Raw Story: Covid19 Destruction of the Minor Leagues.

[weams]

4 hours 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.

There can’t be any media revenue. Good thoughts here. 

[Redskins Rick]

15 hours ago, weams said:

There can’t be any media revenue. Good thoughts here. 

Maryland Baseball Holding LLC owns the Keys, Shorebirds, Baysox and Tides.

I think they also own the Keys and Baysox stadiums.

 

[OsEatAlEast]

Best case scenario for a lot of these teams is for some big backers with some vision come along and create their own league. They would probably have to relocate some of the teams that signed on to larger cities. That would be quite some doing and with the operating costs it would most likely be not worth it to most people. One can hope though!

[DrungoHazewood]

2 hours ago, OsEatAlEast said:

Best case scenario for a lot of these teams is for some big backers with some vision come along and create their own league. They would probably have to relocate some of the teams that signed on to larger cities. That would be quite some doing and with the operating costs it would most likely be not worth it to most people. One can hope though!

Drungo's dream scenario:

1. MLB aggressively contracts the minors to save cash.  Eventually abandoning some fairly large markets that are now AAA or AA cities.

2. Some rich guys start a fairly high level independent league, moving into these abandoned cities and stadiums.  They're able to cut pretty good deals since the stadiums sat unused for a while. They have some key rules differences to address game pace, lack of contact, emphasize athleticism, etc.

3. Some older major leaguers and mid-career AAAA guys jump to the new league, kind of like going to Japan or Korea just closer to home.  A handful of MLB draftees unhappy with their offers also jump.  A few of the teams with big benefactors lead the charge.  Which helps grow attendance. 

4. MLB has a strike/lockout.

5. A substantial number of free agents sign with the indy league due to the lockout.  Maybe even a handful of pre-free agency players jump, too.

6. The new league puts expansion teams in places like Brooklyn, Providence, Montreal, and makes moves towards becoming a 3rd (okay, MLB is just one league, so 2nd) major league.

7. MLB is forced to make reforms and changes that only real competition can drive.

[tntoriole]

On 5/11/2020 at 10:25 AM, DrungoHazewood said:

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.

The structure of minor league baseball or the "farm system" invented by Branch Rickey has been essentially the same structure since the 1950s...it is an antiquated model that I believe many MLB owners would love to kill off and then substitute an academy model or a training model that they directly control rather than all these quasi independent local/governmental businesses that I am sure are a collective pain to try to coordinate the development of prospects with (which is the major leagues ONLY concern- affiliates do very little for major league brand recognition or building major league brand loyalty even....it is the development of prospects that is the only reason MLB puts up with the current structure and if the pandemic gives a legitimate cover, they will let it all die off and rebuild their own much less expensive and much more controllable training system)....just an opinion. 

[drjohnnyfeva]

12 hours ago, Redskins Rick said:

Maryland Baseball Holding LLC owns the Keys, Shorebirds, Baysox and Tides.

I think they also own the Keys and Baysox stadiums.

 

It's not like MiLB is a cheap investment anymore that might return a large profit if run correctly and appeals to the small town and MLB enthusiast markets anymore.  The successful MiLB teams, and the ones that probably sidestep some or most of this crisis, are the ones that are either owned by a LLC of many investors like the one Redskins Rick highlights in the Maryland Baseball Holdings LLC, or the guy(s) who see running a baseball team as a way to make the same money they might as a corporate what-have-you, but having more fun.

I hope they make it.  For me, I look at them, mostly, as small business owners, and hope they have enough in the tank to get get thru this and stay solvent and maybe even pay some of those employees Drungo has discussed.

[Redskins Rick]

11 hours ago, drjohnnyfeva said:

It's not like MiLB is a cheap investment anymore that might return a large profit if run correctly and appeals to the small town and MLB enthusiast markets anymore.  The successful MiLB teams, and the ones that probably sidestep some or most of this crisis, are the ones that are either owned by a LLC of many investors like the one Redskins Rick highlights in the Maryland Baseball Holdings LLC, or the guy(s) who see running a baseball team as a way to make the same money they might as a corporate what-have-you, but having more fun.

I hope they make it.  For me, I look at them, mostly, as small business owners, and hope they have enough in the tank to get get thru this and stay solvent and maybe even pay some of those employees Drungo has discussed.

I suspect even some of the smaller profit teams are protected by an LLC, just in case the guy or gal loses their team due to money or lawsuits, etc, their personal home and assets are typically safe, unless you owe the IRS.

[glenn__davis]

I realize there are MUCH MUCH more important things going on.  But man, the loss of the minor league season this year is such a killjoy.  For the Orioles right now I'd much prefer to be able to follow the minors than try to piece together a MLB season.  

[DrungoHazewood]

In 1950 there were about 65 US-based professional baseball leagues.  Over 500 teams.

In 1965 there were about 20 leagues and about 150 teams.  Over 2/3rds of all minor league teams disappeared in 15 years.  So much for the Golden Age of Baseball.

There has been some growth in the last 50 years.  Now there's six indy leagues, and the affiliated leagues have grown in conjunction with MLB expansion.  But we're nowhere near the post-WWII peak.

I don't think the coming years will result in a 2/3rds decline in minor leagues, but I'm not 100% confident in that.

 

[Redskins Rick]

43 minutes ago, glenn__davis said:

I realize there are MUCH MUCH more important things going on.  But man, the loss of the minor league season this year is such a killjoy.  For the Orioles right now I'd much prefer to be able to follow the minors than try to piece together a MLB season.  

