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.

Specifically, the proposed bill — currently entitled the Save America’s Pastime Act — would amend the federal Fair Labor Standards Act (FLSA) by adding a new exception to the basic minimum wage and overtime protections afforded to most of our nation’s workers, excluding “any employee who has entered into a contract to play baseball at the minor league level.” In addition, the bill goes on to also cast some doubt regarding the status of major-league players under the FLSA, stating that the fact that minor-league players are excluded should not be read to imply that MLB players are themselves in fact covered by the minimum wage and overtime laws.

At first glance, this second portion of the bill would appear to be quite unnecessary, since it is hard to imagine a scenario in which major-league players’ salaries plummet to the point at which they would fall below the federal minimum-wage (currently set at $7.25 per hour). Instead, the provision is likely intended to help foreclose the possibility that major-league players would ever elect to sue for unpaid overtime compensation. Along these lines, it is doubtful whether players would be covered by the so-called “white collar” exception to the overtime rules, meaning that it is theoretically possible that they could someday file a lawsuit — perhaps during the midst of an extended labor stoppage — seeking one-and-a-half times their normal hourly wage for every hour worked over 40 per week.

Should Congress pass the law, the Save America’s Pastime Act states that its new proposed exceptions would apply retroactively to any lawsuit or work occurring “before, on, or after [the bill’s] date of enactment.” While this would not necessarily doom the ongoing minor-league minimum-wage lawsuit in its entirety — since the case also asserts that MLB is in violation of several state-level minimum-wage and overtime laws, rules that would not be affected by the proposed legislation — it means that the plaintiffs could no longer seek relief under the FLSA, severely hampering their hopes of securing nationwide reform in this area. (Meanwhile, the Constitution’s prohibition of so-called ex post facto laws — i.e., those applying with retroactive effect — would not apply to the new bill, as that restriction only prevents Congress from passing retroactive criminal laws.)

Notably, if enacted into law, the Save America’s Pastime Act may actually be somewhat redundant. Major-league teams have asserted in the minor-league wage case that they are already exempt from the FLSA, under the law’s existing exception for seasonal “amusement or recreational establishments.” As I’ve previously discussed, courts are split as to whether this exception — which generally applies to recreational businesses operating seven or fewer months per year — applies to professional sports teams. In the only case decided to date involving a minor-league baseball team, however, a federal appellate court concluded that the Single-A Sarasota White Sox were in fact covered by this exception, and thus did not have to pay its employees the minimum wage or overtime.

Should this same interpretation be adopted in the minor-league wage lawsuit, then the Save America’s Pastime Act would be unnecessary, as minor-league players would already be excluded from the protections of the FLSA under this preexisting exception.

It remains to be seen, of course, whether the new proposed legislation is ultimately enacted into law. On the one hand, because Congress is currently unable to accomplish much of anything at all in the current political climate, it would seem unlikely that such a bill would make it through both the House and the Senate. And even if it did, it’s not clear that President Obama (or a potential future President Clinton) would sign it into law. (A Donald Trump administration may be another story, however.)

Moreover, even though the bill originally had bipartisan support, having been proposed by Representatives Cheri Bustos (D-IL) and Brett Guthrie (R-KY), Rep. Bustos has already announced — little more than an hour ago — that she is withdrawing her support for the legislation due to the backlash it has already received.

On the other hand, Minor League Baseball (MiLB) has historically proven to have a significant lobbying force on Capitol Hill. With more than 160 teams spread throughout 42 states, minor-league owners have routinely been able to successfully exert their influence over the years on a large and geographically diverse group of Congressional representatives.

And at the same time, MLB is likely to flex its own political muscle to help the cause, since major-league teams will be the ones forced to directly foot the bill should the minor-league players win their lawsuit. (Notably, MLB’s political action committee (PAC) made campaign donations to both of the original sponsors of the Save America’s Pastime Act.)

Should the judge in the minor-league wage lawsuit rule against MLB on the applicability of the seasonal-amusement-or-recreational-establishment exception — thus suggesting that minor-league players are in fact currently entitled to the minimum wage and overtime compensation — then one can expect that the league’s lobbying efforts in Congress will only intensify.

