Minor Leage Baseball History Overview Essay Example

Minor League Lawsuit

Introduction

Baseball has become a business of one goal – maximizing profits. There is no doubt that both the investors and players intended it to be profitable and create large revenues from the beginning. Nevertheless, today, with the means of developed electronic communication, television, and online streams, it can be seen by millions of people. Profits of the industry have grown much higher compared to the initial business. However, the US courts continue to approach baseball mostly as pure sports and not the business. This is why the labor issues of Minor League (MiLB) players receive little serious attention in the media. They are perceived as athletes and thereby not seen as individuals with the same issues usual people may engage in their employment. However, the scale of neglect is significantly large. It involves extreme limitation of freedom of contract between the league and its players, violation of federal laws and harsh exploitation.

The paper will review the history of the issue, analyze how it is connected to the labor and employee relations, and suggest what could be done differently, as well as what needs to be implemented. It will show that in professional baseball, there’s a thin line drawn between business and sport, and it would not be productive neither should that line be erased nor ignored.

The US Congress has been recently asked to clarify whether the Fair Labor Standards Act (FLSA) is applied to the professional baseball leagues and, therefore, whether it entitled players to the minimum wages and overtime. This is but one of the broader currents of legal occurrences arguing the decency of MLB policy towards MiLB players. The most recent Senne case of 2014 stands for the lawsuit that has been filed by the former Minor League players against the Minor League administration. It concerns the violation of their rights provided for by the federal minimum wages and overtime law (Leventhal, 2014). It is one of several recent cases. The players stated with one voice that they had been working regularly for 50 to 70 hours per week during a five-month season receiving payments of approximately $3,000 to $7,000. The required training sessions during the spring time or any other off-season training during the winter or fall were not accounted for in the players’ paychecks at all. Besides that, their schedules included a large number of activities, such as bus travels, mandatory conditioning training, and six to seven games per week that were not compensated. According to MLB’s statement, however, FLSA laws do not apply to professional athletes, such as Minor League players (Opfer, 2015).

MLB Rules

Despite the fact that there are a number of provisions in the US Constitution, which prohibit the deterioration in the terms of signed agreements, the rules of MLB manage to bypass this prohibition essentially eliminating the freedom of contract.

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Signing bonuses for players during the tournament is strictly suppressed by the Commissioner of Baseball. On the other hand, based on the MLB’s policy, a Uniform Player Contract (UPC) has to be used by all MLB’s franchises and needs a direct commissioner approval. It is generally drafted or signed outside of the draft players of their negotiating power. Under the UPC requirements, the franchise basically owns the athletes’ rights for seven years. A player cannot sign any contract with another team within MLB or the US. And only by the draft franchise the player’s rights can be passed to another team. MBL rules also determine players’ payments and restrictions. According to the regulations, the first-year Minor League players can earn about $7,500 per year while some earn even less than that. After his first year, a player has the opportunity to negotiate his salary. But if the agreement is not reached, based on the current regulations, he will be forced to work under the imposed franchise’s conditions.

Same UPC’s regulations make players responsible for performing all of the mandatory off-season activities, for which they do not get paid. This uncompensated load results in players’ lack of skills to perform any secondary jobs other than the ones with the same minimum wages during the off-season.

Antitrust exemption

The means that enable MLB to apply such policies are rooted in the antitrust exemption granted to the Major League in 1922. It allows MBL to increase its revenues by buying out teams that fail to produce higher profits. It makes it within MBL rights whether or not to allow or restrict the new franchises into the leagues raising the demand for existing thirty franchises. Cities that are financially capable of supporting franchises are prevented from joining the league by the MLB bylaws granting franchises a super-majority voting requirement.
Therefore, the issue here is much bigger than just exploitation of MiLB players. MLB basically can take an advantage of the entire market – it controls new franchises from joining the league to the teams moving to another city.

Wages and overtime

MLB has been constantly violating MiLB players’ payment rights of $7.25 per hour as the minimum wages granted to them by the federal minimum wage law. $5,500 is considered to be an average player’s annual salary. This means the player receives about $1.76 per hour in the championship season and $2.65 – in the offseason. According to the ‘Poverty Guidelines’ of 2010 by the Federal Government, an individual is defined impoverished if he/she makes less than $10,830 per year (Masteralexis & Masteralexis, 2011, p. 17).
There are several reasons for paying the MiLB players such small amount of money. First of all, while their salaries had risen by about 75 percent, the overall inflation during the last forty years reached 400 percent. The second reason is that MLB violates federal overtime pay laws by refusing to pay the players for overtime hours. MiLB players work much more than forty hours per week but receive only $7.25 based on a forty-hour work week.

