July 15, 2014

Baseball Therapy

Why Are We Playing Hunger Games with Minor Leaguers?

by Russell A. Carleton

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I think the secret is out. Minor league players get paid very little. Not just a little bit compared to the millionaires they hope to become. They put in long hours and have a couple hundred dollars at the end of the month (plus some per diem) to show for it. In fact, there’s a lawsuit on the subject that’s been filed by some former minor leaguers, alleging that teams have broken federal minimum wage law. (I’ll leave the issue of legality to the courts.) Some end up eating poorly because they can’t afford nutritious food and have no means to cook it. They share small apartments with teammates. They sleep on the floor. Plenty retire because they can’t afford to chase the dream any more. I’m sure some retire because they get sick of living hand-to-mouth (which would be a balk).

Baseball can be cruel. Consider how hard a young man must work and how much he has to dream to get to a point where he’s one of the best 200 or so high school seniors in the country (because he’s number 193). He might get drafted in a single-digit round (maybe), but there are only 25 spots on the big league roster and draftees and international signings from so many other years who want them. His chances aren’t great for making the majors, but to him, it’s all he’s ever dreamed about. So, for him, it’s for the love of the game. He is a starving (sometimes literally?) artist for his craft. Until he gets cut.

That’s the romanticized notion. That players accept such poor living conditions because it’s part of “the hunger” (sometimes literally?) for the game. Teams accept these conditions for their players because, well, it’s cheap. Teams do hand out large bonuses to certain players, usually the high draftees and big-ticket international signings. Those are the guys the team brass believe will eventually make an impact on the MLB roster. Because of those bonuses, those guys have a cash reserve for supplementing that meager salary, and the rest of the team ... they’re really just there to fill out numbers, aren’t they? Oh sure, if one develops into something nice, then that’s well and good, but teams seem to be of the opinion that they shouldn’t bother wasting resources on players who probably aren’t going to make any sort of difference.

What I most commonly hear from fans when they hear the truth about minor league life boils down to “You’re going to be making millions in a few years anyway” (most minor leaguers never get even the proverbial cup of coffee, much less a million dollars) or “You’re getting paid to play baseball, please stop whining. Why, if I had a chance to, I totally would trade places with you.” It’s not polite to complain. In fact, when I reached out to a few minor leaguers, none of them wanted to talk, even anonymously, about the issue. The words “rock the boat” were used and no, we weren’t talking about Guys and Dolls. The therapist in me always perks up when people are afraid to talk about something.

I hope you all have life jackets on.

What baseball has is a system where teams keep costs down, and the players accept that this is just the natural order of things. It’s not even Stockholm Syndrome. After all, if the dream is to play Major League Baseball, what other options do they have?

Is this a good system? I don’t ask that question as an exercise in moral philosophy with the poor pitiable minor leaguers cast as a vulnerable group in need of protection. I’m asking this from the other side. Is it smart for teams in Major League Baseball to willfully pay their minor leaguers so little? Aside from cost-savings and the moralizing, could teams actually have more success developing players if they opened their wallets a little wider?

Warning! Gory Mathematical Details Ahead!

Let’s dig into a little data. Lately, I’ve been studying the drafts between 2003 and 2008, because those players have had time to develop and we now know what they are. Not everyone enters baseball through the draft, but it’s a good place to start our investigation because we have good records for signing bonuses and we can match them up to what those players eventually became.

For this analysis, I grouped all players by the size of their signing bonus and saw what percentage of the time players in each group appeared in an MLB game, achieved 1 career WAR (to date), or 5 career WAR.

This is about what we might expect. The better the player, the bigger the signing bonus, the better the chance that he will eventually do something useful for you. The guys in that low bonus group? They just didn’t have what it took.

Or is that really it?

There are two ways to look at that first group, the players who got a four- or five-figure bonus. Yes, only 15 percent made it to the big leagues. But then again, 15 percent made it! There are some guys in that group who have major league talent. What happened to the other 85 percent? In United States culture, we’re trained to believe that either those guys weren’t talented enough or they weren’t willing to work as hard. In other words, the blame is on them. It’s probably true for a good chunk of them. But are we overlooking something? What if the reason they didn’t make it was because of the bonus they received?

Think of a minor league player as a seed. The major league organization is the gardener. If a gardener waters the front row lovingly every day, but neglects to water the back row of the garden or weed it or put those tomato trellises up, then the seeds probably won’t grow very well. Maybe some will (it might rain), but the odds aren’t good. What if the gardener spent a little more time on that back row? Not all of those seeds would grow, but what if a few more did?

