Baseball America reported on Tuesday (April 21) that Minor League Baseball is prepared to agree to the contraction of 42 clubs (a definitive list of teams has not yet been released). The surprising about-face comes just six months after MLB first proposed the idea of reducing the number of affiliated MiLB clubs to 120 (farm team owners vehemently opposed the plan at the time) and less than three months since Congress introduced a task force with the stated mission of saving minor league baseball in those markets. The concession (along with MiLB’s willingness to adopt improved facility standards and to enhance the “geographical cohesiveness of the [various] leagues”) would seemingly pave the way for a new Professional Baseball Agreement to be signed (the current pact expires following the ’20 season). MiLB owners are expected to seek a 10-year deal (ensuring long-term stability) in exchange for falling in line with nearly every one of MLB’s demands.
Howie Long-Short: The Coronavirus outbreak changed “everything” in terms of Minor League Baseball’s efforts to stave off contraction. Baseball America EIC B.J. Schecter said stay at home orders and the subsequent economic slide upended the business model and took away any leverage MiLB may have held in negotiations with MLB. With teams likely to fold anyway, it became easier for MiLB to go along with the proposed downsizing. “Profit margins for MiLB clubs were already slim, but now that it looks increasingly unlikely there will be minor league baseball in 2020 – and plenty of doubt about whether fans will return to the stadium when the games do resume – teams are fighting for their survival.” Remember, unlike their major league counterparts, the MiLB business model does not include guaranteed revenues; there are no television contracts. Nearly all of the money teams make comes from the in-stadium experience and if there are no games, there’s minimal revenue coming in. That’s problematic for club owners – which in most cases are small business operators, not billionaire investors – still burdened by sizable fixed costs (see: loans on the team, stadium leases and to a lesser degree payroll).
When MLB first floated the concept of MiLB contraction in October, the idea was met with public outrage. The PR nightmare the news cycle created gave MilB some leverage, but vocal support for the small market teams has since dissipated. “People (see: congress, general public) are simply not focused [on the solvency of minor league baseball clubs] right now, with the country facing much larger economic issues.” Once MiLB lost its lone trump card, there really was no other choice but to accept the elimination of +/- 25% of all affiliated teams. What was the alternative? MLB controls the players and has resources to support a developmental league with or without MiLB’s participation.
Speculation exists that the elimination of 42 clubs may not be enough to save the MiLB league office. Schecter said “there’s been talk amongst major league baseball [executives] about running the MiLB operation out of the MLB office in New York.” The prospect of improving operational efficiencies (see: eliminating costs, reducing travel), while potentially having a chance to “benefit from the rise of minor-league franchise values”, is viewed as an attractive proposition. Operating under the MLB umbrella would seemingly give MiLB owners some much desired security.
It reasons to assume MLB players were confident that a reduction in MiLB clubs was coming when they agreed to cut down on the number of rounds – and thus players selected – in the ’20 and ’21 amateur drafts (in exchange for an advance on ’20 salaries and a guarantee that they would receive service time for the ’20 season regardless of whether games are played or not). Schacter agreed saying “there’s been a feeling [in baseball circles] that contraction was inevitable and with less teams, there’s obviously less of a need for as many players.”
It remains TBD what will happen to the 42 MiLB clubs losing their MLB affiliation, but it’s believed the two sides are working to ensure “the majority” of the short-season and rookie ball teams left on the outside looking in will have some sort of MLB ties to ensure their economic viability. Schecter has his doubts that a club participating in a developmental league without players tied to MLB clubs could survive in most cities. “Unless MLB is going to heavily subsidize those teams, they’re going to be hard pressed to succeed under that model.” It should be mentioned that MiLB is planning to add two successful independent clubs to affiliated ball (the St. Paul Saints and Sugar Land Skeeters).
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