At the Winter Meetings in San Diego last month, Rob Manfred spoke to owners representing all of the 120 minor-league teams. The commissioner told the group that they should expect to share in some of the increased costs that will arise from collective bargaining between MLB and the Players Association, according to people present at the meeting.
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“He indicated that obviously everybody in this room is going to have to make their own sacrifice,” recalled one minor-league owner who was not authorized to speak publicly.
In mid-January, MLB is expected to make its first round of counter-proposals to the MLBPA as the sides work on the first-ever CBA governing the minors. As the negotiations continue, another group whose bottom line will be affected is watching trepidatiously: those minor-league owners.
Minor-league owners are not directly involved in bargaining, but are said to be receiving updates from MLB. Minor-league players are employed by and receive their salaries from the major-league teams, which is why the negotiation is between the league and the MLBPA.
Rob Manfred (Julio Aguilar / Getty Images)
Some minor-league owners believe MLB has wide leeway to pass on some of the increased costs the new CBA will call for. Every affiliate has a contract with MLB, known as a Player Development License, or PDL. But exactly what modifications those contracts allow for is a central question. Terms of the contracts each team has with MLB are closely guarded by all parties.
“There is a tremendous amount of discretion they have with respect to player-related items,” said one owner. “For example: at the beginning of the pandemic, or during the pandemic, they decided they needed an additional bus and that was going to be borne by the minor-league teams, that expense. Those types of additional amenities are going to hit us.
“MLB understands what their responsibilities are: basically salary and whatever other types of benefits they need to provide, housing costs, all of those are under MLB’s purview. Anything else — so what needs to be provided in the clubhouses, travel, any other amenities, of which there probably are many more than MLB’s responsibility — are undoubtedly going to be passed on to the minor-league teams.”
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A person on the league’s side who was not authorized to speak publicly said that the framework for handling these changes is already in place. For example: PDLs call for a percentage split in certain categories, including hotel costs. If the MLBPA successfully obtains a higher minimum level of hotel accommodation for minor leaguers, then any raised cost would be handled according to the split that’s already prescribed.
The person said that MLB cannot institute a new category of cost unilaterally, and noted there is a governance structure in place that would handle any such change. MLB and the minor-league owners have a nine-person executive board: four minor-league owners, four MLB officials, and a ninth person from outside the sport appointed by the other members of the board. But some minor-league owners feel they ultimately have to pick and choose which issues their board representatives take up, citing a heavy influence the league exerts.
Some who run minor-league clubs feel like bystanders during bargaining. Once minor leaguers formed a union, the players gained a right to make information requests about the business, including financial statements from minor-league teams.
“One of the first round of requests that the union had of MLB was to provide operating information from a revenue standpoint about minor-league teams,” an owner said. “My sense is they’re going to negotiate on the success of minor-league teams and that they understand that that is a weak spot in negotiation for MLB, because if we as a union want A, B and C — and MLB is not getting hurt by this — let’s ask for it. Because we can now represent that minor-league teams make an average of X dollars per year and they can afford to pay a little bit more on A, B, C.”
Those on the players’ side likely would say that these complaints are just natural consequences of players having union representation for the first time, and likely would suggest that both major-league and minor-league owners can easily afford the changes.
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Last year, Manfred said that MLB subsidizes the minor leagues to the tune of about $1 billion per year.
“MLB will spend at least $1.03 billion in 2022 to operate the Minor League system,” Manfred wrote. “Of that amount, about $750 million will be spent on player compensation and benefits, with that amount rising to over $800 million in 2023. MLB receives approximately $25 million in revenue from Minor League operators each year. As a result, the net subsidy MLB Clubs provide to Minor League operations is over $1 billion.”
The defunct non-profit Advocates for Minor Leaguers characterized MLB’s investment differently.
“Absent is an explanation of why the owners do this,” Advocates wrote of the subsidization. “Perhaps we are meant to believe that it is simply an act of charity? This framing completely ignores that the development of the Major League product (players, fans, rules, etc.) occurs in the Minor Leagues. Like in any other industry, this research and development has tremendous economic value. Although the value of research and development can be hard to quantify with precision, mainstream metrics – and common sense – make clear that the return on MLB’s investment in the Minor Leagues is excellent.”
Ultimately, some minor-league owners are resentful of MLB’s level of control, citing some cost increases in the time since the PDLs were agreed to. When the PDLs went into effect for the 2021 season, MLB collected 8.5 percent of ticket revenue. The league subsequently started collecting additional money, between 50 cents and a dollar per ticket. That money is said to be earmarked to help sell more tickets.
Every minor-league owner had the choice to sign a PDL, but many also felt strong-armed. Entering 2021, MLB changed the structure of the minor leagues, both contractually and otherwise. The league took 40 teams out of the traditional affiliated umbrella. Previously 160 teams had been minor-league affiliates, from the Triple-A level down to rookie ball. Starting in 2021, there were 120.
But minor-league players notably did one thing in recent years that minor-league owners have not: they banded together to represent their interests as a group.
(Top photo: John E. Moore III / Getty Images)