Suppose you’re a guy who gets a $50,000 bonus. First off, your “advisor” takes a little. (I asked BP’s in-house certified agent Joshua Kusnick how much the standard cut is. He said that it’s 1 to 5 percent, depending on the agent.) Then Uncle Sam takes a chunk. Even if you save all of the remainder for living expenses in the minors, you’re talking about a cash reserve of $40,000 or so. Your net take-home pay is a few hundred bucks per month and you’re going to be in the minors for a few years. There are ways to pick up a couple bucks here and there (minor endorsement/sponsorship deals, appearance fees) and the team does provide some help, but unless you have some other income stream—and remember that you’re playing baseball full-time, so it can’t be a job—you’re eventually going to run out of money and be living that starving artist life. How long could you hold out?

I know that you, reader who can afford a $40 annual subscription to a baseball website, might be tempted to say that you could hold out forever. Try it. I’ll call you in three months to see if you stand by that. Even if a player can get enough calories, he still has to spend a lot of his time worrying about food. Then there’s the issue of housing and utilities. Sure, you can live with roommates and sleep on the floor, but is that going to be adequate sleep? And there’s relaxing after a stressful day. No matter your job, that’s universal. Baseball is a daily grind and players need a space to relax. Sometimes that’s calling home, wherever home is. Sometimes that’s going out for a little bit after a game. That costs money too.

What if a player wants to get married? What if he wants to become a dad? How long will he postpone that? More importantly, how many players walked away from baseball before they had a chance to develop into something that could be useful for the parent club?

Not only that, but while a player is sticking it out, he’s probably not in the best position to learn. Minor leaguers have a lot to learn, no matter how good they are at age 18. There’s a reason just about everyone spends time in the minors. All of these players are very gifted athletes, but they need to learn the mental side of the game too. How to maintain consistent mechanics. How to recognize (and respond to) big-league stuff. How to play the strategic game of baseball. How to re-learn part of your swing to incorporate a minor change in that thing you do with your left elbow, the one that makes all the difference in the world.

The problem with lack of food or lack of sleep is that even if they aren’t having obvious physical effects, they will have mental effects. I’ve written before about the effect poor sleep has on an area of the brain known as the prefrontal cortex (PFC), the part that deals with high-level thinking and learning. Poor nutrition has an effect as well, both directly (the PFC needs a steady stream of glucose) and indirectly (it’s hard to sleep well when you haven’t eaten well). Constant worry builds levels of chemicals called corticoids in the bloodstream, which can trigger anxiety even when there is no reason to be anxious. Anxiety diverts resources away from the PFC to other areas of the brain.

Not only that, but contrary to ideas that “adulthood” begins at 18, the brain, especially the PFC, continues to develop during a person’s 20s and into the early 30s. (The same people who were moshing at high school dances in the mid-90s are only now reaching their full neurological maturity.) The skills that develop during that time are the high-order ones that are critical to taking someone from being just an athlete to being a fully developed player. That development does not take place in a nice linear pattern. In fact, most development happens in fits and starts. People really do wake up one morning and have “eureka!” moments. At the same time teams are relying on players learning skills that are centered in the PFC, they are simultaneously providing those same players with suboptimal conditions for that development. Sure, the players will learn, but are they learning everything that they can?

Let me put this bluntly. By placing minor leaguers in a situation where they are food insecure, and have limited resources to access other stress-relieving techniques, major league teams are poisoning one of their potential pools of talent. Some potential players probably walk away before they have a chance to have a breakthrough moment. (And no, teams can’t possibly keep everyone around forever, but why have someone walk away before you are ready to be done with them?) Some probably spend time they could be learning to tell a ball from a strike worrying about where they will get dinner.

Giving It the Old College Try

So let’s do a little more math. I propose that a team voluntarily increase the base salary for all minor league players to $50,000 per year. I picked that number because it’s a round number that puts a player around the median household income in the United States. On that salary, a player could provide decent housing for himself, not fear the checkout line at the local grocery store, and, if he chose, support a family. He will not live in the lap of luxury, but there would be no worries about basic needs. There’s no guarantee that he would be responsible with the money (we’ll talk about that in a moment). Assuming that players are paid zero dollars now (not true), and that teams had 30 players on seven affiliates to pay, this would represent a new outlay of 10.5 million dollars. In reality, there would be adjustments one way and the other, but that’s the correct order of magnitude.

For this to make sense, a team would have to believe this money would return more value here than in any other use. Using the standard “7 million per win” on the free agent market, a team could return a win and a half with 10.5 million dollars. Putting extra money into draft signing bonuses is no longer an option with the new CBA. International signing bonuses are also (sorta) constrained.

