We’ll get to the regular Friday news roundup in a bit, but first I want to take some time to dig into yesterday’s long Defector article on Diamond Baseball Holdings, the private equity company that in the last few years has bought up a staggering 35% of all minor-league baseball teams. This is the kind of big reported piece that Defector and its predecessor Deadspin used to specialize in, but that hardly anyone seems to have the time to write, or read, anymore. And with DBH’s rampage across the minors one of the enduring mysteries of the modern sports world, I wanted to give it a careful read and see what solid conclusions we can draw about the future of the minor leagues, the role of private equity in sports and the greater world, and anything else we can learn along the way.
Starting at the top:
- Defector has a long history with private equity, having been founded by refugees from Deadspin, whose parent company was bought by PE firm Great Hill Partners, which promptly drove the staff to quit en masse through its incoherent micromanaging. The article starts off, in fact, with a link to an interview with former Deadspin editor Megan Greenwell about how the experience inspired her to write a book about PE, in which she paints the entire industry as a bunch of rich dudes who glom on to anything they think they can extract a profit from — news sites, hospitals, dental offices for some reason — and impose policies more geared toward a quick cash grab than any sensical long-term business plan. (As just one example, Great Hill told Deadspin editors that they needed to insert sports scores on the top of their page, said Greenwell, because “their only version of success for a sports website was ESPN, and so their goal for us was make us ESPN, which didn’t make sense on several levels.”)
- The road to Diamond Baseball Holdings’ rapid expansion was laid in early 2021, right after MLB took over control of the minors. Previously, no one owner could control more than one team in any league — the Defector article doesn’t say, but I’m assuming this goes back to the bad old 19th-century days of “syndicate ball,” when one baseball owner could buy two teams and move all the best players to one, leaving the other to rot on the vine and become the 1899 Cleveland Spiders. Now, MLB and its MiLB arm had agreed, there would be no such limit, only an overall cap of 50 total teams that one owner could hold, with no more than 14 at each minor-league level.
- Into this breach stepped DBH, either with the explicit or implicit approval of MLB. (There’s a long confusing section about a slide deck that may or may not incriminate MLB officials in helping DBH get off the ground, but either way it’s clearly what the league intended to enable by watering down the rule against multiple ownership.) The company immediately started buying up teams willy-nilly, including ten teams in one day in December 2021: the Mississippi Braves, Gwinnett Stripers, Augusta GreenJackets, Hudson Valley Renegades, Iowa Cubs, Memphis Redbirds, Oklahoma City Dodgers, Rome Braves, San Jose Giants, and Scranton/Wilkes-Barre RailRiders.
- At the same time, MLB eliminated 43 affiliated franchises, casting some into the void and forcing others to reinvent themselves as independent league teams or as members of “draft leagues,” new circuits where amateur players would be invited to play for free to compete for attention in the majors’ annual player draft. This not only saved MLB teams money on paying player salaries, it created an abrupt game of musical chairs for minor-league cities to be left with affiliated teams — something that, as I wrote for Defector at the time, allowed MLB to bump up its stadium requirements, “sending signals to jettisoned cities that the best way to get back into the league’s good graces is to build a new stadium.” And that went for cities in fear of being jettisoned, too: As this week’s Defector piece recounts, several teams (the Hillsboro Hops and Richmond Flying Squirrels among them) extracted public stadium cash in part by holding the threat of being evaporated, or just moved to a now-vacant city, over the heads of local officials.
- DBH is owned by the PE company Silver Lake, which also owns a major stake in Fanatics, the apparel company whose questionable production standards led to the infamous see-through MLB uniforms of 2024. Not mentioned by Defector: Silver Lake is also a major investor in Oak View Group, the stadium and arena developer whose CEO Tim Leiweke abruptly resigned this week after he was indicted on federal bid-rigging charges for allegedly conspiring to get Legends Entertainment to drop out of bidding to operate the University of Texas’ basketball arena in exchange for getting lucrative subcontracts.
- “Who were these people? And why would private equity be interested in minor league baseball?” Employees for DBH teams say they don’t know; longtime minor league baseball owner Miles Wolff said to the The Nation last year, “Do you understand how Diamond Baseball hopes to make money? I’m mystified.” That Nation article, incidentally, largely concluded that DBH’s business plan was to cash in on stadium subsidies in the freshly depleted minors, noting that “in the three years DBH has been in operation, DBH-owned teams have extracted nearly $300 million in public money from local governments throughout the country, according to the Maine Center For Economic Policy.”
