Originally Published: December 24, 2014 6:01 a.m.
Major League Baseball's Minor League system is under attack - again.
In early December four former Minor League Baseball (MiLB) players filed a lawsuit claiming that MLB is in violation of the Sherman Antitrust Act for conspiring to suppress MiLB salaries in a variety of ways.
The suit, known as the Miranda case, follows on the heels of the Senne case filed last February. In Senne the Plaintiffs claim that MiLB players are paid less than the minimum wage in violation of the Federal Labor Standards Act (FLSA). MLB countered that MiLB players are seasonal workers; they are apprenticing for a job in MLB; some of the hours devoted to training are for the players' own benefit; and the players should be classified as interns. If any of those scenarios apply, MLB may be exempt from the provisions of the FLSA.
Miranda's list of grievances against MLB begins with the annual player draft, which requires players to negotiate with only one MLB team, thereby limiting signing bonuses. A second grievance is that in 2012 MLB capped the amount teams can spend on signing bonuses. Every team is allocated a "bonus pool" which is based on a combination of the order in which teams finished the previous season - the lower the finish, the higher the bonus pool and vice versa - and the number of draft picks a team has. Clubs who exceed the total bonus allocation can be penalized by MLB, which further serves to limit overall signing bonuses.
Another complaint by the players is that once they sign a contract their salaries are basically "fixed" as long as they are in the Minor Leagues. MLB has established guidelines for minimum MiLB salaries, which are generally presented to players on a take-it-or-leave-it basis. Players earn as little as $2,500 per season - two and one-half months - at the Rookie level up to $10,000 per season - five months - at Triple-A.
MiLB players must sign a Uniform Player Contract, which gives MLB teams control of the player for seven seasons. Once they become free agents, players are able to sell their services to the highest bidder. However, most MiLB players either retire or are released before they ever reach free agency.
It should be noted that MiLB is not a party to either lawsuit. Nevertheless, Minor League clubs have a lot riding on the outcome of the cases. In an effort to defray a portion of the cost of operating their Minor League system, MLB requires each of its affiliates to pay a portion of their revenue into a pool, which is distributed equally among the 30 MLB teams. If MLB loses either lawsuit, it would undoubtedly seek to shift some of the additional cost of doing business onto its MiLB affiliates.
The outcome of the Senne case will depend on the facts, which gives the Plaintiffs at least an outside shot at being successful. The Miranda case, on the other hand, is a full-fledged attack on MLB's sacred cow - its almost century-long exemption from the antitrust laws. The exemption was created in 1922 by the Federal Case, a decision that the Supreme Court has affirmed twice. Even if Miranda reaches the Supreme Court, a long shot at best, it's doubtful that a conservative court will overturn its long-held stance that even if it erred in the Federal Case, the best forum to right that wrong is Congress.
If the Supreme Court looks to Congress for answers, it would present another major hurdle for Plaintiffs. In their complaint they conveniently ignored the Curt Flood Act passed by Congress in 1998. While that legislation chipped away at baseball's antitrust exemption by allowing MLB players to bring antitrust charges against MLB, it specifically excluded Minor League players from doing likewise. While Miranda may expose the hardships MiLB players face, it is destined to fail.
The only sure way MiLB players can "beat the system" is to make it to the Major Leagues where the minimum salary in 2015 will be $507,500. Failing that, perhaps they can take solace in knowing that less than one-half of 1 percent of all high school baseball players ever play professional baseball. That consolation may not be an adequate substitute for additional compensation, but it's all that most players will ever have.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor in the Sport Management Department at SUNY Cortland and maintains the blog http://sportsbeyondthelines.com. Jordan can be reached at firstname.lastname@example.org.