NRPLUS MEMBER ARTICLE
Most sports fans would be willing to make just about any concession if it meant that their favorite sports could return to action. But there are reasons for baseball fans to be wary of the apparent agreement, between Major League Baseball (MLB) and its minor-league affiliates, on a Professional Baseball Agreement (PBA) that would nix up to 42 minor-league clubs from the 160 affiliate teams that Minor League Baseball (MiLB) currently comprises.

While MiLB officials initially resisted the proposed contraction — which I detailed here back in December — Baseball America’s J. J. Cooper reported that they were reconsidering the proposal in the wake of the coronavirus pandemic. Cooper, who cited anonymous sources in his report, claimed that “multiple sources with knowledge of the negotiations say MiLB will indicate that it agrees to 120 affiliated teams in a new PBA” and that the two sides had “already found common ground on a number of the major outstanding issues that MLB deputy commissioner Dan Halem laid out publicly in a letter to members of Congress last November.”

Negotiations continued yesterday via teleconference, and no substantive details were made public. But after Cooper’s report got significant play in the mainstream sports press, MiLB released a statement Tuesday in anticipation of the negotiations, denying the substance of the report. That statement read:

Recent articles on the negotiations between MiLB and Major League Baseball (MLB) are largely inaccurate. There have been no agreements on contraction or any other issues. MiLB looks forward to continuing the good faith negotiations with MLB tomorrow as we work toward an agreement that best ensures the future of professional baseball throughout the United States and Canada.

Baseball fans should hope they are telling the truth. The proposal from MLB is flawed to its core, and threatens to undermine the local character of the sport, all in the pursuit of dubious short-term gains.

None of the defenses of MLB’s proposal holds water. First, the league argues that enhanced analytical techniques and predictive modeling reduce the need for “performance laboratories” for young prospects. Since data-driven scouting has proven a better means of selecting high-school and collegiate prospects than the “eyeball test” alone, and since MLB scouts have a better knowledge of predictive analytics than was even conceivable three decades ago, the league argues that fewer Single-A and rookie-ball teams are required to gauge talent at the introductory levels of the game.

This argument makes intuitive sense but fails in a few ways. It first assumes that the only purpose — or the preeminent purpose — of low-level baseball is to separate the proverbial wheat from the chaff. While this is one of the functions of low-level affiliates, an arguably more important one is the development opportunity it offers for young players in a transition phase between collegiate baseball and the professional game. The impact that these entry-level programs have on player development have upstream benefits for the quality of play at the MLB level. The quantitative effect of those investments on later performance are unknowable, unless and until some of these programs are taken away.

Arguably more important to the game of baseball, however, are the dividends that these affiliate programs pay in terms of fandom at the local level. Baseball’s fandom is more “localized” than any other major professional sport in America. (Online-search results for the NFL’s Atlanta Falcons, for instance, are widely distributed over much of the South and Midwest, while those for the MLB’s Atlanta Braves are concentrated in and near Georgia and the Atlanta metro area.) Many of the 42 minor-league teams initially cited as possible casualties of MLB Commissioner Rob Manfred’s proposal are located in small towns and smaller metro areas, often enjoying significant patronage among local fan bases, which — and this is no small fact — have in many cases paid for stadiums with their tax dollars. Scrapping these small-market teams, which inculcate a love for the game of baseball on a local level, figures to have a non-negligible upstream effect on interest in professional baseball.

Twenty-four teams (or 35% of respondents) said they were seriously concerned that lost revenue from this season would impact their ability to operate next season or in future years, ranking their level of worry at seven out of 10 or higher. Twelve of the clubs—including two of the 16 Triple A teams that replied and five of the 13 from Double A—said they were “extremely concerned” about their ability to continue operating in the future: a 10 out of 10.

Teams were even more bearish about their fellow organizations’ prospects: 48 teams (74% of respondents) thought lost revenue would significantly impact other clubs’ abilities to operate in the future, answering with a seven or higher. Of those teams, 26 put their concern at a 10.

Even as taxpayers help to keep teams afloat, several minor league affiliates reported that their MLB teams seem unconcerned about their plight during the COVID-19 crisis. Though MLB clubs are not allowed, by rule, to directly pump funds into their affiliates, several minor league executives chafed at not having received so much as a check-in phone call.

The frostiness comes amid months of tense back-and-forth between MLB and the minors over the Professional Baseball Agreement, which governs their relationship. Last extended in 2011, the deal expires this September and, as part of the negotiations, MLB is seeking to save costs by eliminating more than a quarter of affiliated teams by next season while pushing for other significant changes to its minor league partnership.