- Defector goes on to speculation that DBH is looking to either increase minor-league teams’ bottom line by hosting lots of concerts (fine as far as it goes, but good luck with that) or by building up Wrigley-style entertainment districts around minor-league stadiums — both of which are all the rage among all sports franchises, so while DBH may indeed be doing so, they’re almost certainly not alone.
All of which leaves us with the original question: What is DBH up to, and is it something specifically related to the evils of private equity, or just what any red-blooded rich dudes looking to fill their pockets would do? The article leaves off without ever really answering the question — though it does at least help establish the timeline by which MLB set the stage for a corporate takeover of the minors, all the better to maximize profits by exploiting minor-league cities and fans. What this means for the future of the minor leagues remains uncertain, though Megan Greenwell would surely warn that it’s not likely to be good.
Finally, one small editorial gripe: I know that headline writing is all SEO keywords these days, but it still seems like a huge missed opportunity not to have titled this story “Yo, Bum Rush MiLB The Show: The Story of PE.” There used to be an art to this stuff, dagnabit. Now if you’ll excuse me, I gotta go yell at some clouds.
We’re five years into this PE firm buying up all these teams, and we still only have nebulous hints about what its endgame is.
As a general rule, if you’re not transparent about your intentions, it’s probably because you’re planning something sinister.
I am trying to figure out what the sinister side is, other than MLB taking control over the minors.
PE when done well will buy companies, retool them and reposition them in the market, and then sell them at a gain. OR they will buy companies, load them down with debt and then strip them for parts.
it’s possible that MLB will cull more teams in the 2025 off-season before their deadline for that expires. but that doesn’t really equate with stripping teams for parts because what kind of parts of an MiLB team can you sell to the market. the main asset, the players are already owned by an individual MLB team. and no one wants an MiLB stadium.
as far as retooling and selling, who would they sell to?
it looks like DBH can make additional money via booking more events at MiLB facilities; raising ticket and concession prices; resolving some administrative overlap; cross-team marketing and advertising; and developing facility adjacent real estate.
but most of these things are already being pursued by individual MiLB (and MLB) teams.
so we’re sort of back to the question of why is this worse that PE is involved, as opposed to individual teams and what does PE get out of this?
and I am still not sure. it may be that it’s easier to manage MiLB if there are only, say five owners, rather than 100.
But MLB is calling the shots on all of this. they took control of the minors by pulling all of the player development agreements, and then they were the ones that removed the barrier to owning multiple teams in a single league. So anything sinister emerges from MLB and PE is just the method by which it happens.
Economies of scale is the obvious reason. They replace people at franchise level with “regional” staff.
Case in point: Gwinnett. The GM and Assistant GM have just been replaced by one person. The Stadium Operations Director “replaced” by a long-time employee, with a title change, who is now doing his old job and new job. Regional office is handling lots for multiple teams.
That sounds like just cutting staff and asking the holdovers to do more work. (From what I’ve seen, doing multiple jobs is already the norm in the minors, with the grounds crew, for example, being drawn from front office and concessions staff.) What solid evidence do we have of DBH hiring people to do the same work across multiple franchises?
Not saying it’s not happening, just that the Defector article didn’t spell out if and how it is.
Gwinnett’s website, for the first time this year, has DBH staff listed on the front office page: https://www.milb.com/gwinnett/team/front-office
And, yes, doing multiple jobs and using cheap interns has always been the norm in minor league sports but DBH seems to increasingly use economies of scale to cut costs further and use head office people to do work for multiple teams.
Can’t necessarily blame them for that but it makes for cookie-cutter operations where everything is the same everywhere.
Two regional ticket sales people doesn’t seem like a major economy of scale move. Though it’s possible this is just the thin edge of the wedge and there’s more to come.
As for cookie-cutter operations, can anyone here name a minor-league affiliated team that isn’t run pretty much like all the others? Certainly consolidated ownership has the potential to make it even worse, but it’s all been one big sea of dizzy-bat races for a while now.
Imagine the economies of scale on grass seed and dirt!
