Raw Story: Covid19 Destruction of the Minor Leagues.

[weams]

 

[weams]

Bill Madden New York Daily News 

 

 

[tntoriole]

Sadly, I agree.  The way minor league teams are currently operated, the margin for survival is very narrow.  I would not be surprised if many teams and parks collapsed over the next year or two.   And MLB may have to build a totally new training system for its own prospects that comes out of team pockets almost completely.  

[scOtt]

2 hours ago, tntoriole said:

Sadly, I agree.  The way minor league teams are currently operated, the margin for survival is very narrow.  I would not be surprised if many teams and parks collapsed over the next year or two.   And MLB may have to build a totally new training system for its own prospects that comes out of team pockets almost completely.  

Rob Manfred rolling his hands in his secret lair...

"FINALLY my evil plans are coming to fruition!"

[atomic]

7 hours ago, tntoriole said:

Sadly, I agree.  The way minor league teams are currently operated, the margin for survival is very narrow.  I would not be surprised if many teams and parks collapsed over the next year or two.   And MLB may have to build a totally new training system for its own prospects that comes out of team pockets almost completely.  

If a team goes bankrupt someone can buy them and carry on.  I don’t see why it is hard to make money. Doesn’t major league pay the player salaries which amounts to nothing.

 

[Redskins Rick]

13 hours ago, tntoriole said:

Sadly, I agree.  The way minor league teams are currently operated, the margin for survival is very narrow.  I would not be surprised if many teams and parks collapsed over the next year or two.   And MLB may have to build a totally new training system for its own prospects that comes out of team pockets almost completely.  

I think MIL was and has been in trouble for some time now, slowly sinking. The Pandemic just gave it a strong push towards a quicker demise as we used to know.

MIL wont go away totally. IMO

I know many clowns will disagree with me. 

There is enough money in MLB, so that everybody can survive and prosper. But, the greedy dont like to share.

[Frobby]

7 hours ago, atomic said:

If a team goes bankrupt someone can buy them and carry on.  I don’t see why it is hard to make money. Doesn’t major league pay the player salaries which amounts to nothing.

 

I can’t speak to how much money they make in normal times.    I do think a lot of MiL teams may go bankrupt.   But going bankrupt and going out of business are two different things.  If revenue levels return to normal at some point, it should be possible to reorganize or sell the teams.   The question is, will revenue return to normal?

[Mr. Chewbacca Jr.]

28 minutes ago, Frobby said:

I can’t speak to how much money they make in normal times.    I do think a lot of MiL teams may go bankrupt.   But going bankrupt and going out of business are two different things.  If revenue levels return to normal at some point, it should be possible to reorganize or sell the teams.   The question is, will revenue return to normal?

I agree. The next few years will be difficult for minor league teams, but if investors see a bankrupt business that still has value - they'll buy it to turn it around or do something with its assets.

[DrungoHazewood]

8 hours ago, atomic said:

If a team goes bankrupt someone can buy them and carry on.  I don’t see why it is hard to make money. Doesn’t major league pay the player salaries which amounts to nothing.

 

It appears that MLB is intending on having fewer and fewer affiliated teams that are subsidized by not having to pay salaries. I doubt the current plan of eliminating 40 teams is the end goal.

Without MLB paying salaries there are fewer markets that can support a team.  If localities didn't provide free stadiums the number would be vanishingly small.  Regency Furniture Stadium in Waldorf cost $25M, if the locality didn't pay for it the Blue Crabs wouldn't exist.  Many localities wouldn't pay $25M for an indy league team.

I fear that minor league baseball as a stand-alone business doesn't work in most cases.  They heavily rely on taxpayer-funded stadiums and MLB-funded salaries.  As MLB draws down the number of affiliates it's going to be awfully tough for a lot markets.

[Redskins Rick]

1 hour ago, Frobby said:

I can’t speak to how much money they make in normal times.    I do think a lot of MiL teams may go bankrupt.   But going bankrupt and going out of business are two different things.  If revenue levels return to normal at some point, it should be possible to reorganize or sell the teams.   The question is, will revenue return to normal?

some of the teams do a really good job of making money, and on the other hand, the low end of the mil franchises are good at spending money and not making a profit.

 

Feast for famine.

 

 

[DrungoHazewood]

1 hour ago, Frobby said:

I can’t speak to how much money they make in normal times.