For those organizations that survive the massive restructuring, minor league executives said, congressional action might be needed to keep teams alive beyond the pandemic. Without extensive financial help, they added, clubs might be forced to shut down or declare for bankruptcy protection. Teams that have served for decades as community bedrocks—while providing an affordable way to have a night out at the ballpark—could disappear in an instant.

“If anyone is telling you they’re not concerned about their survival, then that organization is lying,” says David Lozinak, the chief operating officer for the Altoona (Pa.) Curve, the Double A Pirates affiliate. “No one has the extra $2 million, $3 million, $4 million in their bank account.”

“If enacted, it would undermine the health of the minor league system that undergirds talent development and encourages fan loyalty,” the letter read. “It would particularly be felt in areas far from a major league team or where tickets to a major league game are cost-prohibitive.” The letter asked Major League Baseball to “strongly reconsider its proposed course” and ensure continuity of minor league baseball with Major League affiliations in their communities.

There is no doubt some amount of personal anger in the letter as well, as Congress has, quite recently, bent over backwards for Major League Baseball specifically so that it could maintain the minor leagues on the terms which MLB said was necessary to do so. Specifically, MLB successfully lobbied Congress to amend language in the Fair Labor Standards Act of 1938, classifying players as seasonal workers thus they are no longer entitled to minimum wage and overtime pay, among other protections. That put a lot of heat on Congress, but Congress came through and gave Rob Manfred what he wanted.

As such, this part of the letter seems like a threat:

The abandonment of Minor League clubs by Major League Baseball would devastate our communities, their bond purchasers, and other stakeholders affected by the potential loss of these clubs. We want you to fully understand the impact this could have not only on the communities we represent, but also on the long-term support that Congress has always afforded our national pastime on a wide variety of legislative initiatives.

For over a century, Congress has taken numerous actions specifically designed to protect, preserve, and sustain a system and structure for both Major and Minor League Baseball to flourish.

Congressional threats to baseball have, in the past, greatly altered the league’s behavior. It’ll be interesting to see if that happens again here.

Most recently, the action has centered on a request from a bipartisan group of legislators for the Government Accountability Office to evaluate the “social, economic, and historic contributions” of Minor League Baseball to American society. So far, the resolution has garnered over 20 bipartisan cosponsors, with debate mostly coming from conservatives who question the need for government intervention on the contraction issue. Today, the request passed the U.S. House of Representatives on a voice vote, with no opposition from Major League Baseball. The next step: a vote in the U.S. Senate.

Otherwise, it’s been mostly quiet on the contraction front, though talks have continued following a Feb. 20 meeting. The Congressional action comes at a time when various scenarios have been raised regarding the contraction of 40 MiLB teams after the 2020 season. (MLB also says they’re working from a different list of potentially contracted teams than was leaked last fall.) According to several industry sources, the number of teams slated for contraction had fluctuated between 30 and 40 teams, with MLB changing the lineup of teams to be eliminated. Also, at one time there was a discussion of Short Season A surviving in the form of a slimmed-down NY-Penn League, as well as the potential survival of the Rookie-level Pioneer League if enough MLB teams committed to affiliate deals with at least six teams. A three-year extension to the current PBA was also floated to give teams enough time to secure facility upgrades. (There seems to be no scenario where the Appalachian League survives, as MiLB has no leverage here: All Appy League clubs are owned by MLB teams, which are free to shut them down.) But in recent discussions MLB has retreated from the possibility of retaining short-season and rookie ball, albeit in a slimmed-down form, and suggested that contracted teams would be better off as summer-collegiate markets. (Indeed: what’s emerging is MLB’s eagerness to work with college and summer-collegiate programs on wider player-development strategies, as talk of a longer NCAA baseball season has popped up once again.)

In other words: We’re basically at the same point we were last fall when it was publicly revealed that MLB wanted to contract 42 MiLB teams; we’re now at 40. We’re also now at the point where both sides are digging in their heels, with external factors potentially impacting planning.

One such factor: continued political pressure from U.S. representatives and senators. U.S. Senator Chuck Schumer was part of a meeting in New York State designed to save the Binghamton Rumble Ponies (Class AA; Eastern League) that apparently succeeded. Meanwhile, MLB representatives have agreed to travel to Billings, Montana to meet with U.S. Senator Steve Daines and local representatives to discuss the future of all three Montana MiLB teams—the Billings Mustangs, Great Falls Voyagers and Missoula PaddleHeads—as well as the entire Pioneer League. As noted, the future of the Pioneer League has been in flux, and Daines and U.S. Rep. Greg Gianforte—both Montana Republicans—have signed on to the Congressional effort to prevent contraction, as has Montana’s other U.S. Senator, Democrat Jon Tester. While this may not be a huge factor in this meeting, there may be a little more pressure for Daines to deliver: as of today he has a formidable opponent in his quest for reelection in the form of Montana Gov. Steve Bullock. Politically, there’s no downside for Daines to pressure the New York fat cats into saving multiple Montana baseball teams and delivering jobs to the state.

