Is MLB threatening to decimate minors to screw taxpayers or players or what?

So Friday’s big news was this bombshell report by J.J. Cooper in Baseball America that Major League Baseball is proposing to get rid of one-quarter of all minor league teams after next season, while rearranging surviving teams and leagues and replacing some of the Snapped franchises with leagues of unaffiliated players and amateur wood-bat leagues. BA called the proposal, if adopted, “the most dramatic restructuring of the minor leagues in more than half a century.”

That, if anything, is understating the case. Baseball’s minor leagues originated as independent entities whose teams would sign players themselves and then sell the best of them to major league franchises; starting in the mid-20th century, MLB teams started to affiliate with minor league “farm teams” whose players were paid and supplied by the major league affiliate. Aside from changes to the classification levels — a holdover from old rules about how much MLB teams had to pay MiLB teams for poaching their players — that system remains pretty much unchanged today. And MLB franchises have always been free to have as many or as few farm teams as they want; for that matter, minor leagues have been free to have as many or as few teams as they want, though independent teams without MLB affiliations have become a rarity in affiliated leagues in recent years.

So, what the hell prompted this? The BA article is wide-ranging and a bit rambling, but there are a few clues:

“From the perspective of MLB clubs, our principal goals are upgrading the minor league facilities that we believe have inadequate standards for potential MLB players, improving the working conditions for MiLB players, including their compensation, improving transportation and hotel accommodations, providing better geographic affiliations between major league clubs and their affiliates, as well as better geographic lineups of leagues to reduce player travel,” [said MLB deputy commissioner Dan Halem]…

In MLB’s viewpoint, roughly a quarter of all current MiLB clubs far fall below the level of facilities they view as needed for their minor league players. MLB has essentially put the onus on MiLB to find a way to guarantee those stadiums will all reach what MLB deems as acceptable standards in the near future.

Put that way, this sounds like, in part at least, a massive nationwide shakedown of minor-league teams — and inevitably the cities they play in — to upgrade their stadiums to “acceptable standards” on pain of losing their major-league affiliations otherwise. This gambit has been used before on a smaller scale — most notably when the community-owned Toledo Mud Hens had to build a new stadium under threat of having their franchise yanked — but announcing to the entire minor leagues that they’ll have to scramble to be one of the 120 teams allowed onto the lifeboat would be a stupendous escalation of the strategy.

Nobody seems to have gone into details as to what’s “unacceptable” in current minor-league stadiums. Former Toronto Blue Jays exec Keith Law wrote at ESPN that “nobody wants to admit it” but “a lot of markets … lack the facilities necessary for modern player development,” but he doesn’t get around to specifics before the article disappears behind a paywall. Since revenue-enhancing items like luxury boxes or additional ad signage don’t do anything for major league affiliates, presumably MLB is looking for things like upgraded clubhouses and training rooms — which MLB could easily enough pay for with a couple of bills pulled off its $10 billion annual bankroll, but why pay for the cow when you can get the milk by shaking down taxpayers?

That’s especially true when there’s a separate shakedown afoot here as well. As noted here briefly last month, there’s a brewing battle over how much MLB is paying its minor leaguers, with players suing to insist that they be paid at least minimum wage (recently punctuated when a player for a Triple-A champion team tweeted out a photo of his meager paycheck), while MLB wonders aloud if maybe modern statistical analysis will allow them to just pay the sure-thing prospects and lay off all the long shots.

The latest MLB proposal, though reported as “getting rid of 42 teams,” really isn’t quite that so much as “get 42 teams worth of players off of the MLB payroll.” The annihilated teams would be replaced by either “Dream Leagues” — which look to be leagues of players unsigned by MLB franchises who would try to play their way into getting offered affiliated contracts, i.e., pretty much the way all of the minors worked 100 years ago — or amateur wood-bat leagues, both of which would have the advantage of costing MLB nothing in terms of player salaries (though BA reports that “there is also an awareness on MLB’s side that some sort of subsidies would be needed” for the Dream Leagues). And while, again, this is chump change when it comes to MLB’s relative costs — as Marc Normandin writes today in his subscription-only newsletter, “paying every single minor-league player in an organization $50,000 per year instead of poverty-level wages would cost every MLB team something like $7.5 million annually” — sports team owners never like to leave any money on the table when it can be reclaimed with the rattle of a saber.

The overall proposal, then, reads as a shot across the bow of both minor-league cities and minor-league teams: Make us happy, or else we can send a whole lot of you to the cornfield. There are other benefits to this kind of 800-pound gorilla behavior, too, of course — MLB can have more control over placing minor league franchises within easy reach of major league ones, and placing hard limits on the number of affiliates each team can have prevents a franchise like the New York Yankees from spending to load up on minor leaguers and forcing other teams to follow suit — but mostly it’s directed at cities and players.