I'd like to know.  Some back-of-the-napkin guesses:

- The Blue Crabs drew 200k fans last year.  If they got $15 in revenues per head, that's $3M in revenues.  
- If they have 20 employees that average $30k each that's $600k
- 25 players times six months times $1500 = $225k in player salaries
- 60 hotel days times $125 a room times 12 rooms (everyone doubles up) = $90k
- If the bus is rented at $5000 per trip, 20 road trips = $100k
- Stadium rent?  Facility maintenance?  Player equipment?
- Fees to the league for umps, league salaries?
- Costs for promotions?
- Revenues from stadium advertising?
- Costs for insurance?
- I'll assume most minor league teams have near zero media revenues.

I'm sure some of that is off and I've missed some things.

So I guess it's plausible that they make a decent profit of several hundred grand a year.  But the margins can't be big.  And certainly this year the revenues are near zero, while at least some of the expenses continue.

[Redskins Rick]

41 minutes ago, DrungoHazewood said:

I'd like to know.  Some back-of-the-napkin guesses:
So I guess it's plausible that they make a decent profit of several hundred grand a year.  But the margins can't be big.  And certainly this year the revenues are near zero, while at least some of the expenses continue.

 

2 hours ago, Frobby said:

I can’t speak to how much money they make in normal times.    I do think a lot of MiL teams may go bankrupt.   But going bankrupt and going out of business are two different things.  If revenue levels return to normal at some point, it should be possible to reorganize or sell the teams.   The question is, will revenue return to normal?

Granted from 2016, but I think it shows a big comparison between the haves and some of the have nots.

I have no clue if these figures are correct, but just for discussion sake.

Some teams have no problem making money in MLB.

https://www.thesportsadvisorygroup.com/resource-library/business-of-sports/minor-league-baseballs-valuable-teams/

[atomic]

1 hour ago, DrungoHazewood said:

I'd like to know.  Some back-of-the-napkin guesses:

- The Blue Crabs drew 200k fans last year.  If they got $15 in revenues per head, that's $3M in revenues.  
- If they have 20 employees that average $30k each that's $600k
- 25 players times six months times $1500 = $225k in player salaries
- 60 hotel days times $125 a room times 12 rooms (everyone doubles up) = $90k
- If the bus is rented at $5000 per trip, 20 road trips = $100k
- Stadium rent?  Facility maintenance?  Player equipment?
- Fees to the league for umps, league salaries?
- Costs for promotions?
- Revenues from stadium advertising?
- Costs for insurance?
- I'll assume most minor league teams have near zero media revenues.

I'm sure some of that is off and I've missed some things.

So I guess it's plausible that they make a decent profit of several hundred grand a year.  But the margins can't be big.  And certainly this year the revenues are near zero, while at least some of the expenses continue.

I am sure they don’t pay $100k a year in bus rentals. And I am sure they are paying 125 dollars for hotel rooms. They play mostly in smaller towns and get good deals for renting out a bunch of rooms. Player salaries payed by mlb.  

[atomic]

3 hours ago, Frobby said:

I can’t speak to how much money they make in normal times.    I do think a lot of MiL teams may go bankrupt.   But going bankrupt and going out of business are two different things.  If revenue levels return to normal at some point, it should be possible to reorganize or sell the teams.   The question is, will revenue return to normal?

MLB has incentive to have minor league teams survive.  What is minimum number of levels teams need? Could they survive with 3 levels. Even if MLB kicked a million a year to help the teams it wouldn’t amount to much for them. I don’t see the survival as a problem. Look at Oriole attendance figures in the early 70s. Those years were abysmal and they survived. Just pay MLB players less money.  It’s not like star players will stop playing if they get 12 million a year instead of 30.  Baseball and minor leagues will survive. 

[DrungoHazewood]

14 minutes ago, atomic said:

I am sure they don’t pay $100k a year in bus rentals. And I am sure they are paying 125 dollars for hotel rooms. They play mostly in smaller towns and get good deals for renting out a bunch of rooms. Player salaries payed by mlb.  

Like I said, my assumptions aren't your assumptions neither of which may not be the ground truth.  Salaries are paid by MLB, unless you're an indy league team like the Blue Crabs I was talking about.

It is interesting in the link Rick provided that even the AAA teams that draw almost 10k a game and have higher ticket prices only have operating profits of a few $million a year.  Most indy league teams have to be operating on a shoestring.