The Cincinnati Reds and Minor League Baseball pay

If you have been reading the words here at RedsMinorLeagues dot com for a while then you’ve probably read about Minor League Baseball pay. I’ve written about it more than a few times. Over the last few years it’s been more of an item that’s been focused on as it’s been in the news cycle at times for all of the wrong reasons. Those reasons range from Major League Baseball and Minor League Baseball spending millions of dollars to lobby Congress to put into law that players only needed to be paid minimum wage for 40 hours, but weren’t required to be paid any overtime. At other times it was just more pointing out how little money many players make in Minor League Baseball. Last spring it was in the news when the Toronto Blue Jays announced they were nearly doubling pay for all of their minor leaguers.

This month has seen a few different things happen that changes that. The first thing that broke in the news was that Major League Baseball sent out a memo to all thirty teams that changes the minimum salary that will be paid to minor league players beginning in the 2021 season. Later that week two other teams announced that they would be making changes in the 2020 season to help out their minor leaguers.

The Chicago Cubs will be giving their minor league players a salary that is up “at least” 50% from where it’s been in the past as first reported by Mark Gonzales of The Chicago Tribune. Depending on the level they are at, it’s an increase of $112-295 per week. According to Gonzales, players in Rookie and A-ball will see an increase in pay of “about 75%”.

Later in that same day Henry Schulman of the San Francisco Chronicle reported that the Giants would also be increasing pay this season, as well as giving most players a housing allowance. The pay increases match what the new numbers in 2021 are, except in Triple-A where there will be an additional $50 a week. But in Rookie-ball players will be given free housing, and in Double-A and Triple-A players will get $500 per month housing allowance. In Single-A players will be matched up with host families.

With all of that going on, I reached out to the Cincinnati Reds to see if they had plans to make any changes for the 2020 season as it relates to pay and or housing benefits from what has been done in the past. The short answer is that there are no changes for 2020.

The long answer is a lot more complicated than that. Let’s first talk about what the Reds are doing and spending each year on the farm system.

What we know the Reds spend on the farm

These days we know a lot more about how much money teams are spending to acquire talent than we did in the past. Both the Major League Baseball draft and the international signing period are capped with bonus pools. As a result, the bonuses paid out are generally speaking publicly known. We can look back at 2019 and make some reasonable assumptions. The Reds spent $11,275,400 to sign players from the draft. That money went to 32 players. 15 of those players got $50,000 or less. 10 of them got $10,000 or less. 15 of those players got at least $125,000.

On the international market the Cincinnati Reds landed in the middle group among the pool amounts. They were allowed to spend up to $5,939,800. They didn’t do that. They traded away some amount of that. But they have spent more than $4,500,000 on the signing class. If we want to round up just a smidge, that’s $16,000,000 that the Reds spent to acquire talent on the free agent market from the amateur ranks in 2019.

We also have some, but not all, salary information. Players on their first contract (haven’t been free agents yet) – those players we know what they make. But players who have been free agents get to negotiate their contracts and those can vary quite a bit. In 99% of cases, we don’t know what those players make. With that said, let’s take a look at the player salary that we do know about.

Let me first start out by saying that I’m working on the assumption that there are roughly 265 minor leaguers in the farm system between the DSL up through Louisville that haven’t yet reached free agency. That number is probably a bit too high (I’m counting 45 DSL players, 40 players in each of the three rookie level teams, 30 each for the A-ball teams, then 20 each for Double-A and Triple-A), but let’s work with that number.

Working off of the minimum salaries based on the information received in the Major League Baseball memo about upcoming raises, and the number of players listed above at those levels, Cincinnati is spending just over $1,200,000 on those player salaries per season. Players also receive $25 per day meal money when on the road. I am unsure if that money exists for players in the DSL/AZL/Greeneville since the DSL/AZL don’t have overnight trips, and Greeneville only has two overnight trips in the league. That’s an additional $200,000 a season. Depending on how that works for the rookie levels I’m unsure of, it may be another $30-50,000 a year on top of that. Let’s just round off this total to an even $1,500,000.

In total, of the known costs we have, we can estimate that the Cincinnati Reds spent $17,500,000 in 2019 for the farm system operation when it comes to salary to the players as well as the acquisition of the players. That number will vary from year to year depending on where a team falls in the draft, how many picks they have, and what group that fall into on the international side of things (this can be a difference of up to $1,100,000 from the bottom to top pooled group). Teams can also acquire more international pool money via trade if they choose.

What we don’t know the Reds spend on the farm

We can start with the player salaries that we don’t know about. Sometimes these minor league free agents can get low 6-figure deals if they have enough service time in the Major Leagues. That kind of deal isn’t usually the case, but that is the upside for these kinds of deals. It’s too difficult to even try to guess at what kind of dollar amount the Reds are spending to sign free agents.

As noted above, the Giants are helping out with housing throughout their system. Cincinnati does help out with housing at some levels. The players in the Dominican Republic live at the complex. Players in Goodyear are also provided housing by the organization. The players in Greeneville and Billings are provided housing assistance, too.