As for which cities, we’re back to tea-leaf reading. The BA article reports that the proposal would “completely eliminate the four, non-complex Rookie-level and short-season classifications from the minor leagues,” meaning the New York-Penn League, Northwest League, Appalachian League, and Pioneer League would be marked for death. (Though it also says the Northwest League would be converted to full-season ball, so maybe only three leagues would be outright eliminated?) But it’s extremely unlikely that MLB would want to eliminate, say, the tremendously popular short-season A ball Brooklyn Cyclones (who play in a fairly new stadium, though 18 years old is worryingly close to not “fairly new” anymore in MLB terms), so you’re likely to see some of those teams shuffled into higher-level leagues, while some higher-level teams get bumped down to Dream League status or whatever. And, of course, MLB can always require stadium expansions or other upgrades for lower-classification stadiums before allowing their teams to get promoted.

Back to Normandin:

My suspicion is that this is mostly a threat from MLB to get MiLB owners to start spending more money: if you don’t want to reach into your pockets to pay for stadium upgrades and better facilities when MLB is under pressure to pay players more and is likely aware they’ll have to eventually do just that, then you don’t get to own an affiliated club anymore. It is a threat they’ll carry out, though: do not think for a second that the army of cutthroat rich assholes are making an empty threat when following through on it would result in even less spending for them. This is the kind of situation that helped make all of them as rich as they are now, and they’ll be glad to pull the trigger to keep that going.

Ayup. This is only the very beginning of what’s likely to be a major expansion of the stadium-shakedown and minor-league-payroll battles. And if Cooper is right, we could start seeing it renewed every few years:

It’s almost like monopoly power is a bad idea! Somebody should really get on that.

 


37 comments on “Is MLB threatening to decimate minors to screw taxpayers or players or what?

  1. The solution is not cutting Yankee minor league teams, it’s making other teams spend more ( the Pirates for example). I am a Yankee fan so I follow their minor leagues, and I have read that most Yankee facilities are considered above the minor league average. Why should they be penalized for the likes of the Pirates who choose to be cheap?

    • Because the Pirates want the ability to be cheap without worrying about being outcompeted by rivals who choose to spend money. Duh! What good is being in a cartel if you don’t get the benefits of monopoly power?

  2. The MLB should be free to determine how much money it wants to invest in these teams, and the teams and the cities should be free to tell the MLB to go pound sand if they don’t want to operate under the new arrangement. No one owes anyone minor league baseball, and it just isn’t enough of an amenity to make sense for localities to invest in it.

    • Right, but as noted above, MLB teams can decide how much money they want to invest in minor league affiliates right now — if the Pirates want to cut back to four affiliated teams, nothing is preventing them from doing so.

      What this gambit would do would be to use MLB’s cartel power to require all their teams to cut back to four affiliates, thereby 1) presenting a united front and 2) avoiding any rogue teams from deciding “No thanks, we’ll just stick with seven affiliates and hoard all the minor leaguers we can.” It’s a direct analogue of the collusion that MLB owners attempted in the 1980s: This is an attempt to protect team owners from themselves, and in so doing to extract more money from both players and minor-league teams and cities. (And since it’s not part of a collective bargaining agreement, it’s probably legal, though I wonder if minor league players could make a legal argument that artificially limiting the number of minor league teams is a restraint of trade.)

      • I am all for the MLB legally needing to make a choice between whether it is separate businesses or a single business, and then needing to be consistent from them on. The cartel stuff also drives me nuts.

  3. I think the article on off-the-field metrics is more telling than a throwaway mention. It looks like MLB had already decided that they don’t need so many MiLB teams in order to identify and groom their prospects (see the example of the Astros in the article). They can do that with better metrics and focused training.

    So, given that they don’t need so many minor league teams, how can they further leverage their plan to reduce the supply of baseball entertainment? Extort better facilities from teams and municipalities! This will do two things: One, reduce MLB’s expense for improved facilities for the prospects they’ve identified. Two, provide a rationale for increased ticket prices, which will be going up anyway due to reduced supply of games.

    IMO, MLB is simply looking to extract as much value as possible out of a shift in technology and training methods.

