While Major League Baseball works on a plan to restart its season, the fate of minor league baseball — and 42 teams in small cities and towns that may be cut under a restructuring proposal — is more precarious than ever.
Minor league teams rely heavily on revenue derived from people in the stands — tickets, beer and hot dog sales and sponsorships tied to attendance. But for the foreseeable future, there will not be fans at games because of the coronavirus pandemic. Even in normal times, more than a handful of canceled games, typically rainouts, could mean the difference between being profitable or not.
The economic realities of the pandemic have been so dire for some team owners that the organization known as the MiLB has increasingly appeared more open to accepting a widely debated plan by Major League Baseball to overhaul the whole farm system. Unveiled in October, M.L.B. would cut a quarter of minor league teams and realign affiliations of MiLB clubs. In recent weeks, the sides have discussed M.L.B. taking over MiLB’s independent operations.
The contraction plan brought an outcry from city leaders and national politicians about undermining a piece of Americana. Yet even before the full force of the pandemic shut down sports in March, there were signs that minor league officials were coming around to accepting it.
“We are hopeful that the negotiations with M.L.B. have entered into a more constructive phase and believe that the prospects for concluding an agreement would be improved if we refrained from additional public comments on the negotiations, pending further developments,” the minor league president, Pat O’Conner, wrote in a Feb. 24 memo to team owners, which was obtained by The New York Times.
A month after M.L.B. and MiLB traded yet another round of barbs in letters and statements, O’Conner barred team owners and officials from speaking to the news media without his office’s approval as negotiations ramped up. The operating agreement between the sides expires in September.
Separately, minor league owners were asked to tone down their appeals to Congress. M.L.B. had bristled at repeated criticism from lawmakers.
The fact that MiLB had appeared to acquiesce to M.L.B. — weeks before the worst of the coronavirus pandemic struck — disappointed some minor league owners, particularly those at risk of losing their major league affiliation. The extended coronavirus shutdown has crippled MiLB’s economic footing and its position in negotiations with M.L.B.
“In every sector of our economy, there’s going to be businesses that aren’t going to make it,” Dick Nussbaum, the president of the Class A Midwest League, said while expressing confidence in the owners of the 16 teams in his league. “So for me to say that we’re all going to be OK, it would be ludicrous.”
O’Conner, through a spokesman, declined to comment.
Without revenue from games, teams in the league have reduced their work forces and sought federal aid. Because they do not have widespread TV or streaming deals, MiLB cannot consider playing games in empty stadiums, as M.L.B. hopes to do this summer. Without a season, some of the 160 MiLB teams may not survive, in effect giving M.L.B. the contraction it sought all along.
MiLB has countered by saying many communities would lose employers and fans, and has argued that M.L.B. teams’ cost savings, largely by eliminating short-season teams, would be minimal. It has also proposed ways to fix stadium inadequacies.
M.L.B. has always had the upper hand. Its teams supply the minor league players and coaches. The franchise values of minor league clubs, worth anywhere from $3 million to $25 million, are largely derived from their major league affiliation.
Knowing this, MiLB waged a public relations battle, seeking and gaining broad support from members of Congress and mayors in minor league cities. But as the pandemic continues, many fear the 2020 minor league season — not just the teams at risk of contraction — is in jeopardy.
“I get 70 dates to make as much money as I can make,” said Sam Bernabe, the president of the Iowa Cubs, the Class AAA affiliate of the Chicago Cubs. He added, “If I lose any of those days, say to a rainout or the postponement because of a health crisis, it makes it worse and worse.”
According to MiLB figures, clubs earn an average of $70,000 in gross revenue per home game and $5.4 million per year. Most of that goes to operating expenses, including paying employees (each team averages 21 full-timers and 200 seasonal workers) and rent (teams pay a combined $65 million annually, the majority to local governments).
Minor league teams have asked their cities or counties for help with their rent or bond payments. Teams have discussed issuing credit to sponsors. Teams have furloughed and laid off full-time workers, many of whom make $40,000 to $50,000 a year. Jeff Savage, the president of the Sacramento River Cats, a Class AAA affiliate of the San Francisco Giants, said recently that his team’s seasonal part-time staff of 500 was down to zero. His full-time staff of over 50 was down to 20.
“If we don’t have a 2020 season, we’re going to go 18 months between games,” he said. “Every business would be really hurt by having 18 months of, in essence, zero revenue.”
To help, Jeff Lantz, an MiLB spokesman, said he expected a lot of teams to receive money from the federal government’s Paycheck Protection Program for small businesses. Still, that is temporary and the future is bleak.
Facing the prospect of a lost 2020 season, some teams have been eager to wrap up negotiations sooner rather than later partly so a 2021 schedule can be made and they can start booking moneymaking nonbaseball events such as concerts and festivals.
With their financial plight mounting, MiLB turned again to allies in Washington sympathetic to their portrayal of David vs. Goliath. Reversing a past order of quiet, MiLB asked its teams to reach out to their representatives in Congress to detail their economic hardship, according to an email from Robert Fountain, MiLB’s deputy general counsel, to teams on April 9, which was obtained by The Times.
The reason: MiLB was seeking a $350 million loan, said three people familiar with the situation who requested anonymity because they were not authorized to speak publicly.
“The P.P.P. is a Band-Aid, and we need a tourniquet,” he said. “The bipartisan congressional members recognize that Minor League Baseball needs this help in a loan program that will stabilize our industry and allow us to continue.”
M.L.B., which spent $1.24 million in lobbying last year, has also been appealing to Congress. From Jan. 1 to March 31, M.L.B. spent $310,000 on lobbying, with coronavirus relief aid and “Minor League Baseball modernization” among the reasons listed in congressional records.
On April 22, M.L.B. and MiLB held a formal negotiating session. The next morning, they released a joint statement calling the meeting “constructive” and saying they would continue talking with the goal of reaching “a mutually beneficial long-term agreement in the near future.”
To many, it was another signal that MiLB was conceding. It was a far cry from O’Conner’s fiery speech to minor league teams at the annual winter meetings in December. “We cannot allow ourselves to be splintered for this next deal,” he said then. “No one’s future is safe unless all of your futures are safe.”
Right now, MiLB’s future isn’t safe.