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The New Rule Shaking Up Minor League Baseball
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Hey Friends,
Just one month after announcing that teams would be required to pick up housing costs for all MiLB players, Major League Baseball (MLB) officially unveiled its new Minor League Housing Policy on Thursday.
Here’s what you need to know:
MLB teams will be required to provide housing accommodation options located at a reasonable, commutable, distance from the ballpark.
Bedrooms must contain a single bed per player, with no more than two players per bedroom.
All accommodations must be furnished, and MLB clubs will also be responsible for covering essential utility bills like electricity, gas, water, and more.
If apartments, rental homes, or host families are not available, clubs may choose to provide hotel rooms that satisfy standards put in place.
But there are a few exemptions — players with existing MLB contracts or those scheduled to earn more than $100,000 in salary will not be covered.
Still, more than 90 percent of all Minor League players across all levels are expected to be covered by the new Minor League Housing Policy.
So that’s the solution, but here’s a quick refresher on why this was necessary in the first place — this is what I wrote last month when the initial decision was announced.
Major League Baseball (MLB) is a massive business.
As the oldest professional sports league in the United States, Major League Baseball generates more than $10 billion in revenue during a typical year. The 30 teams play a combined 4,860 games over a 6-7 month stretch, and the average club brings in more than $330 million in revenue annually.
Major League Baseball Revenue
Unsurprisingly, those numbers have translated into incredible value for the owners of each team. Today, the average MLB team is worth $2.2 billion, and the collective fair-market value of the league's 30 franchises is nearly $70 billion.
Most Valuable MLB Franchises
But here’s the interesting part — despite Major League Baseball being an incredibly lucrative business for almost everyone involved, the roughly 7,500 players that compete throughout the minor league system are not nearly as fortunate.
Here are the current salaries across minor league baseball, including the 38% to 73% pay increase that Major League Baseball implemented this year.
A pay increase is excellent, of course, but given that players are only compensated for the ~21 weeks each year that they are actively playing baseball, the average minor league player only makes between $10,000 and $15,000 per year.
For context, even if you doubled the salary to account for offseason work, it would still be less than the average income of a high school janitor in the United States.
But liveable wages are just one part of the problem. There are so many things that minor league players deal with that often go unnoticed. For example, not only are players responsible for their transportation, phone bills, laundry, and dining, but they also need to find themselves housing.
Historically, players have had two options. Either find a host family within the community willing to rent you a bedroom in exchange for ~$150 to $250 per month or split an apartment with other players in the organization, often jamming 3-4 people in a single bedroom to make the economics work.
Here’s a picture of former player Tom Koehler’s first minor league apartment:
Keep in mind, not only does the language barrier often make things more difficult for international players, but if a player is traded to another team mid-season, most organizations only provide hotel accommodations for 3 to 4 days before the player is expected to find housing. Oh yeah, they are also expected to adjust to a brand new city and perform their best on the field.
The good news? This appears to be changing, finally.
Minor league players and advocacy groups will continue to fight for higher wages. Still, the decision to make all MLB teams provide housing accommodations appears to be a step in the right direction, at least.
Especially when you consider that the average MLB team brings in roughly $330 million in annual revenue and that a $1 million housing expense for all players is just .3% of their yearly budget, it essentially makes it a no-brainer.
My hope is that this doesn’t negatively impact minor league players though.
For example, will this decision put salary increases on the back burner? Will most teams opt for a cheaper, less attractive host family housing option rather than apartment accommodations? We don’t know those answers yet.
As always, the devil is in the details. This appears to be a positive step in the right direction, but history tells us that it will take some time to figure out the net benefit.
I hope everyone has a great day, and we’ll talk tomorrow.
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THE JOE POMP SHOW: My conversation with Hyperice CEO Jim Huether is now live!
Jim joined Hyperice in 2014 and has led the business from less than $1 million in annual sales to over $200 million last year.
In this conversation, Jim walks me through how they built a billion-dollar business, what it was like raising nearly $50 million from some of the world's best athletes, the craziest thing he's ever done to keep the business alive, and more.
This was an awesome conversation. Enjoy!
You can also watch the YouTube video below.
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