The big unknown: how much political pressure can be developed. In the middle of MLB’s annus horribilis—fallout from a sign-stealing scandal, declining attendance, a looming battle for a new labor agreement with players, and now potential financial hits from a coronavirus outbreak—coming to some sort of agreement with MiLB, especially one minimizing the number of contracted teams and giving owners three years to secure facility upgrades—would be an incredibly cheap way for MLB to buy some sorely needed positive public relations.

MLB is firm on its demand for a 120-team farm system, with all of Rookie or Short-Season A leagues and most of those teams going away. Six of the eight Northwest League teams would survive in a Low-A West Coast league, and potentially four to six NY-Penn League teams would constitute part of a new Low-A league. Some teams at the High-A leagues would move a level down; some teams at the Low-A leagues would move a level up. The goal, say MLB negotiators, is to keep the best ballparks and the best geographic fits as part of their new minor-league vision.

MiLB negotiators, meanwhile, have proposed a one-year extension of the current PBA and the continued existence of the St. Petersburg MiLB offices, probably in a scaled-down form. But with the coronavirus pandemic closing down professional baseball indefinitely, there’s no doubt MiLB negotiators are in a weakened position. (Indeed, the coronavirus pandemic and the anticipation that it will take months if not years for the sport to economically recover is now cover for MLB to solidify its demands. At a time when many in America are anticipating changes in coming years, the coronavirus pandemic is providing political shelter for MLB to push for these extensive changes.) Insiders with direct knowledge of the proposals in both MLB and MiLB peg the survival of Minor League Baseball as an operating entity and its associated leagues at 50-50. MLB would perform the following acts:

Develop its own franchise system. This could include the likely inclusion of St. Paul (MN) and Sugar Land (TX) as Triple-A-level markets, the potential addition of a New Orleans team, and two or three current Triple-A markets demoted, including the previously identified Fresno Grizzlies (Class AAA; Pacific Coast League).
Allocate affiliates. MiLB teams would have no say over their parent teams. While you would see many existing relationships endure, you’ll never see a situation where the Washington Nationals are affiliated with a West Coast team.
Eliminate a layer of management between MLB teams and MiLB teams. League offices and league personnel would go away, overseen by coordinators at MLB headquarters. St. Pete would be replaced by Park Avenue. MLB did away with its two league offices as business entities after the 1999 season, and the sport does not appear to have suffered.
Play a larger role in MiLB business decisions. MLB teams would have more power to dictate terms to MiLB teams when it comes to facilities and operations. Don’t be surprised if MLB mandates every MiLB team adopt tickets.com technology, for instance, or demands to use MiLB customer data for their own marketing efforts. MLB teams would also be in a position to dictate ballpark improvements.
Coming up with 40 teams to contract is not subject yet to a final decision, but eliminating the Appalachian League and the Pioneer League accounts for 18 of the 40 teams. Another 10 teams would be eliminated from the NY-Penn League, as well as two from the Northwest League. That’s 30 right there, and finding 10 more in Class AA, High A and Low A would account for the rest. (The list of teams to be potentially contracted now differs slightly from the original contraction list proposed by MLB and is not final.) Unlike prior talks where the notion of buying out contracted teams and paying teams to move down and charge them to move up was under consideration, it doesn’t appear these financial moves are currently being considered. There has been talk of keeping the Rookie Appalachian League as a summer-collegiate league, though it’s not clear that would happen with the current model of MLB ownership. In short, the development work outside players drafted and signed in a future 20-round draft would be shifted to independent leagues and summer-collegiate leagues, who could potentially expand operations into a longer season.

One piece of data that may be somewhat of a softened blow: many in MLB, including negotiators, expect expansion to have sooner than later, potentially adding eight teams to the MLB affiliate mix in the future. There is a simple economic argument for expansion to happen. Without MLB at all this season, the sport stands to lose at least $4 billion in expected revenue in 2020, less if games are played in Florida and Arizona. Billions in expansion fees will help address that shortfall. And that gives eight contracted markets a shot at a new MiLB team: traditionally, an MiLB farm system begins play one year before the expansion MLB team debuts.