Considering that minor-league players have never formed their own union, it’s not clear how they will rebut these lobbying efforts without their own organized presence on Capitol Hill. That having been said, the fact that the Save America’s Pastime Act could also prevent major-league players from filing their own FLSA lawsuits may motivate the Major League Baseball Players Association to weigh in on the matter, which would help to balance the scales somewhat.

Even if its ultimate prospects for passage are uncertain, however, the fact that MLB and MiLB would appear to be throwing their weight behind the Save America’s Pastime Act shows how significant a threat they perceive the minor-league wage litigation to be. Neither organization is likely to rest, then, until they have been definitively defeated on this issue both in court and in Congress.

We hoped you liked reading Congress Is Asked to “Save America’s Pastime” by Nathaniel Grow!

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Nathaniel Grow is an Associate Professor of Business Law and Ethics at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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hoph
Member
hoph

What a disgraceful piece of legislation.

They are quite literally asking for the bare minimum legal wage in the United States. Government lobbying is trying to prevent that.

To provide a salary of $50,000 to every minor league player would be approximately $7.5 Million. MLB is a $9 Billion dollar industry.

Call your representatives: http://www.house.gov/representatives/find/
It’s in committee as H.R. 5580.

killerweaksweet
Member
Member
killerweaksweet

So you are saying that you would not like these players to continue to play? Because that is what will happen. I get your point and all, but if somebody wants to play for $3,300 a year, then why should you stop them because you think they should be paid more?

hoph
Member
hoph

The same reason we have minimum wage laws.

killerweaksweet
Member
Member
killerweaksweet

You do realize that raising minimum wage prices people out of the workforce, right? I mean could MLB afford it, maybe, but what is the downside? The downside is that any player not deemed worth a $50,000 contract in your example has to find another job.

drewsylvania
Member
Member
drewsylvania

It is the business that “prices people out of the workforce”. If MLB wants to remain viable, they can damn well not gouge the people trying to make it to MLB.

Why people think the little guy should always be screwed every time something like this comes up….

killerweaksweet
Member
Member
killerweaksweet

Do I agree that they dont need any more loopholes, yes. Do I hate publicy funded stadiums, yes. Is the name of the bill awful and borderline arrogant, yes. But dont punish the very people you intend to help. Yes they probably can afford it, but the lower level players are the ones that ultimately pay the price.

v2micca
Member
Member
v2micca

Sorry, I can’t get behind this line of thought. If an institution cannot abide while obeying base level regulations that we as a society have agreed upon, then it does not deserve to continue to exist. Yes, it will likely have the unintended side-effect of forcing low-level players out of the game. But honestly, the players that are forced out are probably better off moving onto another profession anyway.

MikeS
Member
MikeS

Paying these people a living wage probably costs less than the worst contract on each 40 man roster. It would not bankrupt the MiLB teams that don;t pay those salaries anyway. It would just be like having an overpaid reliever who couldn’t get high leverage outs in terms of affecting the budget of each franchise.

Spa City
Member
Member
Spa City

Why stop at the players? Each minor league team employs ushers, ballboys/girls, mascots, etc…

Why should these people not be given the basic human right of a “living wage”?

In NY, minimum wage is going to be $15/hour soon. Imagine every ballboy/girl, mascot, groundskeeper, usher, ticket taker, concession stand worker, and player earning $15/hour plus overtime?

This could be an amazing thing to watch.

JDX
Member
JDX

None of the positions you mentioned except maybe groundskeeper work a full 40 hours a week. So, overtime wouldn’t be a concern.

And if the minimum wage in NY is $15, they should make $15.

Of course, that ignores whether or not the minimum wage should or shouldn’t be $15.

Lanidrac
Member
Lanidrac

Most of those people are only part-time employees, so paying them minimum wage wouldn’t be much of a problem. Heck, they may already be making minimum wage.

AngelsLakersFan
Member
AngelsLakersFan

@killerweaksweet I am as anti-minimum wage laws as it gets, so I completely understand your point of view. But more importantly we all need to play by the same rules. If everyone else has minimum wage protection than why not minor league players?

MLB and its minor league affiliates are a government sanctioned monopoly. MLB needs minor league teams to develop talent worth millions of dollars to them. They will have no problem paying even the worst minor league players $50,000 a year because they are contributing far more to the bottom line than that. The only reason the salaries are so low in the first place is because there is 0 competition, and therefore MLB gets to set the price. If there was a second league competing with MLB then we would see these minor leaguers making hundreds of thousands of dollars per year.

killerweaksweet
Member
Member
killerweaksweet

Let me be more clear. I’m totally ok with them removing the anti-trust exemption, but I dont think keeping that exemption and making some law about how much MiLB players should get paid is the answer. Then nobody wins.