    • That article from 538 has a ton of holes in it. Its only success stories are established major leaguers adding a new skillset, in other words dudes who wouldn’t have gone to the minors anyways. That’s not anywhere near the same as developing a player from the ground up in extended spring training and simulated games. Unsurprisingly, the former players interviewed weren’t thrilled with the idea of doing away with games. The article also doesn’t examine the impact that depriving communities access to affordable baseball would have on future participation or fanship, especially given that the sport’s fans are getting older in average age. It strikes me as odd in an era where fellow pro leagues are actually expanding their farm system, not downsizing it.

      If an MLB club truly feels they can identify all their talent and cut 25% of their players they think are just flotsam, they could do that tomorrow. Nobody is stopping them. They don’t want to do that, however, because it wouldn’t look good so they’re trying to use the PBA as an excuse to cut teams.

  4. If this was homeDepot, McD’s, or Pizza Hut the shareholders would be in revolt. I’d imagine Karl Ichon would be jostling for board seats. Closing locations is a corporate balance sheet trick to boost earnings without addressing the key fundamental flaws in the organization.

    I can’t see Walmart closing 1/5 of their stores without going the way of Kmart.

    I think it is safe to say Rob Manfred wants his cake and to eat it too. He’s said that he wants more participation and more kids playing, and the continues to advocate for smaller stadiums and rosters. He either is bordering on incompetence or that baseball in general is lost.

  5. I lived in Lowell, MA, in 2006-7 and went to a couple of Spinners games, part of their 8 year run of sellouts. I checked their attendance for 2019 and it was down 44% from their last sellout season in 2010. It looks like the NY-Penn league has lost a lot of attendance since 2010. In 2010, they had 4 teams with over 200k attendance, in 2019 the highest was Brooklyn with 174k (Staten Island went from 201k to 66k!). It is kind of strange looking at the lower end teams though, several of them actually went up a tiny bit, but not even near enough to offset the losses other teams had.

    Is it worth propping up these leagues if they’re not really needed for player development any more? How much should MLB subsidize something that’s not all that valuable to them? From the Spinners About page it seems like maybe 1 major leaguer per year played for them at some point and most of them probably wouldn’t have been impacted if they started in A rather than short season.

    I guess I don’t see this completely as a money issue, and more like cleaning up something that’s needed it for a long time.

    • Again, this isn’t about individual teams — if the Red Sox wanted to cut loose the Spinners, they could do so right now without any changes to the MLB-MiLB agreement. This looks like using “enh, we don’t really need so many teams” as a way to create an industry-wide race to avoid annihilation by offering up stadium improvements or backing down on demands for a living wage or both.

      It’s creating leverage, in other words. Which I suppose savvy negotiators have a right to do, but it’s also why antitrust laws exist (for which baseball has been exempted, though that can always be revisited by either Congress or the Supreme Court or both).

      • I was mostly using the Spinners just as an example because I knew they were very popular for a long time, but even they’re not doing nearly as well as they used to. But it seems like they’re not alone in that league as having trouble maintaining attendance.

        I don’t know that MLB is using it as a way to push back against providing a living wage. Some of the reasons for the proposal (taken with a grain of salt obviously) are: “improving the working conditions for MiLB players, including their compensation, improving transportation and hotel accommodations”. So it seems like they’re actually proposing to raise wages and make life better for the players.

        • I believe that’s code for “okay, we’ll pay our players, but only if we can not have so many of them.”

          • Neil: One way that rosters can be reduced along with the need for Minor League affiliates while making bad teams more competitive is thru a world wide draft {especially if the Draft was only 20 Rounds}. If the NBA and {especially} the NHL because few players drafted are pro ready can draft players from anywhere. why not ? For example: Jasson Dominquez was considered the top International Prospect, and signed out of the Dominican Republic by the Yankees for $5.5m. If he was subject to the draft, he would go to a team like the Orioles, Royals, Tigers or Marlins and possibly make more money. How much more? By comparison, Number one draft pick Adley Rutschman signed for $8.1m.with the Orioles. Even beyond Dominiquez some of the BEST players in MLB like Gleybar Torres and Vladimir Guerrero were signed out of Latin America.

  6. Neil, this has little to do with government subsidies.

    The proposal gives minor league teams a shade over one year to get their facilities up to snuff. If MLB wanted a taxpayer shakedown, they allow for a lot more time.

    It’s also totally picking the low hanging fruit to demonize “billionaire MLB owners”. MLB pays to largest expense for minor league teams — the players — while letting minor league owners keep almost all MiLB revenue. To me it looks like MLB is saying that they are sick of minor league owners pocketing a few hundred grand or more a year in profits, while keeping locker rooms & training facilities outdated.

    MiLB owners could call up a local contractor tomorrow and finance a clubhouse renovation/expansion, without ever getting the local government involved. That’s what MLB wants, and the short timeline is evidence that MLB specifically does NOT want these minor league owners asking taxpayers to cover it.

