Grow: Minor-league salaries challenged in new antitrust lawsuit

From SABR member Nathaniel Grow at FanGraphs on December 8, 2014:

In the latest in a series of legal challenges to the minor league salary structure, a new federal class-action lawsuit filed on Friday alleges that Major League Baseball’s treatment of minor league baseball players runs afoul of the Sherman Antitrust Act. In Miranda v. Office of the Commissioner of Baseball, four former minor league players (Sergio Miranda, Jeff Dominguez, Jorge Padilla and Cirilo Cruz) contend that MLB teams have violated federal antitrust law by illegally conspiring to fix minor league players’ salaries at below-market rates. Still, despite the merits of the players’ claims, the suit’s odds of success are relatively low.

The Miranda suit alleges that MLB unlawfully suppresses minor league players’ salaries in a variety of ways. By subjecting North American amateur players to the first-year player draft each June, Major League Baseball prevents draftees from selling their services to the highest bidder — instead forcing them to negotiate with only a single team. MLB then artificially reduces the size of the signing bonuses that entry level players receive through its domestic and international signing bonus pool restrictions.

Once players have entered the minor leagues, their annual salaries are then largely dictated on a take-it-or-leave-it basis by their teams in accordance with MLB-imposed, minor league salary “guidelines.” And because MLB teams retain the exclusive rights to their minor league players’ services for seven years, many players go their entire careers without ever being able to sell their services in a competitive market. As a result, the suit asserts that most minor league players earn as little as $3,000 to $7,500 per year.

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Originally published: December 9, 2014. Last Updated: December 9, 2014.