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Speaker 1: This is the Bloomberg Business of Sports show, where we

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Speaker 1: explore the big money issues in the world of sports,

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Speaker 1: and I'm Scarlet Food. It's a busy week for baseball fans.

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Speaker 1: MLB's All Star festivities kickoff tonight with the Home Run Derby.

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Speaker 1: Of course, the trade deadline is coming up soon as well,

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Speaker 1: and we know that Juan Soto, start outfielder, has rejected

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Speaker 1: a fifteen year, four hundred forty million dollar offer from

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Speaker 1: the Washington Nationals that would have been the largest contract

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Speaker 1: in baseball history. So the question is what's going to

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Speaker 1: happen before the trade deadline on Tuesday, August two. Maybe

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Speaker 1: the Nats will move him. Of course that's on the

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Speaker 1: big league level. But we're gonna start with a headline

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Speaker 1: that really starts with minor leaguers, and it's something that

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Speaker 1: the big league players have have been engaged with and

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Speaker 1: are very invested in. Major League Baseball agreed to pay

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Speaker 1: a hundred eighty five million dollars. It's part of a

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Speaker 1: settlement with minor league ball players who say that the

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Speaker 1: league was unfairly exploiting them. So for more on that

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Speaker 1: and how this came about, how long it's been anticipated,

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Speaker 1: let's bring in Bloomberg Legal News editor Peter Bloomberg. Peter,

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Speaker 1: thank you so much for joining us. Sure happy to

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Speaker 1: be here. So let's talk a little bit about this settlement,

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Speaker 1: because this is a case, a dispute that's been going

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Speaker 1: on for years, right, that's right. It's been kicking around

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Speaker 1: since two thousand fourteen, so that's an eight year odyssey.

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Speaker 1: It was filed as a class action suit on behalf

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Speaker 1: of players throughout the minor leagues. The defendants in the

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Speaker 1: case we're all thirty MLB teams and UH. It was

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Speaker 1: brought by minor league players who were seeking pay for

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Speaker 1: minimum wage and overtime violation. And according to the lawsuit,

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Speaker 1: how much were the players earning in the minor leagues. Well,

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Speaker 1: they claimed that they were earning UH quote poverty wages,

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Speaker 1: and UH studies have shown that on average they were

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Speaker 1: getting paid UH five thousand and fifteen thousand dollars a season. Now,

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Speaker 1: of course, the the MLB has provided them over the

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Speaker 1: years UH with some benefits including UM food, housing, healthcare benefits.

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Speaker 1: But the key thing is that the MLB only recognized

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Speaker 1: their season, their their championships season as as the time

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Speaker 1: when they were getting paid. They weren't being compensated for

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Speaker 1: spring training and extended spring training and instructional leagues, so

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Speaker 1: they were really being treated as seasonal workers, not year

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Speaker 1: round employees. I see. So it's like they were working

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Speaker 1: for free for the time when they're preparing for the

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Speaker 1: season that they were paid. That's what they claimed. Yes, okay,

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Speaker 1: So by contrast, the average MLB player makes more than

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Speaker 1: four million dollars a year, and according to folks we

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Speaker 1: studied baseball contracts, they can't be paid less than seven

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Speaker 1: hundred thousands. So that's a huge contrast between what you

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Speaker 1: make in the minor leagues versus what you make in

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Speaker 1: major league baseball. So, Peter, this really shows just how

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Speaker 1: much um minor league ball players are willing to put

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Speaker 1: up with for an opportunity, a chance maybe to one

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Speaker 1: day make it to the big leagues. That's right, that's right.

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Speaker 1: And they claimed in the in the lawsuit that they

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Speaker 1: should be getting, you know, at least minimum wage. And

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Speaker 1: there was a law written into the federal code in

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Speaker 1: two thousand eighteen that that actually exempted them from federal

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Speaker 1: wage laws. And that was a law that, of course

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Speaker 1: the MLB helped to get past. So one of the

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Speaker 1: most important provisions in this agreement, beyond just the amount

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Speaker 1: of money that's going to be paid, is there's going

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Speaker 1: to be a removal from the contract of a provision

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Speaker 1: that forbids the teams from paying them minimum wages for

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Speaker 1: these periods outside of the championship playing season. So now

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Speaker 1: that the teams will not be barred from paying the

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Speaker 1: minor leaguers a fair wage. I'm still intrigued by this

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Speaker 1: idea that the players filed their class action lawsuit in

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Speaker 1: It's actually been up and down the court system. It's

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Speaker 1: been through several appeals. It went all the way to

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Speaker 1: the US Supreme Court, which refused to dismiss the case

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Speaker 1: in and then it came back down the ladder to

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Speaker 1: the trial court and to a judge in San Francisco

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Speaker 1: who issued an important ruling back in March that sided

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Speaker 1: with the minor leaguers on a lot of key issues

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Speaker 1: and also found some some violations that that ended up

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Speaker 1: with like a two million dollar award for just a

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Speaker 1: small piece of the lawsuit. But when the settlement was

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Speaker 1: a reach this summer, it was the case was only