    • So then why make this a part of the MLB-MiLB agreement negotiation, as opposed to individual MLB teams telling their affiliates, “Hey, go call up a local contractor tomorrow or else we’re not going to renew your affiliate agreement”?

      The short timeline — and even more so, the specific threat to eliminate 42 teams — is evidence that the MLB-MiLB agreement is MLB’s best leverage to extract concessions from somebody, and they’re determined to play hardball to do so.

      • If the agreement states that there have to be X number of minor league teams, and minor league teams know that fewer-than-X have modern facilities, then minor league owners have the leverage to tell MLB no, when asked to upgrade facilities. That’s why it’s part of the negotiation of the agreement.

        I’d ask the other side: Why create such a short timeline for facilities upgrades, if this whole thing is a gambit by MLB owners to extract government subsidies? Why not make it two or three years, to give minor league owners time to work the local legislatures?

        • I don’t believe the current agreement states that there have to be X number of minor league teams. MLB traditionally hasn’t had say over how many teams there are or what leagues they play in.

    • – The players aren’t the largest expense for minor-league teams. Not even close. Most minor-league teams have budgets of $2 million+. Paying 30 guys $1000/month over a five-month season only comes out to $150,000 in salary, and while the big clubs also take care of equipment and coaches’ salaries, minor-league clubs have many other expenses (stadium leases, front office staff, etc.) Teams at the higher levels pay for their own travel, as well.
      – Many minor-league teams lose money. Most owners are not “pocketing a few hundred grand or more in profits.”
      – MLB couldn’t care less whether minor-league owners ask taxpayers to cover the costs or they cover it themselves. Do you really think a big-league owner in Chicago or the MLB offices in New York are losing sleep over the taxpayers of Bluefield and Idaho Falls?

      • 1) All of the reporting has stated that player costs are the largest expense for minor league operations.

        2) If all of these minor league teams are losing money, then how are they staying in business? This isn’t the NBA, where you used to get the ego trip of sitting in courtside seats on television. I find it hard to believe that people are burning hundreds of thousands of dollars to have a couple thousand people watch their team’s games.

        3) If MLB wanted to make it easier for minor league owners to get local government subsidies, then why the short timeline for facilities upgrades? Why not give teams two or three years, so that minor league owners could threaten their local legislators?

  7. Yes, there are sub-par parks, but no way it’s 25% of them. I have no problem with a mandate to clean up the real dives, but I’ve read several times over the years that some minor league teams have needed some sort of facilities waiver in order to allow them to continue to exist in their current stadiums. Potomac comes to mind, but I think there are more (Appy League?). If such a waiver process exists, couldn’t they crack down there instead of tearing down the whole system?

  8. May be going well outside the box, but looking at Player Development, Money Allocation and Minor League independence why not scrap the entire Minor League system as it presently exists. Non-Major League Players under contract to a team would spend Spring Training, Summer and Fall “League” play at the Major League Team’s Spring Training/Year Round facilities. Minor League baseball would exist as an organization, as it is now, but with Independent Teams and Leagues. Something along the line of college football conferences, but for pros. Some of these teams may in time become de facto affiliates of some Major League Teams for some of their players. This way the Majors have fewer minor league players but more time and concentration on development and the Minors can be truly independent, as far as their finances will let them, which is how the Minors began.

    • “Something along the line of college football conferences, but for pros. Some of these teams may in time become de facto affiliates of some Major League Teams for some of their players.”

      That’s exactly the way the minors have worked for the last 150 years.

      Sending MLB-signed players to Florida or Arizona would be a huge wasted opportunity for MLB organizations, since summer attendance in those places is pretty dismal. Plus it’s a long flight to, say, Minnesota if you need to call a guy up for a game or ten.

      The “we don’t need so many minor-league teams” argument is really “teams don’t need so many minor leaguers in their system (since everybody knows who the prospects are now in the age of advanced metrics).” I certainly get the argument for this, but if it’s true, I don’t really get why teams are continuing to draft and sign so many players and stock NY-Penn League teams with them.

      • Neil, Thank you for the response. Independent Minor League teams/leagues freed from required Player Development Contracts would be free to sign and sell whomever they could. They would exist primarily for the benefit and their team, league and fans. As for attendance in AZ and FL, it wouldn’t really matter as the primary purpose would be for player development for the Majors.

  9. So I guess the potential quest for a new Kingsport Mets stadium is back on?

    According to the tl;dr condensed podcast version of that article it does sound like “Gib new stadium or team goes away.”