For instance, in Bridewell v. The Cincinnati Reds in 1998 the court ruled that baseball was not exempt from federal overtime laws (Leppler, 2014). The court found that the organization employed more than 100 people and was operating year around, which broke the argument claiming it was a seasonal business.
Summing up, MLB does not compensate its players’ off-season activities, which is mandatory based on their contracts. It does not comply with overtime wage laws and federal minimum wage laws. MLB’s statements made in its defense that players can support themselves in terms of getting second jobs during the seven-month off-season does not hold water as the employers are, on the one hand, likely to refuse to hire someone who can work for seven months. And, on the other hand, if the players do get secondary jobs they are not likely to be paid more than minimum wages.

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Labor and employee relations

The discussed issues have affected the contemporary MiLB employee relations significantly. According to Masteralexis & Masteralexis (2011), the antitrust exemption granted to MLB around a century ago and codified in the Curt Flood Act of 1998, has “enabled the minor leagues to prosper despite the fact that many minor leaguers do not earn a ‘living wage’.” (p. 7)
MLB today continues to exploit the MiLB players making it appear the way that it provides them with the opportunity to do the job they love and enables them to join the competition of working their way up through the minor league to a big play. The great success stories of a small number of players are used to make the issues of thousands other underpaid players remain in the shadow and avoid attention.

Whereas MLB claims, the Minor league’s system provides all the means necessary for the players to train and get talented enough for the big play. The MLB’s rules and regulations assign enormous seven-year obligations to the players who actually play very little. In the end, the players are stuck in the minor leagues and are powerless to negotiate the change of their conditions for better or even their way out. If the players leave, they are deprived of the right to play for their MLB team or any professional franchise, either domestic or foreign. Lepper (2014) outlined that in 1920s MLB established a farm system to develop players. Later, in 1962, it implemented a Player Development Plan requiring franchises to maintain a certain number of teams. Each franchise today consists of about forty major players and 150 to 250 players in the farm system. There are about four to five teams. Thus, general amount of employees in the MLB’s minor league is around 6,000 people at any given time. Based on the new regulations enacted in 1965, all new players must take part in the draft to sign with a team. These players are usually aged 18 to 22. In case they get selected, the drafting team gains exclusive rights over them. The players do not have the right to join another team.

To understand another important aspect of how this issue is connected to the labor and employee relations, it is necessary to turn to the Toolson v. New York Yankees case of 1953. MLB has frequently quoted the case to ensure its right to deprive players of their negotiating capacity in terms of access to other teams in different cities or states. Toolson argued, although to no avail under the Sherman Act, that MLB’s decision to debar him from playing baseball was illegal, even though he refused to play for the new franchise to which he was assigned. The court ruled, however, that baseball was simply a sport, and was not held to be commerce or trade. According to Steinman (2015), this case, despite that it was lost, continues to haunt MiLB players. The two points from this case were further legally developed in Gardella v. Chandler and the Court of Appeals decision related to the Supreme Court rule in Federal Baseball Club of 1922 granting the antitrust exemption to MLB (Leppler, 2014). In the first case, the court had agreed that MLB could be approached as commerce because of the significant change in the television and radio aspects of the game. In the latter case, the Court of Appeals found it was Supreme Court’s problem to correct its own error had it occurred. Eventually, things still remain the way they were almost a century ago.

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Finally, in 2009, MLB implemented two new clauses to the contract that newly drafted players are obligated to sign. They include Addendum F and Addendum G, paragraph C. Under the first one, as cited in Masteralexis & Masteralexis (2011), players must submit to the jurisdiction of the home team for compensation claims and may be required to file their compensations outside the home state into the one that has laws more favorable to the employer. And the latter stated it was the minor league player’s financial responsibility to pay the difference should he be willing to use his own physician to perform medical procedures instead of the team physician.