And there are other leagues they can go to, they just aren’t nearly as high of a level of competition/prestige.

Whether MLB has the ability to pay or not is irrelevant. The only people that will get burned by enacting some minimum wage law is the players not good enough to warrant giving $50,000 to as I have said all along.

treyash9
Member
Member
treyash9

This is not a capitalist, open, free market so the principals to which you refer do not apply. MLB is a monopoly. MLB will not close minor league teams due to only making $8.9B instead of $9.0B – it is an empty threat.

Johnston
Member
Johnston

The MLB has already made it very clear that they won’t pay it. They *might* pay the actual prospects, who make up much less than 10% of the minors, but not everyone. Expect mass minor league layoffs and team closures if this happens and a shift to an NFL-like system of prospects staying with the main team (on an all-new 60- to 80-man roster) while all non-prospects go play wherever they can find work.

It would be a disaster.

ptscott
Member
ptscott

It’s true that minimum wage laws can lead to less employment and might harm workers in some situations. However, the setting where the justification for minimum wage laws is most clear is monopsonistic labor markets (when there are few employers). This situation definitely applies to MiLB, where most players can only work for the team that drafted them. Economic models predict that employers will exploit workers in such markets without regulation, and that seems to be a pretty accurate description of what’s going on in MiLB.

Stovokor
Member
Member
Stovokor

Dude, you’re trying to make an Econ 101 argument in favor of a cartel with a congressional antitrust exemption… Your position is laughably wrong, as well as morally bankrupt.

Current MiLB wages aren’t at a market-based equilibrium point because MLB is a monopoly that exercises market power. Teams aren’t going to shut down their Rookie, A, A+, AA or AAA affiliates just because they have to pay their players minimum wage. If you haven’t noticed, they’re ridiculously profitable as it is. Look at MLB salaries, TV rights contracts, MLB franchise sale prices, etc.

By your logic, why outlaw child labor? If kids are willing to work for 50 cents/hr in an unregulated sweatshop, why should we stop them?

killerweaksweet
Member
Member
killerweaksweet

Again, as I said above, I’m against the anti-trust exemption but at the same time not for some forced wage minimum, which the OP was demanding. I realize now that may be hard for some people to comprehend apparently… Also, I never said that MLB franchises would close their minor affiliates. That would be foolish. My only point in this whole ridiculous thing that I’ve been down voted to hell for, was that players that would have been willing to sign for less than minimums to prove themselves would never get a chance if they weren’t deemed worthy.

I’ve failed to hear a legitimate argument against my position that doesn’t include 1. Personal views on Morality/Fairness, 2. The MLB can afford it anyway. 3. Everywhere else has a minimum wage. Let me explain why I don’t agree with any of those positions and then I’m deuces:

1. Morality is unlegislatable. What you may deem as vulgar, another may deem acceptable. So don’t give me some moral reason regarding minimum wage. If you really cared, get off you ace and go donate to your local minor league teams and every single oher charitable organization in America. That’s impossible for anyone, because ultimately it’s your own interests that trump all. (Please don’t think my use of “trump” means I support that nutjob).

2. They could afford it. This goes along with number 1. You assume that since someone has the money to give more to someone, that some obligation is present. This cant be further from the case. Just as you have a right to spend your money as you wish, the MLB the same right. Just because they have more is irrelevant. Anyone can come in here and argue that the MLB’s money should be spent towards cancer research instead of sports/entertainment and none of you could argue against it (well maybe except for me…). Stop trying to tell other people what to do. Personal freedom is the only way where everyone wins.

3. Everywhere else has a minimum wage. This logically makes sense. Why should they be exempt? I agree. Remove the anti-trust exemption. But do you not foresee players that aren’t deemed worthy of the minimum wage “working out” for these teams “voluntarily” in some months long camps? I’d rather them at least get $3,300, than get nothing because everyone thinks “they deserve more.”

Finally on your “hot take” child labor argument that all “Moral Police” types gravitate to when free labor laws are in question…We have laws against minors being able to make cognitive decisions based on their maturity level. But honestly, from now on you are not allowed to let that 15 year old neighborhood kid cut your lawn, else you’ll be deemed a hypocrite.

