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ESPN staff
IN EARLY 2018, Major League Baseball needed a little help.
Commissioner Rob Manfred’s office wanted to get a bill passed to keep MLB from having to pay the federal minimum wage or overtime to minor league players. League officials asked minor league owners, who run the teams but don’t pay the players, to take up their cause.
“We were told very clearly if we didn’t get that thing passed, we would be staring down the barrel of contraction,” said Dave Heller, who owns four minor league teams. “So we were all supremely motivated to help MLB pass that legislation.”
Owners of teams such as the River Bandits and the Lugnuts walked marble halls and implored their representatives to support what was called the “Save America’s Pastime Act.” Minor League Baseball president Pat O’Conner chipped in, saying he had met with several lawmakers, including Senate Minority Leader Chuck Schumer.
It worked. The act passed, buried on Page 1,967 of a $1.3 trillion spending bill.
But then in October, word leaked out that big changes were coming to the minor leagues anyway. MLB was planning to reduce the number of affiliated minor league teams from 160 to 120. Some minor league owners felt betrayed.
“We were invited to dinner and found out we were it,” said Dave Baggott, president of Utah’s Ogden Raptors.
Prominent political figures who had supported the Save America’s Pastime Act condemned Major League Baseball.
“One of the things that kind of burns me … they really leaned and relied on minor league baseball to come to people like me and say, ‘This is going to harm our teams,'” Republican Sen. Shelley Moore Capito of West Virginia told ESPN. “And now here we are. ‘Guess what: You’re going to lose all four of your teams in West Virginia.’ Huh?”
MLB’s plan, cemented in a proposal delivered to MiLB last week, reaffirms a new reality: The two organizations no longer operate as partners, if they ever were. They are superior and subordinate. And the months leading to this point have been a lesson in economics, politics and efficiency, but mostly power.
The minor league system as it has existed for decades will effectively end when the current agreement between MLB and MiLB expires Sept. 30. MiLB’s offices in St. Petersburg, Florida, will be shuttered, an MLB source told ESPN, and the minors will be run out of MLB’s headquarters in New York City.
Minor League Baseball executives and owners have tried for 11 months to find some sort of leverage with MLB, whether through direct talks or public and congressional pressure, before realizing they really have none, according to more than a dozen major and minor league officials, team owners and others interviewed by ESPN.
“I don’t think there’s anything that could be said on behalf of Minor League Baseball that could make this change not occur,” said Mahlon Luttrell, president and general manager of the Bristol Pirates in Virginia. “And we’ve come to realize that.”
Talks continued Wednesday on a new Professional Baseball Agreement, but under MLB’s proposal, first reported by Baseball America:
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There will be only 120 affiliated teams, four per major league team. At least 42 teams will lose their affiliations, while some independent teams could become affiliates. Minor league owners don’t know which teams are on the cut list.
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There will no longer be rookie and short-season Class A levels. Lower-level players will train in their major league club’s spring training facilities in Arizona or Florida, but scores of paying jobs in the game will be lost.
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MLB will take over merchandising, broadcast and sponsorship rights, splitting revenues 50-50 with the minor league clubs.
It wasn’t detailed in MLB’s proposal last week, but several MLB sources told ESPN that teams losing affiliation will be encouraged to join either amateur summer “wood bat” leagues populated by college players or become independent professional clubs. A proposal detailing those options is expected next week.
The plan included few details that hadn’t been signaled previously, but it was notable that Manfred’s office even made a proposal. Minor league executives recognize that MLB doesn’t need to negotiate if it isn’t so inclined.
“You’re basically wondering, are they going to compromise even a tiny little bit to get a deal signed or are they going to impose on us? Because they can impose if they want,” one owner said.
Minor league owners told ESPN they understand they have little leverage but that they’re asking MLB to give them a longer agreement that secures the value of their franchises.
MLB officials declined to make anyone available to speak on the record to ESPN, but high-level league sources who spoke on condition of anonymity defended their reorganization plan, saying it makes sense for an industry to control its own feeder system. They acknowledged they could simply impose a new system, but one official said MLB would like to retain a “partnership” with MiLB.
The minor league season was canceled due to the coronavirus pandemic June 30, before a game was played, and teams, having already lost millions in expenses without any revenue stream, have been left to wonder whether they’ll survive the shake-up. Some see it as a power grab protected by MLB’s century-old antitrust exemption.
“I’ve always thought the plan has been to let the agreement expire,” said Jeff Katofsky, the owner of the Orem Owlz, a Rookie League affiliate of the Angels in Utah. “Manfred doesn’t want to be the commissioner of Major League Baseball. He wants to be called ‘Commissioner of Baseball.’