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Speaker 1: a few weeks away from going to trial, and there

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Speaker 1: was substantially more at stake than the hundred million dollars

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Speaker 1: they settled for. So uh, it looked, you know, as

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Speaker 1: with any legal settlement, each side figures out what its

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Speaker 1: risks of going to trial are, and they decided each

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Speaker 1: side decided that settlement was the best idea to avoid

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Speaker 1: the trial. A trial could have been embarrassing for the

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Speaker 1: MLB diffent head. Well, just if it had exposed the

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Speaker 1: disparity that you spoke about earlier, UM, with the you know,

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Speaker 1: the the huge gap in what the minor and major

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Speaker 1: league players are paid. Yeah, it would. It would just

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Speaker 1: invite a lot of patent in that press. It would

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Speaker 1: have had minor league players as witnesses testifying about their

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Speaker 1: standard of living, um, eating peanut butter sandwiches to to

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Speaker 1: make ends meet, that kind of thing. So I'm curious then,

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Speaker 1: in terms of what else MLB is going to do

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Speaker 1: when it comes to um, the player development system and

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Speaker 1: the minor leagues. Is this kind of just one step

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Speaker 1: along the process along a bigger effort it is? Uh,

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Speaker 1: The majors are are also implementing additional changes to sort

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Speaker 1: of add some you know, some other benefits for for

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Speaker 1: minor league players and it's an ongoing process. There's also

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Speaker 1: you know, there's also been some some scuttle but about

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Speaker 1: the minor league ers trying to form a union. We

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Speaker 1: know that the parties both announced that they had reached

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Speaker 1: a settlement, but they didn't disclose the terms. So is

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Speaker 1: it unusual that we now know the terms of of

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Speaker 1: the settlement. No, not at all. Um, That's just part

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Speaker 1: of the process. And the next step will be asking

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Speaker 1: the judge to approve the settlement, and the judge is

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Speaker 1: the final has the final say. Um. And in this case,

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Speaker 1: which is also not unusual, about a third of the

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Speaker 1: hundred and eighty five million will go to the lawyers

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Speaker 1: for the players and for for for costs associated with

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Speaker 1: the litigation, which will leave the players themselves, thousands of

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Speaker 1: minor league players going back more than a decade, uh,

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Speaker 1: you know, who've been in and out of the league,

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Speaker 1: with about a hundred and twenty million that will be

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Speaker 1: divvied up among those players, the ones who signed up

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Speaker 1: on you know, signed onto the class action. And the

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Speaker 1: amount that individual players receive will just be calculated according

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Speaker 1: to the record of when they played and how long

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Speaker 1: they played. More of a moral victory than a financial

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Speaker 1: victory when it comes down to it, though, right, I mean,

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Speaker 1: because they're setting precedents for what happens going forward. Yeah,

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Speaker 1: exactly as I said. Um, that contract change is is

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Speaker 1: the biggest is the biggest part of it because it's

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Speaker 1: gonna it's gonna benefit players going forward. Peter, thank you

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Speaker 1: so much for joining us. Peter Bloomberg is one of

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Speaker 1: our legal editors here at Bloomberg News. He covers all

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Speaker 1: kinds of legal cases, some baseball, some not so much.

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Speaker 1: I know that, Peter, You've talked a lot about a

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Speaker 1: i g. Being back at baseball lawsuit seeking lost revenue

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Speaker 1: from COVID, which I thought was really interesting as well. Um,

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Speaker 1: it's not something that people in baseball think about a

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Speaker 1: lot unless you happen to be a baseball team owner

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Speaker 1: or you're looking at MLB and its status as not

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Speaker 1: a cartel. But it's got this non compete status that

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Speaker 1: that is kind of special among professional sports leagues, isn't it? Yes,

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Speaker 1: it is, and it continues to be an issue that

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Speaker 1: it gets brought up in lawsuits and in inquiries from Congress.

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Speaker 1: Do you think that's gonna stay or is there a

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Speaker 1: momentum to strip the MLB of that, you know, I wouldn't.

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Speaker 1: I wouldn't be in a position to comment on that

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Speaker 1: because so far it has managed to stay despite multiple challenges.

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Speaker 1: So the only thing we can say is that it's

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Speaker 1: not going to go away easily. Got it all right, Peter,

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Speaker 1: Thank you so much. Peter Blomberg, Bloomberg Legal News Editor,

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Speaker 1: thank you. And that was Bloomberg Legal News Editor, Peter Bloomberg.

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Speaker 1: This is the Bloomberg Business of Sports podcast. I'm Scarlet Food.

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Speaker 1: My usual partners in crime, Michael Barr and Damien Sassara

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Speaker 1: would be back with me in a couple of weeks.

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Speaker 1: Catch us here each and every Monday, Wednesday and Thursday,

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Speaker 1: where we explore the world of money and sports. Also

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Speaker 1: be sure to catch me on Twitter at Scarlet Food.

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Speaker 1: You're listening to Bloomberg Business of Sports on Bloomberg Radio

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Speaker 1: around the world. M