thursday evening, the judge in the minor-league wage lawsuit ruled that the plaintiffs had failed to show that their cases were similarly situated. Thus, the judge “decertified” the case as a collective action.

This means that the roughly 2,200 current and former minor-league players who had joined the case since October have now been tossed back out of the lawsuit. These players must now instead file their own individual lawsuits against MLB should they wish to seek compensation for their alleged underpayment.

Perhaps more importantly, Thursday’s ruling also dramatically lowers the odds that the existing lawsuit will force MLB to make significant, league-wide changes to its minor-league pay practices. Thus, the decision represents a major victory for the league in the minor-league wage litigation.

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Dissecting Rob Manfred, Tony Clark on Minor-League Wages

As has become customary, both Major League Baseball Commissioner Rob Manfred and Tony Clark, head of the Major League Baseball Players Association, held press conferences during All-Star week to field questions regarding various issues affecting the game. Unsurprisingly, one of the issues about which both men were asked concerned the ongoing litigation over the allegedly illegally low wages paid to minor-league players.

For his part, Manfred insisted that the minor-league wage debate “is not a dollars and cents issue” for the league. Instead, he asserted that the league was merely concerned with the feasibility of applying these laws to professional athletes:

“I want to take extra BP — am I working, or am I not working? Travel time. You know, is every moment that you’re on the bus, is that your commute that you don’t get paid for? Or is that working time? Where’s the clock, who’s going to punch a clock keep track of those hours?”

“Who’s going to keep track of those hours? When you’re eating in a clubhouse with a spread that the employer provides, is that working time, or is that your lunch break? We can figure out the economics. The administrative burden associated with the application of these laws to professional athletes that were never intended to apply for professional athletes is the real issue.”

Meanwhile, Clark contended that his hands are tied on the matter, since the MLBPA does not currently represent most minor-league players, and thus “legally [doesn’t] have the ability to negotiate on their behalf.”

To some extent, both Manfred and Clark expressed fair and legitimate concerns regarding the issue. At the same time, however, further examination reveals that both statements appear to be somewhat disingenuous.

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MLB Teams Best Positioned to Take on Salary at Deadline

At last year’s the trade deadline, the Texas Rangers made a deal for Cole Hamels despite a 50-52 record that placed them three games back in the wild card race, with four teams in front of them — and seven games back in the division, with two teams ahead of them. The club ultimately finished the season 38-22, winning the division in the process. The addition of Hamels was certainly integral to their success.

That said, the trade wasn’t necessarily made with just 2015 in mind; in the process, the Rangers were able to move Matt Harrison’s contract and retain Cole Hamels through either 2018 or 2019 (for which latter year the club holds an option). Hamels hasn’t been at his best this year — his 2.93 ERA obscures uncharacteristically weak fielding-independent numbers — but the Rangers have continued winning this season, having produced a 53-32 record and a 7.5-game lead on the Houston Astros.

The Rangers leveraged some payroll flexibility into the acquisition of a player likely to help them in the present and future. A look at the current state of future payroll commitments could help determine which teams are best positioned to take on money at this year’s deadline.

While the traditional would-be free agents are always popular trade targets, there are quite a few players who could be moved in the next month who are owed money beyond this season. Ryan Braun has $76 million remaining on his contract after this year. Andrew Miller will earn $18 million through the 2018 season. Carlos Gonzalez has $20 million coming to him next year while Jay Bruce has a reasonable option and Jonathan Lucroy has a ridiculously team-friendly option. While teams have more money to spend than ever before, they still operate on budgets, and looking at future commitments is a start in determining how much money a team has to spend.

The graph below shows every team’s commitments for the 2017 season, per Cot’s Contracts. Only guaranteed money is included, which means options and potential arbitration salaries are left out for the time being.