“It’s about controlling the industry. It’s all about money and power.”
O’Conner, MiLB’s president since 2007, declined interview requests for this story. His efforts to preserve MiLB as an organization have appeared in disarray in recent weeks as he reconstituted his negotiating team. MLB and MiLB sources said it isn’t clear whether he’ll have a job when the new agreement is completed.
Some minor league owners accuse O’Conner of acting in his own interest to preserve MiLB as an organization rather than working to preserve teams.
“First and foremost, Pat is concerned about his own job,” said one owner who declined to be named.
And some expressed suspicion that fellow owners have been sharing information with MLB in hopes of currying favor. “They’re doing to us what they do to the major and minor league players: pitting us against each other,” the owner said.
Several other minor league owners declined to speak for attribution because they still hope their teams will be spared and they fear retribution from MLB. “They have all the power,” one said. “And they’re vindictive.”
Minor League Baseball, a tradition of languid summer nights at ballparks where families can afford to watch future stars, has been reduced to a paranoid game of “Survivor.” The calculus isn’t to save MiLB writ large, another owner said, “It’s to be one of the 120 teams.”
THE SEPARATION OF major and minor leagues is one of those historical quirks that many expected to go the way of separate offices for MLB’s National and American leagues. Tradition rarely survives the forces of efficiency, and those forces have played a prominent role in the reorganization plan.
For decades, MLB teams have paid the salaries of minor league players and coaches, as well as paying for baseball equipment, while the minor league affiliates generally have covered travel and other ballpark expenses. The cost for salary and insurance work out to an average of $400,000 per year for the average minor league team, industry sources said.
MLB teams have managed affiliate contracts with each of their minor league partners, from rookie ball up to Triple-A, in agreements that are subject to renewal every two or four years. The system results in some odd pairings, such as the Washington Nationals and their Triple-A team, which is 2,300 miles away in Fresno, California.
Currently, minor league teams pay out 8.5% of their ticket revenue — about $20 million total — with 8% going to Major League Baseball and 0.5% going to MiLB.
In the new plan, major league teams will get to pick their affiliates — four apiece, with discretion to cull the minor league clubs that play in substandard facilities or are simply inconveniently located.
An MLB source said large-market clubs initially balked at the plan because they can afford to have more affiliated teams and thus develop more talent. Several owners initially asked Manfred to consider 140 teams or at least take an incremental step toward 120. But as one MLB team executive said, “They’re all on board now because of the pandemic; we’re lucky if there’s 120 teams left standing.”
As far as revenue, the new plan calls for minor league teams to pay the same 8.5% — all to MLB.
Minor league affiliates will be given licenses, but if the major league club decides it doesn’t like the way a team is doing things or wants better facilities, it can negotiate with another club when the license expires, according to the plan.
The expectation is that the minor leagues will become more like the NBA’s G League, which is owned and operated by the NBA, although a few franchises are owned independently. In that sense, MLB’s plan fits into what Manfred has called his “One Baseball” vision since taking office five years ago.
When talks on a new agreement began late last summer, many minor league owners had no idea that MLB wanted to reduce the number of affiliated teams. The New York Times reported the plan in October, followed in November by a list of the 42 teams to lose affiliation. O’Conner criticized the league’s plans publicly, and MLB officials were furious that he, in their view, broke ranks by going public.
In a letter to O’Conner in January, deputy commissioner Dan Halem wrote, “I want to state, once again, that MiLB and you personally are doing significant damage to your relationship with the 30 Clubs by attacking MLB publicly and in the political realm.”
As O’Conner reshuffled his negotiating team several times in the past month, a number of owners reached out directly to MLB and said that he did not represent their interests, MLB and MiLB sources told ESPN.
“From my perspective, the disorganization that this reflects is just unbelievable,” a veteran minor league owner said. “If you’re a minor league owner, you have to recognize this has to be worked out internally and there has to be a unified approach.”
The negotiating committee changes sent an unmistakable message, the owner said: “Minor League Baseball leadership doesn’t know what the f— it’s doing.”
But not all owners are so critical of O’Conner.
“After 40 years of having a feeling going one way and not realizing it was changing, I think he got caught,” said Katofsky, the Orem Owlz owner. “Do I hate him? Of course not. Am I disappointed? Yeah, of course, because it has a real effect on me and my friends and partners.
“A lot of people think it’s all Pat’s fault because they’ve got to blame someone. If this all goes to s—, I’m not going to make Pat the scapegoat.”
