Untangling a Minor League Mess, Part I

In 2011, Major League and Minor League Baseball agreed to extend their current Professional Baseball Agreement (PBA) through the 2020 season. That agreement, which extended a prior agreement that wasn’t set to expire until 2014, maintained the status quo between the majors and the minors that most fans are familiar with today. There would continue to be over 160 affiliated minor league teams, with each team’s major league parent organization providing the players and the minor league clubs providing the facilities, travel, and fans. That agreement also included an increase in the ticket tax minor league teams pay to major league teams based on ticket revenue. That PBA is set to expire at the end of this season, and Major League Baseball wants to make drastic changes to the next agreement, changes that would dramatically reshape the minor leagues as we know them now.

The negotiations, which have thus far been quite ugly, first became public back in October when Baseball America revealed some details of MLB’s proposal (Baseball America, and JJ Cooper in particular, has done a great job covering the dispute); a later New York Times report confirmed the 42 teams set for contraction. Since then, the two sides have traded public missives, accusing each other of engaging in behavior that is not in the best interest of baseball.

Cumulatively, the changes proposed by MLB represent a move to gain power and consolidate control over the minor leagues. The MLB plan would move the amateur draft later in the year and decrease its number of rounds, get rid of short-season baseball, remove one-fifth of the independently owned full-season teams, take control of the Florida State League, and restructure existing leagues and reclassify some teams. The cumulative effect of these changes would be to diminish the power of MiLB relative to MLB and to potentially lower affiliate value for independently owned minor league franchises. With such sweeping and fundamental changes on the table, there’s a lot to sort through. But to get to the core of what’s at stake, it’s helpful to unpack one of the most significant changes under consideration: getting rid of short-season baseball.

To understand where Minor League and Major League Baseball come down on short-season ball, I will pose a few introductory questions and answer them based on my own understanding of the leagues’ respective positions before diving into the meat of the argument.

Should Short-Season Ball Exist?

MiLB: Yes.

MLB: Largely no, though there will be some use of spring training complexes for GCL and AZL squads, and some current short-season teams will be reclassified.

Who should pay for Short-Season Ball?

MiLB: Consistent with the current framework, minor league teams will pay for facilities, travel, and stadium and administrative staff, while major league teams will pay for player acquisition and payroll. Minor league teams will kick back around 5% of ticket sales.

MLB: Major league teams no longer wish to pay the players. They are willing to pay a small amount for some administrative costs.

Currently, 40 teams play short-season baseball across four leagues: New York-Penn, Appalachian, Pioneer, and Northwest. These leagues start in mid-June right after the draft and play until early September. The rosters are populated with recent draft picks and international players in their first few years in the States. Outside of highly drafted domestic players and top international signees, these leagues generally aren’t teeming with top prospects, but looking back at our 2016 Leaderboards for some perspective, we see future major leaguers or top prospects Taylor Trammell, Keibert Ruiz, Jazz Chisholm, Andrew Knizner, Vladimir Guerrero Jr., Alex Kirilloff, Nick Solak, Tommy Edman, and Nate Lowe scattered across short-season ball.

The position of MiLB and its franchises is fairly easy to articulate. They want to keep things as they have been for the last 30 years or so. Their PR pitch is also easily understandable. MiLB doesn’t want teams removed from the communities they currently call home because they are important to the fabric of the game in this country. As Ben Clemens and Meg Rowley demonstrated in November, the effect is clear and obvious. Many current and potential fans would lose access to live professional baseball under the plan.

Now, minor league owners are generally millionaires in their own right, and they have moved teams on occasion to extract better deals for themselves and to improve facilities, much like MLB has mandated. Their motives aren’t purely altruistic. They’ve also gotten public subsidies to make improvements in many ballparks, including in some of the cities that might lose their teams. (In some stadiums, the conditions probably do need improving, and in prior agreements, MLB and MiLB have negotiated exactly what standards need to be met.)

If we set aside the important issue of fans losing access to in-person baseball, most of the rest of the points above are either PR volleys or terms that are typically worked out as part of a negotiation. That doesn’t explain why MLB is proposing eliminating all these teams. While MLB’s contraction plan included just 28 of the 40 teams in the short-season leagues, the remaining proposal essentially restructures the rest of minor league baseball. That MLB’s plan is to reduce the system down to exactly 120 minor league teams with four per major league franchise (Triple-A, Double-A, Advanced A, and A) shows the main objective: cost-cutting. Major league teams would still have their Gulf-Coast and Arizona League teams, which play at team’s spring training complexes, to absorb some of the players currently in short-season ball, but most of those professional playing jobs would be eliminated.

MiLB has referred to MLB’s plan as a cost-saving one. Rob Manfred objected to that characterization at the winter meetings:

Q. Rob, mentioning the Minor League negotiations, cutting some of these teams might be a way to improve Minor League salaries. I’m wondering is there a better way to —

ROB MANFRED: I didn’t say what you said I said. I said those were issues that needed to be addressed and should be addressed in the negotiating room. And, you know, obviously there is a way to pay people more without reducing the number of franchises.

I think the question there becomes who should bear all of the costs associated with the player-related improvements that we think need to be made in the Minor League system.

When Manfred uses the term “obviously,” he seemingly means that the obvious way to pay players more is for minor league teams to contribute more than the $18 million in ticket taxes they currently pay (the cost of minor league pay is roughly $80 million). That every MLB team might contribute a few million more dollars to double the pay for minor leaguers is somehow less obvious to the Commissioner. The second part of Manfred’s statement makes clear that he believes minor league teams need to be doing more. The problem with that line of thought is that the proposed contraction solution doesn’t contribute to player-related pay increases unless it is a cost-saving solution to pay other minor leaguers more.

By contracting these teams (and their payrolls of roughly $300,000 to $400,000), major league teams save somewhere in the neighborhood of $16 million. Because the contracted teams tend to have lower attendance and lower ticket prices (although the contracted teams make up 25% of the number of teams, they make up closer to 10% of attendance), the $18 million ticket kickback wouldn’t be affected much. Even if the rookie-league savings are used to give the remaining minor leaguers a 25% raise, removing the short-season teams is still a cost-saving measure.

Now, just because contraction is a cost-saving measure doesn’t mean that major league teams might not have a more efficient way to help train players to make the big leagues. In the next piece, we’ll look at the stated objectives of MLB’s plan — efficiency among them — how the potential result leaves MLB with increasing control and power of the minor leagues, and whether they are goals worth striving for.