At some levels there are also “host families”. This isn’t paid for by the organization, but is set up in some places – Dayton for example – where players can live with a host family during the season. That helps cut down expenses for the players, but doesn’t come from the organization’s check book.

Several years ago the Reds organization began to provide catered meals at the ballparks for players as a way to try to provide them with right inputs given that they are professional athletes. The days of a spread that features whatever lunch meat, peanut butter, jelly, chips, and bread that happened to be on sale that week that the clubhouse guy(s) could find are over.

Another unknown aspect of spending is related to the education of players. Major League Baseball has a scholarship plan in place. It is used to help pay for the further education of players drafted and is paid for in nearly every case by the team that originally drafts the player. There are some rules about how long a player can wait to use it after being out of the game, and how much they can get – but it’s a very much unknown expense that teams do have to pay out for now former players.

In the Dominican Republic at the Reds academy they also provide schooling to the players. Many of the players are of high school age at the complexes in the Dominican and get education. Each year multiple players get their high school diplomas through the various complexes run by Major League Baseball teams at the complexes.

The Indirect cost of the minors

Above we’ve mostly discussed things that go to directly benefit the players, either in terms of salary, or salary saved (education, food). But that isn’t all of the cost that go into what a team spends on the farm system. The team pays four coaches for seven teams in the United States and eight coaches for the Dominican Summer League team. Each team has trainers and strength and conditioning coaches.

The organization has 13 people listed among their various coordinators/roving instructors group. That doesn’t include guys like Eric Davis, Bill Doran, Barry Larkin, or Mario Soto who aren’t listed as roving instructors, but sort of double as them in their roles as they relate to the minor leagues. Out in Goodyear at the complex there are also rehab coaches, trainers, and other staff who are there year round to work with the players who are coming back from injury. The total number of minor league related non-coaching staff has dramatically increased in the last handful of years.

Over the last five years or so, the Reds have invested more into technology – as has the rest of baseball. It began when they had the Trackman installed in Double-A and Triple-A, and was then followed up by having it installed at all of their ballparks the following season. In some of their ballparks they also have fielder tracking technology installed. Aside from the investment to buy the equipment, you have to pay people to run the systems during the game. And you have to pay for people to analyze that data afterwards, too.

What the upcoming raise means

This was covered the other day when the 2021 raises were announced. If we are going to assume that the number of teams remain the same as they are today and MLB’s plan to eliminate several of the rookie leagues around the minors doesn’t go through – the pay raise will increase the farm system budget by just over $600,000 a year. If teams are eliminated, that number would obviously decrease – by roughly $100,000 a year.

For the individual players, here’s how it breaks down for guys who are still on their non-free agent contracts:

It’s once again worth noting that players are only paid during the season in which games are counted in the standings. They are not being paid in spring training, and they aren’t paid during extended spring training if they happen to be there instead of assigned to a team.

Could more be done?

This is always the question that comes up when discussing whether teams can or should pay the minor league players more/better. And of course the answer is yes, more could be done. It’s always easy to spend someone else’s money, of course. And I’m not entirely sure who to take the small amount of money from that would be required to help increase (even more so than what is coming in 2021) – but as noted above, for about the same price as one minimum Major League contract for a season, the players are going to see raises of 38-72%. Yet despite those high percentages in raises the minor leaguers are going to be making what your average retail worker makes.

Now, the average retail worker may not get some housing assistance like some of the players do. But they also can be paid for overtime. And they don’t get to be told where in the country that have to be employed, or have to move to an entirely new city on an days notice (though players aren’t going to complain about being promoted – but this is something that 99.9% of employees in the work force don’t have to even think about with their job). There’s certainly some give-and-take here.

What would another $600,000 do for the players? What about an extra $1,200,000? An additional $1,200,000 would push full-season players into the range of $19,000-23,000 per baseball season. Rookie-ball players would still be far less than that given that they are playing for 12 weeks instead of 21.

The question comes back to where does that money come from. Do the Major League Baseball owners take on such an expense? They currently cover all salaried costs for the players. Does the Major League Baseball Players Association decide that they can help fund this by taking what feels like an infinitesimal amount away from the current salaries paid to active Major Leaguers (2020 team payrolls is just over $3,900,000,000)?

Or could Major League Baseball tap into their reserves to help cover it. In the few years before baseball switched over to a capped amount of money teams could spend on international players they went to a system where you could spend more than they said you “were allowed to”, but you had to pay fines and face penalties to do so. Teams didn’t care to pay the fines or face the penalties, and before the system was changed, there was over $200,000,000 in fines/penalties paid to Major League Baseball by teams.

That’s money that teams paid to Major League Baseball that didn’t go to players they signed. That is money teams paid in order to sign the players, but money that didn’t actually go to the players. Tap into that money to help fund some additional increases.

There are a lot of options that could be utilized to help further increase the salaries to minor league players. And in the grand scheme of things the cost to those it would come from is minuscule. But to the players themselves, it would be difference making for many of them. The guys who got large signing bonuses are probably going to be fine either way. Most players don’t get those, though. And for them, that paycheck they get during the season really does matter.