2017 MLB PAYROLL COMMITMENTS (1)

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Disney Invests Over $1 Billion in MLBAM

Yesterday, after months of rumored negotiations, news broke that Disney had agreed to acquire a 33% stake in MLB’s streaming-video division, often referred to as BAM Tech. According the report, Disney — which has ABC and ESPN under its umbrella — agreed to acquire one-third of BAM Tech for $1.16 billion, which puts the overall valuation for the entire streaming division at $3.5 billion. As part of the deal, Disney also has the right to purchase another 33% of the company in the future, which would allow them to become majority owners of whatever they choose to call BAM Tech long-term.

The deal is certain to have far-reaching implications for the future of streaming video, and it also could have implications in the upcoming labor negotiations as owners attempt to separate non-baseball revenue from baseball revenue despite its origins within the game.

With this deal, it is clear that BAM Tech is set to be distinct from MLBAM, focusing on streaming efforts outside of baseball. This development was first announced last August, coinciding with a deal to acquire NHL’s streaming rights. MLBAM  has become a force in the industry, branching out from providing only MLB-related services several years ago to providing back-end help to ESPN, rolling out the WWE Network and HBO NOW, along with streaming the NCAA Tournament and PGA tour events.

MLB considered several options with their streaming-services business, from going public to staying put, but ultimately chose a strategic partnership with Disney. By retaining a large equity stake in BAM Tech, at least until the option to sell another third is due, MLB has bet on the continuing upside of the company. By partnering with Disney, the odds are good that more deals like what the league did with the NHL and HBO will come down the pike, and if MLB and Disney can grow the company together, the remaining equity the league holds will likely increase in value, perhaps significantly.

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Congress Is Asked to “Save America’s Pastime”

Rightly or wrongly, minor-league baseball teams believe the ongoing, class-action lawsuit over minor-league players’ wages presents something of an existential threat. As has been previously discussed here on a variety of occasions, the litigation contends, in short, that many minor league players’ salaries — which can run as low as $3,300 per year — violate the federal minimum wage and overtime laws.

Even though minor-league teams are not actually responsible for their players’ salaries — minor leaguers are instead paid by their respective major-league franchise — they still fear that a ruling in the players’ favor could be vitally injurious to their interests. As the argument goes, if major-league teams are forced to incur higher payroll costs, then they will likely cut back on other subsidies that they may currently provide to their minor-league partners.

Moreover, the minor leagues worry that, in some cases, MLB teams may potentially even decide to terminate their relationship with one or more of their minor-league affiliates in order to reduce costs. While most of the higher-level minor-league teams would likely survive such an scenario, the minor leagues fear that a victory for the players could spell doom for some of their lower-level franchises, especially those residing in particularly small metropolitan areas.

As a result, the minor leagues announced 18 months ago that they would petition Congress for relief, asking the legislature to pass a law protecting the industry from the federal minimum wage and maximum hour laws. A year and a half later, these efforts finally came to fruition, when a bill was introduced in the U.S. House of Representatives last week proposing to formally exclude minor-league baseball players from the federal minimum wage and overtime protections. Read the rest of this entry »


Michael Conforto’s Wrist and the Language of the CBA

On Saturday, the New York Mets announced that the team was demoting struggling outfielder Michael Conforto, optioning him to Triple-A Las Vegas. On one hand, the Mets’ decision to send Conforto to the minors wasn’t particularly surprising, as the second-year player had been in the midst of a deep slump, hitting just .148/.217/.303 since May 1.

On the other hand, however, the timing of Conforto’s demotion was potentially a bit controversial in a different respect. As ESPN’s Keith Law noted on Saturday:

Indeed, Conforto reportedly was given a cortisone shot on Tuesday, June 14 to treat strained cartilage in his ailing left wrist.

This is potentially significant because Article XIX(C)(1) of Major League Baseball’s collective bargaining agreement forbids teams from sending injured major-league players to the minor leagues. As the provision clearly states, “Players who are injured and not able to play may not be assigned to a Minor League club.” Instead, the CBA requires clubs to place injured major-league players on the major-league disabled list.