Let the downvotes begin again…

killerweaksweet
Member
Member
killerweaksweet

Excuse me, the writer (OP) was not demanding minimum wage. The first comment that I saw was

Poor Mans Rick Reed
Member
Member
Poor Mans Rick Reed

Agreed. This feels quite different compared to the usual saga of millionaires vs billionaires that we’re used to in major league negotiations.

Classic 4 star movie “The Replacements” gives an example of what this situation IS NOT: https://youtu.be/R1JVfRV1U1I?t=15s

jdbolick
Member

To provide a salary of $50,000 to every minor league player would be approximately $7.5 Million. MLB is a $9 Billion dollar industry.

Uhm … $7.5 million would cover a $50,000 salary for one hundred and fifty minor leaguers. There are over five thousand players in various levels below the major leagues, so the real total would be over $250 million. MLB could afford it, obviously, but that is an enormous increase in expenses that would undoubtedly see many teams disbanded.

Barnard
Member
Member
Barnard

$7.5 million per team

Spa City
Member
Member
Spa City

Why stop at the players? Every minor league team also employs dozens more people as ballboys/girls, batboys/girls, mascots, ushers, etc.

Why shouldn’t the minor league teams also pay these people a living wage ($15/hour in NY)? Just because they dont’ work directly for MLB, does not mean they deserve less than the players.

Social justice!

Spa City
Member
Member
Spa City

I assume all of the “down vote” commenters do not think employees of minor league teams deserve a “living wage”.

Do you all seriously think these people deserve to earn less than minimum wage?

Where is the justice in that?

Concerned Reader John
Member
Concerned Reader John

I think it’s the antagonistic tone more so than the content of your comment. It’s off-putting. Just a thought, have a good one.

Spa City
Member
Member
Spa City

I think you’re right…

People don’t like it when their little feelings get ouchy.

Goms
Member

People don’t like it when other people are dicks.

Spa City
Member
Member
Spa City

Your language is offensive. Not to me, but probably to somebody.

SandalsNoPants
Member
SandalsNoPants

People seem perfectly fine with suppressing wages, though. Hrm.

Metz
Member
Metz

The minimum wage is not $15 right now in NY, and won’t be for several years. You couldn’t even be bothered to do a basic Google search, how is anybody supposed to take you seriously?

Spa City
Member
Member
Spa City

Can’t you tell that I don’t care? To you and everybody else on this board I am just a screen name. This is just for humour value as far as I am concerned.

db8r_boi
Member
db8r_boi

I don’t get it. Why do you think all of those people don’t make minimum wage? I’m almost positive that they do. I’m pretty sure only the players and certain exempt “interns” don’t make minimum wage. I think this is the source of your downvotes.

drewsylvania
Member
Member
drewsylvania

Then they should figure it out. Boohoo for them. Businesses are always trying to pass on costs to anyone but themselves. MLB is already a monopoly with antitrust exemption. Now it wants to break federal wage laws? GTFO

jdbolick
Member

Then they should figure it out. Boohoo for them. Businesses are always trying to pass on costs to anyone but themselves.

Which is why forcing them to spend an extra ~$250 million per season is going to have consequences. The majority of minor leagues are only there to fill out the rosters around the players the organizations believe might have a major league future.

Doug Lampert
Member
Member
Doug Lampert

I’d guess if there were a $50,000 minimum per minor league player (and given overtime it might well be that high even at the current low minimum wage) that the average team would drop to no more than three affiliated teams in fairly short order. You’d also completely kill all independent professional ball.

I think minor leaguers should at the minimum either be paid minimum wage or be free to sign with anyone they like in a free market. But the claim that putting this in won’t kill teams and leagues is nonsensical.

Jason B
Member
Member
Jason B

You keep throwing around this 250MM number. Where did it come from? Remember, these players aren’t starting from $0. Please show your work.

