MLB Looking to Improve MiLB Stadium Facilities, Working Conditions; Discussing Contraction of 40 Teams

JohnWallStreet

Baseball America reported on October 18 that Major League Baseball is considering a radical proposal that would see the contraction of forty-two minor league teams – reducing the total number of affiliated clubs to 120 – at the completion of the ’20 season (when the existing PBA expires). MLB is looking to improve stadium facilities and working conditions (think: compensation, travel) for their minor league players. The “preliminary offering subject to alteration” would also see MLB gain control over – and drastically reshuffle – team/league affiliations and geographies.

Howie Long-Short: To evaluate the idea one must understand that MiLB exists to build and develop players for MLB. As it stands, baseball has – by far – the most extensive minor-league system of the big four sports. Each of the 30 clubs has at least six MiLB affiliates (many carry more). If one believes that MLB teams could field competitive rosters without having +/- 180 minor leaguers under contract, then contraction makes sense.

JohnWallStreet spoke to the owner of one MLB club who does not believe that baseball’s minor league system needs to be as “robust as it is for [organizations] to put highly qualified players on major-league teams.” He/she said that they would be “in favor of some reduction. If you had one less affiliate per organization, there would still be 150 teams sponsored by major-league clubs.

For contextual purposes, it is important to note that “every minor-league player contract is 100% funded by the major-league organization. No minor-league affiliate pays a nickel for any player, coach, manager, trainer or video coordinator.” MLB is looking for MiLB to pick up some of the costs associated with an increase in player salaries in these negotiations.

But eliminating one level of minor-league baseball isn’t going to be an “enormous expense reduction” for MLB team owners. The catalyst for change here is the “ongoing battles [MLB teams face] relating to ownership in these local communities [and their unwillingness to make] the proper investments to create good playing conditions” (think: locker rooms, bullpens). MLB owners investing in these players – particularly the highly touted big money prospects – want them playing “in a facility worthy of professional baseball.” While most MiLB parks “do the right thing in terms of maintenance”, the outliers remain a constant thorn in the league’s side. On paper, eliminating the teams playing in the 30 worst venues and reshuffling the leagues accordingly would seem to solve that problem.

The minor-league parks in disrepair are either financed by a community funded foundation (see: non-profit) or those that are syndicate owned. The former often lack the resources necessary to make capital improvements, while the ladder is focused on ROI. Investor backed syndicates will work to maximize revenues while controlling expenses. Unfortunately, oftentimes that means not investing in facilities for the benefit of the team on the field.

It’s logical to wonder why MLB doesn’t just buy out the existing MiLB ownership groups and control the entire system (enabling them to avoid these types of headaches). Our source suggested it has to do with the “significant legal ramifications that would occur if that [scenario] were to promulgate itself. Remember, the league operates with an anti-trust exemption and legislatures want these teams in their home communities.

The proposal assigns values to each level of the minor leagues. AAA teams are valued at $20 million, AA teams are said to be worth $15 million, High A ball clubs are priced at $10 million, Low A ball clubs are $8 million and short-season and Rookie-level teams are slotted at $6 million. Teams that move down a level or lose their MiLB affiliation would be compensated accordingly. Clubs that move up would be expected to pay the differential. The problem is that the league’s assessments of these teams’ worth is below what many would command on the open market and it’s not reasonable to expect MiLB team owners to leave money on the table. This would seemingly be a substantial hurdle.

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