As some sort of comparison group, let’s go back to the initial chart.

These are the same figures as above, just highlighting these two rows. The first row is the group we are most concerned about. The second is a group who received a bigger bonus, and over five years in the minors could supplement their wages with their bonus to the tune of roughly $50,000 per year. Those in the second group probably are better players to start out with, although that’s debatable, as we’ve seen that once teams get past the first round (where slot values now are usually north of a million and a half) they do not seem to be very good at picking the eventually good from the eventually bad. We see that in the low-bonus group, 1 in 18 make it to the majors and put up one WAR, and 1 in 40 produces 5 career WAR. We see that in the bigger bonus group, an extra 10 percent of that group produces one WAR and an extra 5.5 percent puts up at least 5 career WAR.

Let’s assume for a moment (falsely) that the reason low-bonus guys don’t succeed as often is entirely because of money issues. If they had money like the bigger bonus group, they’d succeed at the same rate. Assuming there are 100 or so low-bonus players in the system, increasing their salary would yield an extra five or six players who are capable of putting up 5 career WAR. (Perhaps we could roughly estimate that these would be 1-WAR-per-year players during their cost-controlled time?) In this fantasy world, where salary drives results, a team could clear 5 extra WAR by beefing up its minor league salaries. Sounds like a good deal, but of course based on a flawed premise. How flawed?

Let’s grant that the two groups are not equal in their talent and that teams are somewhat (but not perfectly) skilled at handing out bonuses to better players. The reason that Smith got $400,000 and Jones got $40,000 when they were signing was that Smith has a better chance of being a good player than Jones. (Seems a reasonable assumption, no?) Let’s also assume that my theory—that low salary combined with no bonus to supplement it hinders development—is at least somewhat true.

Statistically, we’re now playing an R-squared game. How much of the difference between those results is because better players get bigger bonuses and how much of it is because the low bonus group is hungry? If assuming that 100 percent of the variance can be explained by hunger nets us five or six wins per season, it doesn’t have to actually maintain all that much explanatory power for it to still look like a winning bet.

Want to make it a better bet? A $40,000 per player base salary would cost a team $8.4 million. Worried that the money would largely be wasted? I’ve estimated that full catering services for lunch and dinner across a minor league system would cost somewhere around $1.3 million. Renting 20 apartments (some guys live with roommates) with furnishings and utilities, even assuming that each would cost $1,500 per month (probably high in what are, by definition, minor league towns) would cost 2.5 million a year. Directly taking care of the two big basic needs (food and shelter) would run somewhere in the neighborhood of 4 million dollars. It buys a lot of peace of mind for players so that mind can focus on getting better at baseball. It doesn’t buy a lot on the free agent market.

If that reminds anyone of the college room-and-board model, well ... yeah.

Drafting and Developing

I know. Sorry about your lawn.

The basic minor league pay structure makes little sense. If the goal is to produce Major League–ready players (who are cost-controlled), then why would teams pay minor leaguers in a way that is counter-productive to the development it seeks? If teams are going to swear that they are “draft and develop” organizations, they shouldn’t do the job halfway.

The most common retort to the “hunger hypothesis” would probably be that the harsh conditions weed out those who really #want to be major leaguers. (A billion extra credit points to someone who uses the term “spoiled” in their answer.) The Great American Novel must be written by a starving artist! Frankly, neither the scoreboard, nor the strike zone, nor the laws of gravity that you must fight against to get the ball 400 feet from home plate and over a wall care whether you suffered for your craft. Baseball teams should not be in the business of writing the Great American Novel.

The model of low wages for minor leaguers, the hunger games if you will, is guilty of one of two things. Maybe both. One is that it misunderstands basic principles of human development. The other is that it assumes that talent will shine through no matter what the circumstances, and that all teams should be concerned about is buying talent. It’s all nature and no nurture. No one seems ready to invest in the idea that nurture might be a very powerful force. Instead of a frantic search for “talent,” teams could harness the power of understanding human development at a very deep level and develop value that way. Okay, so the search for talent will never not be frantic, but a team could improve the return on that search.

I’d argue that there’s plenty of good, solid science already backing up the idea that teams are actually shooting themselves in the foot with their policy of paying so little to minor leaguers. Yes, it will require a lot of money, but might I make the case that it would be a wise investment? I think this is another one of those blind spots in baseball where ideas of how things should be have trumped the science of how things work best. If there’s something that’s shown to be a recipe for a market inefficiency over the years, it’s that.

Russell A. Carleton is an author of Baseball Prospectus. Follow @pizzacutter4
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