It sucks.

We didnt have sport years during WW-2. I wasnt around then, but @Tony-OH was. LMBO

Ask him to tell us stories. 

[Number5]

4 minutes ago, DrungoHazewood said:

In 1950 there were about 65 US-based professional baseball leagues.  Over 500 teams.

In 1965 there were about 20 leagues and about 150 teams.  Over 2/3rds of all minor league teams disappeared in 15 years.  So much for the Golden Age of Baseball.

There has been some growth in the last 50 years.  Now there's six indy leagues, and the affiliated leagues have grown in conjunction with MLB expansion.  But we're nowhere near the post-WWII peak.

I don't think the coming years will result in a 2/3rds decline in minor leagues, but I'm not 100% confident in that.

 

Television.  And not just televised baseball games.  Having free entertainment every evening in their living room greatly reduced the desire/need for Mr. and Mrs. Small Town America to take the kids out to watch Class C baseball and feed them hot dogs.

[DrungoHazewood]

1 hour ago, Number5 said:

Television.  And not just televised baseball games.  Having free entertainment every evening in their living room greatly reduced the desire/need for Mr. and Mrs. Small Town America to take the kids out to watch Class C baseball and feed them hot dogs.

Yes, that was a big part of it.  It's funny to think of now, but baseball originally considered TV to be an existential threat to its existence.  Now they make as much money or more off TV than in-stadium revenues.  And they draw a lot more fans to the stadium than they did in the 50s and prior.

[Redskins Rick]

18 hours ago, DrungoHazewood said:

Yes, that was a big part of it.  It's funny to think of now, but baseball originally considered TV to be an existential threat to its existence.  Now they make as much money or more off TV than in-stadium revenues.  And they draw a lot more fans to the stadium than they did in the 50s and prior.

To be honest, I think its more about where the world has changed financially. They didn't have much discretionary money for entertainment.

The ones that had the money, were afraid to spend it, remembering how they or their parents lost everything when the stock market crashed.

I was raised by a pretty successful moderate high middle class on a very good Government GS grade scale.

We ate out, once a month at McDonalds, if we was lucky.

We ate out at sit down restaurants when we travel on vacation to see our grandparents.

Look at the demographics, the avg MLB fan are not youngsters, they grew up loving the game before cable.

[DrungoHazewood]

36 minutes ago, Redskins Rick said:

To be honest, I think its more about where the world has changed financially. They didn't have much discretionary money for entertainment.

The ones that had the money, were afraid to spend it, remembering how they or their parents lost everything when the stock market crashed.

I was raised by a pretty successful moderate high middle class on a very good Government GS grade scale.

We ate out, once a month at McDonalds, if we was lucky.

We ate out at sit down restaurants when we travel on vacation to see our grandparents.

Look at the demographics, the avg MLB fan are not youngsters, they grew up loving the game before cable.

There are a lot of factors.  In the 1950s clearly TV had a huge impact.  The 1948 Indians drew 2.6 million fans, which was the record for decades.  Cleveland was still a fairly large industrial city (about 900k people, 7th in the US), prior to the rust belt, but it wasn't some kind of high-income metropolis.  In 1958 they drew 660k fans.  The Yankees' attendance fell by almost half in that same period.  The '55 Senators drew 425,000 fans, or 5500 a game.  That's less than the Hartford Yard Goats* drew last year.

Transportation was different, cars less reliable, efficient, and fewer of them per household.  People were fleeing cities for the suburbs in the 50s.  Stadiums were mostly 30, 40, 50 years old with few amenities, no parking, and often bad sight lines.  We romanticize places like Ebbets Field or the Polo Grounds but they were generations older than Memorial Stadium, which was pretty outdated when I went there in the 80s and early 90s.

In 1950 and 1960 the average MLB ticket was between $1.50 and $2.00, compared to over $20 today.  Which is fairly in line with inflation, a $1.50 in 1950 is about $16.00 today.

I had similar experiences growing up.  My Dad was a government engineer and project manager, making a solid GS-13 salary and we went out to eat a few times a year.  We made it to one or two Orioles games a year, and we're about two hours from Baltimore.  When he was a kid in the 50s I don't know that it ever occurred to them to go to DC or Baltimore to a ballgame, but they were three or four hours away, and lower-middle class farmers.  But clearly the population had the capacity to draw 2M+ to a some city's baseball games, if the external factors cooperated.

Although in 1978 the Orioles' all time attendance record for a season was 1.203M fans, in 1966.  Or 100k less than the '19 Orioles.

* Anyone else just done with minor league team names?  If I see another Rocket City Trash Pandas I'm going to... something.  Like many things it was cool the first five times, but it's time to stop.  Just name your team something that kind has at least a tenuous connection to reality.  If you name your team Trash Pandas you're admitting you've got nothing, the game is a bunch of anonymous non-prospects, and you're trying to sell an extra 20 hats to five-year-olds and 42-year-old minor league nerds.

[DrungoHazewood]

Fun fact of the day: the 1935 St. Louis Browns drew 80,922 fans, or 1065 per game.  Supporting a payroll of approximately $108,000. 

I don't know how they didn't go bankrupt.  Tickets had to be 50 cents.  They probably only made payroll based on revenue from advertising signs on the outfield fence and ads in the program.  And beer.