Is Distribution of Wealth a Problem for MLBPA?

On Monday, Dan Rosenheck of The Economist responded to the “predictably hagiographic” coverage of Marvin Miller’s death by outlining  what he calls the “mixed legacy” of the founder and longtime leader of the MLBPA. No doubt several of Rosenheck’s points are imminently debatable, as should be expected. His is, after all, a contrarian position. During the early stages of Miller’s tenure he was up against the only federally-sanctioned monopoly in American history. It was difficult to perfect MLB’s compensatory system when the compensators had grown accustomed to having no system at all. In the latter stages Miller chose to prioritize relevant privacy issues over the long term maximization of revenue, as Rosenheck would’ve preferred. Union negotiators are frequently tasked with a precarious balancing act. Certainly, Miller, like any man in his position, made some difficult rationalizations and, inevitably, evaluators of Miller’s legacy from both camps will be victims of their own hindsight biases.

That said, the centerpiece of Rosenheck’s argument is extremely compelling. The system of free agency which is “often cited as Mr. Miller’s crowning achievement,” though it “maximised total wages…also created a grossly unfair dichotomy among the players between the haves and the have-nots.” The majority of professional baseball players, youngsters toiling in the minor leagues, “are effectively still bound by the old reserve clause” which Curt Flood famously described as means of re-legalizing slavery. Many are quick to dismiss the economic challenges facing professional athletes. The “well-paid slave” is obviously an oxymoron. But underlying Rosenheck’s argument is evidence that the baseball player’s plight may be more familiar to many Americans than they suspect. In the wake of the Occupy movement and the Obama-Romney election most IIATMS readers are probably accustomed to seeing graphs like this one:

What follows is an analogous chart for professional baseball:

(Click “view full post” to read more)

As you can see, approximately two thirds of all salaries dispersed last season went to only 226 players (that is, less than one third of the active MLB rosters), while nearly 3000 minor-leaguers competed for just slightly more than the total worth of A-Rod’s most recent contract.

Obviously, income disparity is a systemic problem for which no single individual or institution can be held accountable. However, while all the American citizens from the first graph are at least theoretically equally represented by our Union, there is no body responsible for the interests of the bottom 80% of baseball players employed in the U.S. In fact, the organization which represents the top 20% is routinely entitled by law to sacrifice the 80% in favor of marginal benefits for their minority constituency. As Rosenheck puts it, “The MLBPA has exclusive control over a crucial issue affecting non-members: the amateur draft, which binds players to the team that selects them and sharply reduces their signing bonuses. Drafted players cannot sue the owner for collusion to hold down their bonuses, because the draft was collectively bargained for by MLBPA. The union should thus be obligated to represent those players’ interests. Instead, it has systematically sacrificed their interests in favor of those of its members.” While other American unions have traditionally glorified the “rank and file” worker, the MLBPA treats him with equal, if not greater disdain than his employer.

The problems represented by the above chart are multifold, but they all come back to a central truth: when disparities such as these exist, it is not evidence of a rational or efficient marketplace, and in the long run it portends volatility. MLB aspires to meritocracy, but some replacement-level players make $25 Million (here’s to you, Vernon Wells) while others make $35,000. Of course, there will always be outliers, but with greater income disparity comes greater market inefficiency, and the prevalence of baseball analytics make that inefficiency especially glaring. While it may be difficult to estimate how overpaid a corporate CEO is compared to the average employee, it is very easy to see that neither Alfonso Soriano nor Barry Zito will ever provide as much value as 42 randomly-selected rookies. In the long run, a broken compensation structure works to the disadvantage of labor, management, and the consumer (just ask GM).

Note: The above chart is compiled from a variety of sources, foremost Cot’s Contracts. Because of the scarcity of public records regarding minor-league salaries and service times, some approximations were necessary. However, in every case I attempted to err on the side of overestimating minor-leaguer compensation; for example, including all 2011 signing bonuses. The chart does not included Rookie League rosters because of high turnover rates and the scarcity of guaranteed contracts. Same goes for Mexican, Dominican, and Venezuelan Leagues. Feel free to ask questions about methodology in the comments.  

Matt teaches at The University of Alabama. Roll Tide. He specializes in American Literature and Rhetorical Economics. Fate chose for him the peculiar perdition of rooting for the Chicago Cubs and the Los Angeles Clippers.

About Matt Seybold

Matt teaches at The University of Alabama. Roll Tide. He specializes in American Literature and Rhetorical Economics. Fate chose for him the peculiar perdition of rooting for the Chicago Cubs and the Los Angeles Clippers.

22 thoughts on “Is Distribution of Wealth a Problem for MLBPA?

  1. Now maybe you can begin to understand that Miller's accomplishments are far from laudable when viewed objectively. When you view the Millers of this world through the rose-colored lenses of a crippling pro-labor bias, you overvalue intentions to the detriment of results. Failure is not an accomplishment, no matter how good the intention.

  2. "when disparities such as these exist, it is not evidence of a rational or efficient marketplace".

    Actually, that's exactly what it's evidence of. The market is extremely rational at valuing free agents, a 5 WAR player is worth far more than 5 times as much as a 1 WAR player due to the limits of roster size.

  3. Not that I haven't adovcated for better pay for minor leaguers and amateurs (signing bonuses), but equating them with major leaguers in order to kvetch about the legacy of Miller is just, well…yeah.

  4. This article is weird. On the one hand, I am shocked that income distribution among MLB players so closely mirrors the US as a wholeand that doesn't seem quite right. On the other, the notion that baseball's payscale isn't a meritocracy and using present performance as proof of that thesis is silly. Players are paid based on past performance. It's not a perfect meritocracy, but that would require ever contact to have a minimum baseball salary and then incentivize every stat; that obviously is never going to happen

  5. Anyway, I'll likely get around to addressing the original Economist post sometime tomorrow. Suffice it to say, I will not have very many nice things to say about it, beyond perhaps nominating it for the Concern Trolling Hall of Fame.

  6. I think it would be interesting to see how much value an average player provides over the course of his career. arod for example, was underpaid when he was with the mariners, and overpaid afterward. mike trout was terribly underpaid this year, but will likely be overpaid later in life. thats how the system is built. it would be interesting to see if it comes close to balancing out.