Who Pays for Minor League Training Costs?

11 Pages Posted: 28 Aug 2013

See all articles by Anthony C. Krautmann

Anthony C. Krautmann

DePaul University - Department of Economics

E. Gustafson

University of Dayton - School of Business Administration - Department of Economics and Finance

Lawrence Hadley

University of Dayton - School of Business Administration - Department of Economics and Finance

Date Written: January 2000

Abstract

As an alternative to monopsonistic exploitation, the underpayment of players in major league baseball may be explained as the attempt by owners to recoup general training expenses. In this article, a method is proffered for estimating the ‘surplus’ extracted from those players restricted by the reserve clause, where this surplus is defined as the difference between what the player is actually paid and what he would have received if he were a free agent. These estimates are then used to examine how the surplus varies across players. The results suggest a number of interesting aspects of the recovery of minor league training costs, monopsony exploitation, and the distribution of the surplus across players. First, owners only extract a surplus from ‘apprentices’ (i.e., those young players who are ineligible for salary arbitration). Second, the largest surpluses are extracted from those who cost the least to train. In fact, the surplus generated by star apprentices is about twice that of mediocre apprentices. Finally, the results suggest that the surplus extracted from minority apprentices is 10–15% higher than that extracted from white apprentices.

Suggested Citation

Krautmann, Anthony C. and Gustafson, Elizabeth and Hadley, Lawrence, Who Pays for Minor League Training Costs? (January 2000). Contemporary Economic Policy, Vol. 18, Issue 1, pp. 37-47, 2000. Available at SSRN: https://ssrn.com/abstract=2317099 or http://dx.doi.org/10.1111/j.1465-7287.2000.tb00004.x

Anthony C. Krautmann (Contact Author)

DePaul University - Department of Economics ( email )

1 E. Jackson Blvd.
Chicago, IL 60604
United States

Elizabeth Gustafson

University of Dayton - School of Business Administration - Department of Economics and Finance ( email )

300 College Park
Dayton, OH 45469
United States
(937) 229-2406 (Phone)

Lawrence Hadley

University of Dayton - School of Business Administration - Department of Economics and Finance ( email )

300 College Park
Dayton, OH 45469
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
166
PlumX Metrics