  10. I come to a different conclusion of what MLB is trying to do here. Like any employer that needs a steady supply of skilled workers, it wants to ensure that its subsidized training schools (the minor league teams) are providing the students (players) adequate facilities, accommodations, and working conditions (better pay and less travel) to keep the pipeline flowing. Colleges, trade schools, apprenticeships and internships have to meet standards to be accredited; why not MiLB? Especially when MLB is footing a big part of the bill? I don’t see this proposal necessarily culling a lot of teams.

    As to the pay issue, every sport, (and every industry for that matter), pro or amateur, has a ladder system. Everyone starts at entry level and works his or her way up for more riches and fame. Baseball is the same.The lower minors pay less than the higher minors which pay less than the majors. How much is too low to pay professional players? Well, has there ever been a shortage of guys willing to be paid to play baseball with a chance to make the majors?

    • Average pay per year by level:

      Single-A: $6,000
      Double-A: $9,350
      Triple-A: $15,000
      MLB: $4,000,000

      That’s the kind of pay ladder that generally leads to armed uprisings.

        • I don’t have figures for the average, but minor league team revenue tops out at around $20 million a year, while MLB revenue tops out at around $600 million a year. So even the Triple-A to MLB salary ratio is low by about a factor of ten by this count. And that’s even if you discount the idea that most minor league salaries are really expenses toward the MLB business (developing players for future appearance in the bigs), not part of the minor league business model.

      • So it’s a very steep pay scale from the entry level/trainee to the elite, top level talent? Sort of like show business, or medicine, or the legal profession, ……or just about any private sector industry. That’s the way it works in a meritocracy. See “Wealth of Nations” Adam Smith 1776, Book 1, Chapter 10.

        • There are a bunch of public-interest lawyers at the door who’d like a word with you about your notion of “merit.”

          It’s more clear in sports, obviously, where everyone is working in the same industry and top-level players are clearly “better.” Still, the Mike Trouts of the world wouldn’t be able to earn much of a living if the league’s lesser lights didn’t show up to let him hit homers off them. (And that’s even assuming you accept the premise that people with rarer skills deserve to earn more just by virtue of those skills being rare.)

    • “I don’t see this proposal necessarily culling a lot of teams.”

      Except the part where it culls 42 teams. And if MLB clubs want to upgrade facilities, they can literally call their affiliates tomorrow and say they’ll sign PDCs with other clubs if they’re not made. You don’t need to hinge the PBA on it.

  11. I don’t understand why so many ostensible baseball fans are carrying water for this insane gambit. There’s nothing currently stopping MLB clubs from cutting their number of teams, or setting up PDC’s with clubs in a tighter geography, or spending more on travel, or demanding that their affiliates upgrade their training facilities. This just strikes me as another episode of MLB clubs demanding to be as cheap as possible while giving themselves cover. They can now claim that their affiliates didn’t “do enough” and “had to be” cut. No club wants to just cut clubs on their own, because it would understandably piss off communities they cultivate ties to. This move will deprive countless fans from being able to attend minor-league ball, and given how hard it’s been for unaffiliated clubs these days, probably any pro baseball at all. There are millions of folks in Utah, Idaho, and Montana who’d lose out with no Pioneer League. If I can’t take my family to see the Owlz, who are 5 minutes away, and have to go to either Denver or Phoenix instead, it’ll probably be the last time they see pro ball. Cutting off access to affordable baseball seems insanely myopic if you’re trying to cultivate future fans.

    Also, while I’m sure some stadiums are outdated, this strikes me as not being about facilities. Most of the teams in the Pioneer League are in stadiums less than 15 years old, and at least a quarter of those are also used for Division 1 programs. So it strikes me as odd that they cite facilities but immediately single out a league that’s made a good-faith effort to have newer stadia. It seems like what they want is to consolidate the leagues geographically, and force their affiliates to be stuck with the parent club instead of being able to negotiate a new PDC every year.

  12. Has anyone actually seen the plan? I’ve read a ton of articles about it, including here, with references to this league or that team changing or being dropped…but no one’s actually published the plan that I can see.

  13. It would probably shock most people just how little the talent earns in the minors. It shows the value of MLB affiliation to minor league owners, if they can show a route to wealth for the few, they can always get the free foot soldiers. See also the freakonomics chapter “Why do Drug Dealers Live With Their Moms”…

    (PS.The application of Betteridge’s Law here depends on your position re “decimation” I guess ;) )

    • It’s actually more than decimation, in the original Latin sense. (Quartimation?)

      But anyway, Betteridge really only applies to yes/no question headlines, which this one isn’t.

      This has officially been the most pedantic comment ever.