Lanidrac
Member
Lanidrac

Why couldn’t the teams make a combined effort to mostly freeze their Major League payrolls for a few years in order to cover the increased cost? Sure, it would hurt in the short-term, but it’s better long-term than cutting all of those potential future contributors. While it doesn’t happen often, every once in a while you will see a high round draft pick or low bonus foreign signing make an impact in the Big Leagues, and I can’t see most teams giving up the chance at getting any more of those hidden gems even if costs them some extra dough. The MLBPA would probably balk at it, but the owners just have to get it through their heads that the players can’t have it both ways.

treyash9
Member
Member
treyash9

MLB is a monopoly and exerts that power as seen here. Our elected officials are supposed to protect us from this. I wrote to my representative yesterday.

It is in MLB’s interest to keep all of their MiLB teams / the pipeline of prospects in tact. The verbiage suggesting teams being disbanded is an empty threat. $9B in Profit in 2015 is what I read, not revenues.

I agree with you in full but would point out that MiLB includes about 6-7 levels for each team and each of those levels has about 25-30 players. The number of players is more like 5,000. I couldn’t find a number on a quick search so this will have to do.

5,000 players making about $12.5K/yr on average (for half year of work). I’d propose that amount needs to double. $25K/player – this would be a $62.5M increase in salary expense. This number would be grossed up to include payroll taxes for a total increase in cost to MLB of approximately $70M.

So, that $9B in profit would turn into $8.9B in profit. I’d love to hear the justification from the MLB or its teams on cutting minor league teams due to a 1% decrease in profitability. That is really just a rounding error on such a large number.

To killerweaksweet – this is not a free market where players and teams routinely negotiate their salaries. It is structured and entirely dictated by the business at the expense of the employees. The players have no choice but to accept the low salary to pursue their desired career. Monopoly.

killerweaksweet
Member
Member
killerweaksweet

9 Billion in revenue is NOT the same as 9 billion in Profit

killerweaksweet
Member
Member
killerweaksweet

For example Cards had $294M in revenue, but $73.6M EBITDA as the most profitable team. The $9B number everyone is throwing around is revenue, not profit

http://www.stltoday.com/sports/baseball/professional/bernie-cards-are-mlb-s-most-profitable-team/article_830f1863-411a-576f-922a-1096370407ca.html

treyash9
Member
Member
treyash9

Thanks – OK so in 2014, the Cards Operating Income was $74M. So then, their 170 MiLB guys could have each received an extra $12.5K/yr each and it wouldn’t hurt the cash flows by a material amount?

Their OpInc would have been **gasp** $72M. How horrid. Close all the minor league teams down. It’s over. Everyone go home.

mtsw
Member
Member

The one place MLB is NOT a monopoly is in the minor leagues, where indy leagues compete with affiliated ball for customers and talent.

It’s worth noting that the players who have real bargaining power here aren’t the ones who need help from minimum wage laws. The organizational-filler type guys are the ones who can’t afford to eat, whereas almost all of the actual prospects received hefty bonuses when they were drafted.

Lanidrac
Member
Lanidrac

But the indy leagues are also under the umbrella of Minor League Baseball. Wouldn’t they be affected nearly equally by whatever happens with the MiLB salaries?

jdbolick
Member

The verbiage suggesting teams being disbanded is an empty threat.

I have no idea why you think it would be an empty threat because it most definitely is not. If expenses rise dramatically, there’s no question that the number of minor league teams will be significantly reduced.

Jason B
Member
Member
Jason B

If you can’t afford to pay your players a living wage, perhaps your business model is the culprit, not the players making like $11,000 a year?

GoNYGoNYGoGo
Member
Member
GoNYGoNYGoGo

Let’s practice math. 5 minor league baseball teams with 25 players per roster. That’s at least 125 players, (actually more given that there are minor leaguers on the D/L). So $50K x 125 = $6.25 million (ignoring benefits). 30 major league teams, so now we’re at $187.5 million, far more than $7.5 million.

Lanidrac
Guest
Lanidrac

So? The $6.25M per team is already less than the $7M per team that he/she already quoted, minimum wage (even with overtime) probably means a lot less than $50K per year, and you forgot to ignore the portion of those salaries that they’re already getting now (including the big prospects who are already making at least minimum wage).

rosen380
Member

That is like $7.5M per team, not for the whole league, so a bit tricky to compare that number to league-wide revenue. And the league isn’t payign for it, the teams are.

To the Yankees and Dodgers and Cubs and Mets, $7.5M isn’t much, but I think it is a pretty decent dent in the payrolls of some small market teams…

rosen380
Member

Whoops, missed jdbolick’s comment below.