“cookie-cutter operations”
right. that is one of the things that I am most worried about. the minors is fun because the teams mostly reflect their locales. if they all just take their cues from Microsoft Scoreboard 2025 it runs the risk of becoming considerably less fun.
I would wonder how much the savings would be. possibly decent on a team-by-team basis, but would it really be significant from a PE perspective?
again, the only thing that we know for sure is that we’re not certain.
J.C. Bradbury also theorizes that Diamond’s plan is about economies of scale, fwiw, and notes that they bought up some teams that already have new stadiums, so it likely isn’t just about a subsidy play:
https://bsky.app/profile/jcbradbury.bsky.social/post/3ltossm7ayk2q
Interesting. I’ve been wondering the same thing since they first began soaking up franchises across various leagues.
The subsidies are certainly “nice” for DBH, but it seems unlikely that $300m in direct subsidies and tax breaks can cover their outlay to obtain control of these franchises… many of which are likely still losing significant money on operations.
It also seems unlikely that the notion of “ancillary development” in most of the MiLB host cities will generate significant revenue. LA Live works in LA. You may find it harder to turn a profit on a similar development in Fresno, Boise or Peoria.
Whether owning an outright majority of MiLB franchises could put the company in a position to extract much greater subsidies from host cities, I don’t know. But that seems to me to be the only path to profitability… “pay us $10m every year to play in the stadium you built for us or else”.
Hey, it worked for a number of NHL teams…
Whether “MLB” itself is behind DBH’s push is hard to say. Their reps have said that is “categorically false”. Assuming they know what the words categorically and false actually mean, they might be telling the truth. If several of MLB’s richest owners and some of it’s execs formed a company (or not bother and operate as affiliated individuals) to create and control DBH while not actually doing so through any MLB channel, they would not be lying in saying it is not “MLB” as an entity that controls DBH.
The effect is the same, but the distinction is both legal and clear.
MLB’s supposed ban on owning or controlling multiple teams (either in the major or minors) didn’t stop Arnold Johnson – a known associate and business partner of then Yankee ownership – from buying the Athletics and moving them to KC. Following that, he sold almost all of the A’s best players to the Yankees – prompting Bill Veeck to refer to him as a Yankees farm team owner.
St. Louis Browns fans will recall similar stories of player ‘sales’ to larger teams to cover debts. And Mr. Veeck’s name comes up again there…
The long con never really changes, does
“Whether “MLB” itself is behind DBH’s push is hard to say.”
I think that we can say that MLB is behind this in the sense that they wanted to take control over MiLB without actually owning the teams. So they created conditions that allowed someone else own the teams and operate them under MLB rules. DBH just happened to get there first.
This story seems to confirm some things that us fans of minor league teams have been hearing. Especially in the Braves org. The Mississippi to Columbus deal was shady as hell. The GM there, Laven, got in big trouble, and got out scott free after getting the job to move to Georgia. He got fired in Arkansas before for shady stuff, and from lots of employees you heard there, his stripes didnt change when it came to harassing staff. Somebody needs to look into that guy.
The article mentions that MLB would like to eliminate more teams from its portfolio so I’m trying to figure out if The Draft League is going to last.
Based on nothing but anecdotal evidence from the State College Spikes, I cannot see how it can last.
As far as I know, the Spikes are not a DBH joint yet. (Nearby Altoona Curve are, but I haven’t been there lately). They’re still owned by Chuck Greenberg, who also owns the Myrtle Beach and Frisco, TX team.
Since shifting from being the Cardinal’s NYPL affiliate to the Draft League, the Spikes’ prices have gone up (tickets and concessions), the quality of baseball has gone down, attendance is down (by how much, I’m not sure) and local enthusiasm is definitely way down. Not sure if that proves anything.
According to its website, in the DL’s four years of existence, five alum have played in the majors. Better than I would have thought and four years is still short, but I don’t know if that makes it any more useful than any of the other high-end summer prospect leagues like the Cape Cod League.
I also saw that they’ve yet to have anybody taken higher than the third round and most of the draft picks go much later than that. According to a SABR paper I found, about 40% of players taken in the third round will ever play in the majors and the odds go down from there (although not as rapidly as I would have thought).
