Minor league baseball faces uncertain future

Minor league baseball teams, like millions of other small businesses in North America, are in trouble. Big trouble.

Unlike their Major League Baseball colleagues who typically get about half their revenue from media rights deals, minor league teams are almost exclusively reliant on ticket sales and in-stadium concession and merchandise revenues.

MLB teams could play without fans and still pull in a ton of revenue.

That said, MLB’s Arizona Plan, in which all games would be played in Arizona, primarily in spring training parks, or anything similar, seems totally unfeasible since it will only take one or two players contracting the COVID-19 virus on a given team to shut that team down for good.

Then what, does that team just drop out of the league? Is the World Series winner under the Arizona Plan the last team standing without a COVID-19 case on their roster or coaching staff?

Minor league teams, on the other hand, simply don’t have anywhere near enough media dollars to survive without fans.

Minor league baseball grossed US$864 million total for its 160 clubs last year. Operating expenses take 89 per cent of that figure. Given approximately 12 home games a month, teams lose about 16 per cent of their annual revenue with each month of lost games.

“Our entire business model is people coming to our stadium,” said Scott Hunsicker, general manager of the Reading, Pa., Fightin’ Phils. “The concept of even playing a game in our stadium with no people is so far outside of our business model that it almost seems like a wasted effort to even ponder it.”

Yes, minor league teams can fight for some of the small business aid in the COVID-19 stimulus package (although as of April 16, the U.S. money targeted for small businesses is already gone). But to survive this pandemic, they’re likely going to need help from their brethren in the Majors.

Revenue for Major League Baseball owners has skyrocketed during the past decade, due largely to dramatic increases in media income. According to Statista, a statistics website, Major League Baseball’s 30 teams generated around US$9 billion in total revenue during the 2017 season, almost twice the revenue generated 10 years prior, when total revenue was at US$5.5 billion.

Moreover, MLB franchise values are also soaring. Strong revenue growth has had a large impact on the valuation of MLB franchises. By 2017, the average franchise value was estimated at US$1.54 billion, a new high.

Despite this strong financial picture, owners have traditionally refused to throw the minor leagues more than a few bones. Minor league player salaries have remained stagnant for a decade. And before the pandemic hit, MLB owners were considering cutting 25 per cent of minor league clubs, in order to stuff more money in their already overflowing pockets.

Many of the teams targeted for elimination have been stalwart cultural institutions in their towns for decades.

“Minor league baseball teams have had a major impact on small communities. These teams provide an enormous cultural and economic benefit to the communities they call home,” said Congressman David McKinley of West Virginia.

It’s true. Minor league baseball teams are part of Americana. And as long as Major League Baseball is enjoying the antitrust exemption U.S. lawmakers have given them, they have a moral responsibility to do what’s best for all of baseball’s stakeholders.

Major League Baseball owners need to climb up from behind their wallets and take a hard look at what’s best for the game in the big picture.

And that includes throwing a life-raft to drowning minor league clubs in towns across the continent.