THE CONTRACTION LIST has changed since it was published last year, MLB sources told ESPN, with some teams coming off and others added. The original plan for getting 160 teams down to 120 called for adding two currently unaffiliated clubs, the St. Paul Saints in Minnesota and the Sugar Land Skeeters in Texas, which is why 42 teams were losing affiliation. And what was 42 teams last year might become 43, as a third unaffiliated team, the Somerset Patriots in New Jersey, is being considered as a potential New York Yankees affiliate.
MLB sources said the new list hasn’t been finalized, and minor league owners said they don’t expect to see it until the last minute. “They won’t make same mistake twice,” one team owner said. “There are probably 130 owners who are convinced their teams aren’t going to be contracted, and 10 of them are going to be very surprised.”
MLB rejects the term “contracted” as it doesn’t control whether the teams stay in business. Teams that lose affiliation will have three options: They can become independent professional teams; they can replace the MiLB players with college amateurs; or they can fold. MLB argues that the teams can still be viable because fans in towns with rookie or short-season Class A baseball go to the ballpark for the experience, not the players.
“Same schedule, same tickets, same age and quality of play,” an MLB official told ESPN. “Literally nothing changes. Instead of low-level minor league players, it’s guys that go to Vanderbilt, etc.”
When Manfred addressed the 120-team plan to the media last year, he said there would still be “professional” baseball in those communities losing affiliated teams. MLB has since added plans to create and operate several summer amateur leagues, similar to the fabled Cape Cod Baseball League, where college players use wood bats. And because they’re college players, no one has to pay them. USA Baseball, which governs amateur play, would help identify potential players.
Several minor league owners interviewed by ESPN said it’s an unacceptable alternative. They said fans — and local leaders who chipped in to build multimillion-dollar stadiums — come to see professionals, not amateurs.
“The people at MLB who say that just don’t know what they’re talking about,” a prominent minor league owner said. “Ninety-five percent play in ballparks that were publicly funded to the tune of $20 [million] to $25 million per ballpark, and they never would’ve built them for amateur, college ball.
“The commissioner’s office either doesn’t understand or is trying to pull the wool over people’s eyes.”
When Democratic Rep. Lori Trahan of Massachusetts learned that the Lowell Spinners, a Red Sox affiliate, were on the list to lose affiliation, she and several other lawmakers created the Save Minor League Baseball congressional task force. She said affiliation with a major league club is crucial.
“When I think about the Spinners coming to Lowell a quarter century ago, it transformed the city,” Trahan told ESPN. “So many of the families who live in a city like Lowell and the surrounding towns, they can’t afford a night of baseball at Fenway Park. But what really draws the fans there is the opportunity to see the next Mookie Betts or Jackie Bradley Jr. play in their hometown. … The Red Sox affiliation is as important as the Spinners itself.”
Heller, who owns the Spinners, said he doesn’t buy that fans couldn’t tell the difference.
“If anyone believes that it would be the same type of relationship if future Red Sox stars were replaced with generic college players, they’re wrong,” Heller said. “It would not be. Not by a long shot.”
An MLB official told ESPN the league will pay required franchise fees for teams that choose to join independent leagues such as the Atlantic League or the American Association.
Some minor league owners also have accused MLB of reducing the value of their teams so major league clubs can buy them at a cut rate. Several owners said that given the present uncertainties, their teams are impossible to sell.
“Ask yourself a question: What do you think a minor league team is worth right now?” said Baggott, of the Ogden Raptors. “Is there a market right now? They’re not worth a penny right now.”
Tommy George, president of the Sports Advisory Group, a consulting firm that helps clients buy and sell sports franchises, said that under normal circumstances, minor league clubs are worth from $10 million to $50 million. But the uncertainty of MiLB’s relationship with MLB and the pandemic have frozen the market.
“No one can make a decision until a decision is made,” George said. “Major League Baseball may have lucked out in this circumstance. I had heard as late as January or February maybe there was some sort of middle ground, and now I think MLB is kind of saying, well, you tell us who is left standing.”
MLB officials reject the assertion that there’s any motive to drive down franchise values. The changes are all about efficiency, they said.
“If you go to the worst of humanity and say, ‘Why would someone want to do all this?’ It would really be to steal your lunch money. It would be to drive people out of business and be able to come in at a less than market rate,” one MLB team executive said. “And if you go to the best of intentions, which, as a fair-minded person, I actually believe there could be best of intentions here … Major League Baseball sees a way to make this better, to make it where it’s cheaper.”
MLB’s PLAN DREW the attention of lawmakers who remember the lobbying effort on the Save America’s Pastime Act just two years ago.
Ted Tornow, general manager of Iowa’s community-owned Clinton LumberKings, who stand to lose their Class A affiliation with the Miami Marlins, said lawmakers “are putting two plus two together and they figured out what happened. In retrospect, MLB played the Senate like a string quartet.”