Things that could have been differently:

There is absolutely no need for the raise of arguments about financial means of compensation for MiLB players as professional baseball is an extremely profitable business today. It could be designed to be more of a business model rather than sport. And it could learn from other great business models of the 20th century as well. Ford’s business model, for example, proved to be successful because of the close attention it always carefully paid to its employees. At least, minor leaguers could be provided with minimum wages, overtime, and better working conditions.
Whereas in 1998 the US Congress passed legislation affecting baseball antitrust exemption, it had no impact on MiLB. Responding to this situation, MiLB came up with three firm arguments for the minor league exemption. They stated that it was because of the MiLB’s activity that millions of people could watch professional baseball. With no support from MLB it would be impossible for the MiLB’s communities to support their local teams. And finally, MBL would be much shorter in resources and desire to make payments of salaries and other related payments to MiLB players, its management, and its staff (Leppler, 2014). There are two points here. First of all, these arguments are very strong. And the other point is MiLB players made them. Throughout the history of professional baseball, MiLB players held a lot of potential power within MLB. Without the MiLB players, MLB would be likely to decline, its teams would fight to replace retired or injured players, and fans would be paying attention to the sports that are less competitive. Therefore, if there was a MiLB labor union in 1998, things would probably not have been the same, and MiLB’s arguments could affect the outcome in favor of change.

Implementation to create a more positive environment

The year MLB received the antitrust exemption, baseball was far smaller deal than it is today. There were a limited number of teams and players. Today, it is an international sports colossus. It receives significant revenues from television contracts, sponsorships, and other resources. Steinman outlined a great example of just how the game has changed (2015). It involved the case of Stan Musial who was a major MLB player back in 1940s. He had to sell Christmas trees from a parking lot during the off-season to make extra money. In the modern league, players of his caliber make millions of dollars and they would need protection from the fans taking pictures of them if they decided to sell a Christmas tree in that fashion.

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Should the antitrust exemption granted to MLB be lifted, MiLB players would be able to file suits claiming the discussed rights they have been deprived of by the MLB contracts. However, on the other hand, it could be argued that the existing antitrust exemption is what keeps MiLB operational – it provides the incentive for MLB to continue its financing of the minor leagues. Thus, should the exemption be lifted, the potential domino effect could affect the competitive balance of MLB. The richer franchises would be able to afford the top prospects. On the contrary, many teams based in small communities would have no means to work their way up to the major leagues. Finally, MiLB employees would be likely to lose their jobs because of the small revenues of its teams. They would be unable to afford legal protection of their rights.

Unionization is a possible way to overcome this dilemma. It could ensure the minor leaguers enjoy their negotiating power related to the issues of protection similar to MLB. The union would be a perfect authority to represent MiLB players’ interests. It would enable them to be responsible for the terms and conditions of their employment. As an alternative, MLB Players Association should extend its concerns to the MiLB players or generally include all the professionals in baseball.

Accordingly, a MiLB player should be able to decide himself whether to bring compensation suit to his home state. He should not be obligated to submit it to any external jurisdiction. Addenda F and G of MLB regulations need to be cancelled because they are unnecessary and unfair.

Impact on the HR function of an organization

The complex nature of the topic discussed revealed that labor regulations behind employee relations do not necessarily have to be unfair for the business to be profitable. Furthermore, the discussed compensation regulations seem rather anecdotal given the value Minor League players possess for the overall success of professional baseball. Understanding that both, the owners and players, regard baseball as means to make profit, besides that they both like it, MBL’s HR department should change some of the organization’s attitudes towards its MiLB employees. As a matter of fact though, this has not happened yet. No serious actions were undertaken by MLB, and the recent MiLB lawsuits reflect the growing need to address this problem. It should be noted that in cases like this the HR has to pay attention to both business and sport elements of the organization and its environment. Lawsuits filed against the organization in such fashion may also have bad impact on the company’s reputation. This is the point where HR and PR efforts should meet as they are interrelated.

Conclusions

Despite the success of baseball as business, MLB continues to use its nearly 100 years old strategy in relationships with MiLB employees. The concept and perception of baseball has evolved during this time to be more than just sports and, therefore, employee relations should be now approached with respect to this progress. After all, it is the underpaid MiLB players that stand behind the overall success of professional baseball.

The paper has reviewed various issues of Minor League’s lawsuit cases analyzing broader employment problems underlying them. It was suggested that MiLB players should be provided with at least minimum wages and overtime compensations as well as improvement of their working conditions. Refusal to do so does not comply with federal laws and is against common sense. However, unionization is a reliable option for athletes as a means to protect them in the light of the stubbornness of MLB administration in taking any important steps to address the issue.