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MLB owners to eliminate pensions for non-players

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$8 billion industry wants to keep more for itself

JR and RV
JR and RV
David Banks

covered this last year when the rumors first surfaced regarding the owners' intention to eliminate defined benefit pension plans for non-uniformed personnel. MLB disputed the veracity of those reports, with soon-to-be commissioner Rob Manfred saying there had been no discussion about this topic.

Today, we got confirmation of what we already knew. Manfred lied:

Major League Baseball owners, despite earning more than $8 billion in revenue in 2013, voted in January to allow individual teams to slash or eliminate pension-plan offerings to their non-uniformed personnel.

The vote, tabled a year earlier when the intention became public, quietly took place Jan. 16 at the quarterly owners meetings in Paradise Valley, Ariz., the same gathering at which instant-replay expansion unanimously was approved.

The retirement plans of any baseball employee not wearing a big league uniform may be affected by the decision, including secretaries, scouts, front-office executives, and minor league staff.

Some of those personnel, particularly at the minor league level and in amateur scouting, make less than $40,000 a year and rely on pensions in retirement.

Of course, Manfred now is eager to point out that this doesn't require any team to cut or eliminate defined benefit pensions. It just gives them the option to do so. Obviously, this wouldn't have passed if many teams were not seriously considering doing it.

The Colorado Rockies are mentioned as a team that is unlikely to change its defined benefit plan. As I discussed in my article last year, White Sox owner Jerry Reinsdorf was vehement in his opposition during prior owners' meetings on this subject:

The first attempt to do so, initiated [in 2012] by a small-market owner [read: Kansas City Royals owner David Glass], was voted down after Chicago White Sox owner Jerry Reinsdorf chastised his brethren for being petty with the lives of ordinary people given the riches produced by the sport.

It's safe to assume that Reinsdorf, who is well-known for treating his employees well, is unlikely to take any action. I detailed some of Reinsdorf's and the White Sox' treatment of employees in the past but, one thing to highlight again is that then-White Sox GM Roland Hemond was one of the main driving forces for MLB putting in place the pension rules on this issue in 1981.

Those rules have now been changed. Specifically, the owners voted to repeal the "compatibility rule", which required each team to provide a pension to employees through the Non-Uniformed Personnel Pension Plan, or provide something of equivalent quality.

Existing pension obligations are unaffected by this change.