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.