In the NYPL, all the players were drafted or international signings. On any given night, there’d be three or four guys on the field who were known to be legit prospects. Occasionally higher level players – even major leaguers – came there on rehab assignments.
And yet that was considered expendable. So does this league really serve any purpose for MLB other than that it sorta saved a handful of very small markets from The Big Cull? Now that its been a few years, might they just say “Hey, we tried” and pull the plug?
Retail price up.
Customer satisfaction down.
Product quality way down
Sales (tickets) volume down.
Worker compensation down/eliminated.
If that isn’t the calling card of private equity I don’t know what is.
“Good job Brownie!”
This makes Tom Volpe, 7th Inning Stretch LLC Key principle, who lived in Dubai, has past associations in that country, was Chief Executive Officer of Dubai Group with access to $130 billion in assets, who owns three minor league baseball teams, currently leads Major League Baseball joined with professional soccer to build a new $137 million minor league stadium in Everett, Washington, look like a Little Mom and Pop Store. And Diamond Baseball Holdings owns 35% of the teams!!
Somebody should say something about poor little Tommy Volpe.
I too read the Defector piece and had the response that, while it is very interesting, it didn’t really bring it home. We expect, when reading pieces about private equity, to get a slash-and-burn story. We have good reason for this, as this really does happen. But it does not follow that this is the only tool in private equity’s kit. How does DBH expect to make money? Minor league teams have increased in value over the past few decades. Perhaps the answer is nothing more than they expect at some point to sell the teams at a profit.
Being a baseball history nerd, I also think that the backstory is missing. Ownership of multiple teams in a league is a problem because it produces perverse incentives to maximize one team at the expense of the other(s). The 1899 Cleveland Spiders are the poser child here.
The point that is often missed is that the minor leagues are not competitive leagues. They have the apparatus of competitive leagues, with standings and post-season series and pennants, but this is vestigial. Everyone knows this. Should your local minor league team make the post-season you can walk up to the box office at game time and get a good seat. Nobody actually cares about the pennant. The games are marketed as affordable family entertainment and, of near the big league club, seeing the future stars of the team you actually care about.
This was not always true. A century ago, people cared about their local minor league teams in much the same way people today care about MLB teams. The farm system killed that off (as was predicted at the time), turning the minors into developmental leagues. The local organization has nothing to do with who is on the roster, or which of those players on the roster plays on any given day. This is how you get stuff like a pitcher pulled in the middle of the game because a pitcher on the big club pulled a muscle, and they need the minor guy fresh in case he has to be called up.
In this situation, the evils of syndicate ownership simply don’t apply. It took a long time for this implication to be worked out, but it was built in decades ago.
MLB organizations do not care that much about minor league championships, but the actual minor leaguers do. It is still not like college or high school baseball where all the players are leaning over the rail and invested in every pitch, but they are genuinely excited about winning their league, regardless of what level it is.
But hardly anyone else notices. The playoffs draw much smaller crowds than the regular season because the team owners put all of their marketing into ticket packages for groups – companies, churches, little leagues, etc. – months in advance. They can’t sell playoff tickets until they know the team is going to be in the playoffs. So the only fans that show up for the playoffs are the handful that really like baseball for its own sake.
I think it may be getting worse. As recently as 10 years ago, it felt like the minor league parks I went were trying, at least some times, to market the baseball. Now that’s barely an afterthought. It’s about the gimmicks.
And I’m not sure the “stars of the future” aspect draws many people these days. I suppose it does for the hardcore fans. I’ve met those people. But that’s not a big audience.
I question if this is all sustainable. So much of it is geared toward getting families to bring kids to the park, but it’s not as cheap as it once was and a lot of kids would rather be in air conditioning looking at an electronic device.
The Richmond Flying Squirrels are not DBH-owned. They’re mentioned in the Defector piece only as an example of teams pushed into building new stadiums due to the 2020 facility standards mandate.
Lou DiBella owns the team, and has owned the team since it was located in Norwich, CT from 2005-2009.
Ah, I see, that was unclear — correcting now.
Maybe from MLB’s point of view, they would rather deal with a few large corporations that own a lot of MiLB teams instead of 50 individual owners who each have one team? Similar to McDonalds preferring to work with larger franchisees that run 50 McDonalds in a region, instead of dealing with a separate franchise owner for each “restaurant”.