An MLB official told ESPN the idea that league officials somehow betrayed minor league owners is “overstated.” The point of the legislation, the official said, was to relieve minor league teams from having to keep track of how many hours a week players work.
Capito was among legislators — including Republican Sen. Chuck Grassley of Iowa and Schumer, the Democratic senator from New York — who asked deputy MLB commissioner Halem for help on behalf of minor league teams in their states.
“We haven’t seen any results from it, but he didn’t just shut the door in my face,” Capito said. “We’re trying to put political pressure as much as we can, realizing it’s a financial decision. And so I’m pretty discouraged right now, to be honest with you.”
Any pressure lawmakers could bring is rooted in MLB’s federal antitrust exemption, which allows it to run the minor leagues and control minor league players the way it wants. The MLB official who spoke to ESPN on the condition of anonymity conceded that the Save America’s Pastime Act that MiLB owners lobbied for had the effect of reaffirming congressional support of the antitrust exemption.
“It definitely protects Major League Baseball from a potential lawsuit from the minor league owners, especially those who are being snuffed out, so to speak,” said Nathaniel Grow, an associate professor of business law and ethics at Indiana University’s Kelley School of Business.
When Congress has wanted something from MLB — like ending the 1994 strike and creating a policy on performance-enhancing drugs in 2005 — it has threatened the exemption.
“I think Congress has a duty to ask questions about, ‘You are protected from antitrust; don’t you think this [minor league reorganization] makes us question that?'” Republican Rep. Morgan Griffith of Virginia told ESPN. “I don’t know that there’s a move to get rid of [the exemption], but … we are hopeful that we would be able to have a hearing and bring some of these issues out to the American public to talk about it.”
Democratic Sen. Jon Tester of Montana told ESPN that minor league baseball is crucial to Montana, which not only doesn’t have a major league team, it doesn’t even border a state that does. Montana stands to lose all three of its teams.
“The antitrust exemption has flowed through my head about possibly taking that away from them,” Tester said. “If they don’t want to play with us, I’m not sure we need to play with them. … In the end, this is about doing what’s right by rural America.
Four teams on the original cut list are in New York, including the Binghamton Rumble Ponies, currently the Mets’ Double-A affiliate. Owner John Hughes said he felt helpless when he learned his team would be replaced by the Brooklyn Cyclones, the Mets’ current Rookie League team. That team would be operated by the Mets’ chief operating officer and owner, Jeff Wilpon, whose family is selling the major league team. The Mets declined comment.
Democratic Rep. Anthony Brindisi of New York invited Halem to tour Binghamton’s ballpark and talk about how the town could improve the facilities. Brindisi said $7.5 million in public money has been put into the stadium since 2017, and Hughes has invested another $2.5 million.
“Congress has been quite good to Major League Baseball, and I want to work with them to try and do what we can to keep clubs like Binghamton where they are right now,” Brindisi told ESPN.
Brindisi said he wasn’t ready to threaten MLB’s antitrust exemption and that he sees himself as a bridge between the area and the powers that will ultimately decide the Rumble Ponies’ fate.
“I don’t think anyone’s looking to lay the hammer down on Major League Baseball,” he said. “I think that the best thing we can do is just continue the talks at this point.”
Schumer said he told MLB “that they have a responsibility here.”
“They can’t just pick up and walk away,” Schumer said. “And I think they’re understanding that. … Other towns across the country and have gathered together and talked to their senators. So I’m hopeful that we can get this done.”
That might be good news for Hughes and the Rumble Ponies, but it just means that another team that didn’t know it was losing its affiliation will be getting bad news at some point.
Capito said she doesn’t see Congress taking action on the antitrust exemption against MLB, which, as an organization, donated $267,000 to federal political campaigns in the most recent election cycle.
“I just don’t think there’s a groundswell of support for that,” she said.
BECAUSE OF THE economic effects of COVID-19 — a source said 122 of MiLB’s 160 teams received federal Paycheck Protection Program loan assistance — Minor League Baseball at one point proposed extending the current agreement for another year.
Executives for MiLB teams said they’re still calculating what the lost 2020 season will do to them. Short-season teams, which begin play in June, hadn’t laid out cash for materials and food when sports shut down in March. But full-season teams had already stocked up, and they sold season and group-ticket packages that had to be refunded.
“We may be the only industry in the country that goes 19 months without operating its core business,” said Chuck Greenberg, a former major league executive who owns three minor league teams. “That’s an extraordinary position to be in.”
But MLB officials told ESPN that the coronavirus pandemic also has affected them and that they are not inclined to extend the current agreement as is.
“We’re ready to move forward,” an MLB official said. “This has been a long time coming.”