“We are all angels with only one wing, only when we come together can we fly.”Luciano de Crescenzo
The first twenty years of the new century has been marked by player performance scandals, high tech cheating, and a pandemic that introduced the term “crowdless games”.
But the most important development effecting the game since baseball ended the reserve clause is the recent decision by Major League Baseball (MLB) to institute a new policy of governance over all aspects of minor league operations and expanded partnerships within the baseball orbit.
In 2019, MLB shocked the baseball world by introducing a revolutionary initiative unofficially known as the “One Baseball Policy”.
The policy’s outline included an elaborate goal of reconstructing Minor League Baseball (MiLB) operations including contracting 43 existing markets (26%), replacing the Professional Baseball Agreement (PBA) with a Professional Developmental License (PDL), placing a cap on each organization’s farm system to 4 teams and limiting the total number of players to under 200 (past agreements with MiLB did not place a limit on teams or players).
One Baseball also included a plan to move pieces of player development to colleges by reducing its first-year player draft from 40 rounds to 20, as well as emphasizing stronger ties with independent professional and summer collegiate leagues. It even addressed new marketing opportunities with Little League Baseball.
In short, One Baseball signaled a “super nova” for the game and once implemented promised to solidify and expand MLB dominance.
One Step Forward, Two Steps Back
According to league and industry sources, One Baseball was a byproduct of increased costs, revenue and attendance declines, aging fan demographics, and new directives in player development using data analytics as primary drivers of the structural changes. But the potential contraction of 40 minor league cities hit a major nerve and dwarfed the other issues related to the policy.
As the One Baseball policy conversation expanded, MLB found itself embroiled in a public relations nightmare.
Growing alarm bells were sounded by minor league owners, officials, fans, and even normally friendly MLB media.
The chorus of displeasure eventually reached congressional leaders who used the moment to garner political currency in an election year. With Congress involved, the controversial policy debate heightened as official letters to MLB from Washington D.C. were fired off threatening to remove the coveted antitrust protection major league owners had enjoyed since 1922.
Major League Baseball’s “One Baseball” Policy Outline
- Reduces minor league affiliates 26% from 162 to 120 teams.
- Eliminates Rookie-level and short-season classifications.
- MiLB clubs share in the increased costs associated with higher player pay scales.
- Replaces the two-year Player Development Contract (PDC) process to a long-term 10-year Professional Developmental License (PDL) agreement.
- Upgraded minor league facility standards.
- Reshapes leagues to a better geographical configuration for travel.
- Agrees to new sponsorship and marketing deal that favors MLB.
- All data licensing under control of MLB.
- Increased minor league player salaries
In response, Dan Halem, the Deputy Commissioner of MLB penned a four-page letter to Congress defending minor league contraction amidst the growing criticism.
He detailed MLB’s $500 million subsidies it pays each year in minor league payrolls and insurances (mostly in signing bonuses to their own players), as well as the desire of MLB to reduce the number of players in the minors.
Apparently, the corporate lawyers at MLB view most of minor league players as game fodder for the better prospects. He noted that only 5% of players selected after the 25th round of the first-year player draft ever make it to the big league and the savings would in part afford better wages for the best prospects.
Less Is More
The league’s better pay for players response has been an issue since a 2014 class-action lawsuit brought by minor league players who brought to light the less than minimum wage (most earned less than $7,500 for a season) salaries they endure during their baseball odyssey.
Under the big league’s new policy, minor league salaries would increase anywhere from 38% to 72% depending on classification. In fact, rookie level pay would rise from $290 per week to $400.
Class A level players would see their compensation go from $290 to $500. Double A increases would be $350 to $600 while Triple A would reach $700 from $502. For the average major league parent organization this would translate to approximately $600k more in player payroll for all four of its affiliates.
While changes to minor league pay is long overdue, does MLB make an effective argument that its progressive move forward is good for the game considering the impact of contracting markets and player pools?
After all, MLB made over $10.7 billion in 2019 and the average franchise value of its 30 member clubs sits at $1.85 billion!
Of course, MLB has always been a business and has a right to incorporate cost-effective measures to better cultivate talent, but it seems they are short-sighted because in the quest to save and make new revenues they are disconnecting a lot of loyal fans and communities that have served to underpin the game.
So, how does MLB justify its strategy?
Take Me Out to the Ballgame
Halem’s letter went on to identify long-standing issues with minor league stadiums “that do not possess adequate training facilities, medical facilities, locker rooms and in some cases, playing fields“ as a primary driver behind contracting certain markets. But MLB never released its metrics for facility grades and when the league announced its list of 120 affiliate winners in December 2020, several losing markets did not fit the narrative painted by Halem.
For example, the Tri-City ValleyCats located in Troy, New York was one of the contracted franchises having been a part of the Short Season New York-Penn League for 18 years.
The ValleyCats had one of the highest attended markets (3rd) in the 14-team league and played in a facility widely receiving high marks in an area of over 1.1 million residents.
In an article nationally circulated on December 10th, 2020, Tri-City president, Rick Murphy told the Times Union, “It’s disappointing and surprising at the same time…I think operationally, we did everything you could expect. We hit all the metrics.“
It was the same for the Kentucky based Lexington Legends, one of the best drawing facilities in the South Atlantic League (Class-A) and the Kane County Cougars (Class-A) a perennial attendance winner for close to thirty years in the Chicago suburbs.
No Minor DNA
Looking closer at the heart of contraction, many of the 43 long-time affiliate markets not invited to continue with MLB have been key regional and economic tourist engines and stable tax revenue sources for municipalities. These teams have loyal fans and offer affordable and accessible family entertainment that will leave a void in these areas.
The real strength of minor league baseball has always been its unique DNA imprint on each community and the ability to add value to the quality of life.
It is not an understatement to say the game depends on audiences far from big league bright lights to survive.
General statements aside, consider the following real-life impact of cities being contracted.
In Grand Rapids, Michigan, the West Michigan Whitecaps (now the High A affiliate of the Detroit Tigers) estimated that $15 million was generated annually to the city’s economy. In Clinton, Iowa, the Clinton LumberKings received the news they would no longer be the Class A affiliate of the Miami Marlins. Clinton County estimated the economic impact of the LumberKings to be over $6.5 million annually in a letter the team released prior to not making the cut.
Moving further down the ledger, some reports noted the owners of the contracted teams were at risk of losing as high as 80% of equity. Prior to 2020, estimates of minor league valuations ranged from $5 million to over $50 million with an average MiLB franchise valuation of over $40 million in the top 20 markets.
While it is true the impacts of contraction on mid-America are great, it is important to note that minor league teams have changed cities 77 times in since 1990.
In fact, Halem went on record and bashed MiLB directly in correspondence to the league saying, “Given the track record of MiLB abandoning communities when it suits the owners’ economic interest, it is more than a bit ironic that you hold yourself out as the defender of local communities…” It’s as if MLB never received notice of any of the 77 moves since 1990 (as required by the PBA between the two organizations) because the big league never once said no to any relocation of a minor league franchise.
But let’s move beyond the acrimony and the mysterious ballpark guidelines to recognize a positive within the One Baseball policy.
NEXT: POSITIVES IN THE RESET