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The NCAA’s New Agent Rule and the MLB Draft

Historically, players selected straight out of high school in the Major League Baseball draft, or those drafted following their junior year in college, were forced to walk something of a fine line. Because the National Collegiate Athletic Association’s rules specified that any player who formally signed with an agent would lose his remaining college eligibility, draftees could not be directly represented by an agent when negotiating with an MLB team.

Instead, players could only employ an agent in an “advisory” capacity. Under NCAA rules, so long as a player’s “advisor” did not directly communicate with an MLB team on the player’s behalf, and so long as the player compensated the advisor for his services (at the advisor’s normal hourly rate), a player would maintain his college eligibility should he ultimately elect not to sign a professional contract and instead return to (or enroll in) college.

Of course, in practice this distinction between an “agent” and an “advisor” often turned out to merely be a matter of semantics. Teams routinely expected (and preferred) to communicate directly with a player’s agent, rather than the player himself, while recent draftees usually preferred to have their agent/advisor negotiate directly with an MLB team on their behalf. So despite their official title, advisors often served as players’ agents, directly representing their clients during their interactions with MLB teams, in violation of NCAA rules.

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Braves, Rangers Indicate No End to Publicly Funded Stadiums

Baltimore’s Camden Yards opened to almost universal praise in 1992. The success of the park and its broad appeal spurred the development of new stadiums throughout baseball. Since the construction of Camden Yards, 21 of the league’s 30 franchises have received new stadiums, while eight others have undergone renovations (sorry, Tampa Bay). In Cleveland, they’ve seen both occur.

Averaging roughly one new stadium per year has been great for business, as attendance has gone up across the league and the old unsightly multipurpose stadiums have been retired. It would be reasonable to think, however, that such a boom in stadium construction would naturally result in an equally steep decline. There are, of course, only so many clubs for which to build new park. Reason isn’t always at play in such cases, however. Both the Braves’ relocation to a new home next year — and a recent announcement by the Rangers that they plan to build a new air-conditioned ballpark just 20-some years after debuting the old one — should solidify that notion for us. As long as they create profits for ownership, stadium building, renovations, and fights for public money will never end.

Baseball is a business, and franchise owners acts as corporate heads looking to extract money and increase profits wherever they can. Getting the public to fund a stadium is a very big part of that and most owners have been incredibly successful in this regard. Of all the news stadiums built in this era, only the San Francisco Giants privately funded their stadium, with the St. Louis Cardinals representing the only other club to account for a significant portion of their stadium’s expense. In most cases, we’ve seen public fights, with threats to relocate elsewhere — sometimes to another city and sometimes just to a neighboring suburb. We’ve seen this play out recently in the case of both the Braves and the Rangers — and, despite all of the new stadiums, we’re not done seeing it.

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Major League Baseball and the New Overtime Rules

This past Wednesday, the U.S. Department of Labor released its long-awaited update of the regulations governing overtime pay under the Fair Labor Standards Act (FLSA). Specifically, the new Labor Department rule modifies the FLSA’s so-called “white collar” exception, under which certain salaried workers employed in an executive, administrative, or professional capacity are not entitled to overtime compensation.

Currently, anyone working in a white-collar position who receives a salary of at least $23,660 per year is exempt from the FLSA’s overtime requirement, meaning that they do not receive any additional pay even when working more than 40 hours per week. Beginning in December 2016, however, that salary threshold will rise to $47,476, so that any white-collar workers earning less than that amount annually will now be owed one-and-a-half times their normal hourly rate anytime they work 41 or more hours per week.

Because MLB teams employ dozens of front-office and business employees working in an executive, administrative, or professional capacity, and because many of these individuals may earn less than $47,000 per year despite routinely being expected to work more than 40 hours per week, this new rule has potentially significant ramifications for the baseball industry.

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