SABR CEO Scott Bush on the Business of Minor League Contractionon September 15, 2020 at 6:16 pm

SABR CEO Scott Bush on the Business of Minor League Contraction

Minor league contraction is imminent, with 40 teams expected to lose their affiliated status once the Professional Baseball Agreement (PBA) between Minor League Baseball and Major League Baseball expires at the end of this month. Part of a ‘One Baseball‘ concept being formulated by the Commissioner’s office, this dismantling and rearranging of the minor league landscape is controversial. To a certain extent, it’s also not well-understood. That’s particularly true on the business front, where myriad factors are at play for nearly everyone involved.

Scott Bush has a solid understanding of what’s involved. Currently the CEO for the Society for American Baseball Research, Bush formerly served as Assistant General Manager for the St. Paul Saints, as well as a Senior Vice President for Business Development with the Goldklang Group, a sports entertainment consulting and management firm that is intricately involved with Minor League Baseball.


David Laurila: What are your general impressions of the proposed contraction — good for baseball, or bad for baseball?

Scott Bush: “I think it’s going to be difficult to measure the impact of this for several years. With the focus on geographic proximity and the ability for teams
to have more access to players, there’s going to be the potential for improved player development. There’s also going to be, from a minor league perspective, the potential for improved relations with the parent clubs. And if there is an emphasis on geographic proximity, one could assume more meaningful regional ties between the minor league teams and their parent clubs.

“But there’s certainly going to be, at minimum, a short-term loss in terms of interest in baseball. We’re going to see communities lose access to baseball, and that can’t be a good thing. So the unknown — and one of the things that everyone is waiting for — is: Will there be a meaningful replacement? What does that look like? How long will it last? For me, that becomes the crux of starting to answer whether this will be good or bad for baseball overall.”

Laurila: Can you elaborate on the relationship between affiliates and parent clubs?

Bush: “There seems to be, at least in the reported negotiations, a willingness on both sides to have longer-term affiliation agreements. That’s something that absolutely will make a difference for the minor league operators. If you’re in a market that, for whatever reason, has historically had a lot of turnover with the affiliation, being able to lock into a longer-term relationship is going to be meaningful. Continuing to turn over your parent club is a negative, because it makes your community feel as if they’re not wanted. Feeling like you’re a lesser market is going to have a negative impact on ticket sales.

“More specifically, it has an impact on the ability of the minor league operators — the business itself — to market what they are, and who they are, to their local community. Tying up those relationships for a longer term and saying, ‘Hey, we’re part of the Tampa Bay Rays system.’ or ‘Hey, we’re part of the Atlanta Braves system,’ — really matters.”

Laurila: The working agreements (Player Development Contracts) between parent clubs and their affiliates have traditionally been for either two or four years. Is there a reason for that?

Bush: “Part of it is that a parent club wants to feel as if they have influence over facilities upgrades that night be needed, and those change all the time. For example, one of the things that has become in vogue in recent years is the addition of a sleeping room for players to utilize pregame. Finding the space in ballparks that were built in, say, 1996 or earlier, to add a sleeping room is very difficult.

“There’s also, ‘Okay, do we have a proper hitting-cage? Are the locker rooms up to par?’ Those are the sorts of things that teams are always wanting to upgrade to make sure they’re providing a good experience for the players. Being able to use the affiliation agreement as a leverage point for facility upgrades has always been important. This dynamic is going to change that. It seems as if a lot of the markets that have been unable to get those things added to their facilities may be disappearing as part of the winnowing down.”

Laurila: You mentioned geographic proximity. East Coast teams sometimes ending with an affiliate in California has been problematic.

Bush: “Part of what that is about is a failure by Minor League Baseball, at the top level, to acknowledge that keeping the league-level infrastructure, which includes having league commissioners that operate outside of St. Petersburg, ultimately wasn’t productive. It isn’t conducive to the relationship with Major League Baseball, because it forced Major League Baseball into affiliates that didn’t make sense for the parent clubs.

“At the highest level of Minor League Baseball, there needed to be management of that issue, and a willingness to tear down some of those long-term structures that were creating a an unproductive relationship. A Triple-A market like Fresno having the Washington Nationals as a parent club… on the surface, that sounds absurd. Part of why that occurred is that Minor League Baseball wasn’t willing to have painful conversations with its member teams about the landscape of those relationships.”

Laurila: The idea that MLB would have almost complete control over Minor League Baseball is concerning to lot of people. Can the commissioner’s office be trusted to do what’s best for baseball as a whole, as opposed to mostly just catering to the wants of 30 owners?

Bush: “I look at it like this: One of the things that is instructive — at least in my opinion — in evaluating all of this is, if you were to start from scratch, and build a player-development system, what would it look like? I think the answer is that you would find each team having academies of their own control, followed by some kind of feeder system. I think we’re getting tuned into something closer to that.

“The reckoning that is occurring right now is largely a result of a vestigial system in which Major League Baseball hasn’t previously had an interest in finding that best possible solution. More and more they are. Unfortunately, the result is all these businesses, which matter a lot to communities across the country, are caught in the crossfire of rebuilding a better player-development system.

“What’s interesting is that this has historically gone in waves. The Cardinals were the first to embrace the idea that the more minor league affiliates they had, the more players they could get into games. The flip side of that is the Royals at one point having an academy system, which they funded for a number of years before a change in management caused them to reverse course. When they won a World Series in 1985, Frank White was a product of that academy system. So there are a number of different approaches that could be taken for player development.

“What’s at play here is that we’ve been inside of this minor league system for so long that we’ve come to assume that it’s the only way to approach it. I recognize that no one wants to see… look, I love minor league baseball. No one wants to see Minor League Baseball disappear from these communities. I understand the skeptical view that many are taking. They’re saying, ‘Well, it’s about money,’ and to an extent that’s probably true. But I also think we need to consider the idea that maybe the minor league baseball system isn’t the optimal way to develop players, which ultimately is what the major league teams should care about.”

Laurila: That said, MLB should also care about attracting players — especially players from underrepresented communities — to the sport in order that they have an opportunity to develop them. As you said earlier, taking affiliated ball away from 40 communities isn’t a good thing.

Bush: “Yes, there is absolutely a question of access to the game, and attracting athletes. That needs to be part of a comprehensive point of view that baseball takes. But just in the prism of, ‘How do we feel about this decision to have fewer minor league baseball teams?’… in my opinion, those are two separate issues.”

Laurila: Changing direction somewhat, how do minor league baseball teams make money?

Bush: “You have to sell tickets. That’s the basis upon which the entire business model exists, and part of selling tickets, historically, has been the minor league baseball experience. It’s fun, it’s affordable, it’s family-friendly entertainment. At its core, that’s what minor league baseball as a business does best. And within each market, teams are tasked with building the brand — building their unique spin on what that fun, affordable, family-friendly entertainment looks like.

“Part of that is highlighting the fact that they’re a feeder for a major league team. Being able to talk about the alumni is a really great thing. To go back to my point earlier about longer-lasting affiliation agreements, if you’re a Rays affiliate but two years ago you were Rangers affiliate… that’s not as good. Talking about alumni who are playing for a team that isn’t part of your system anymore loses its luster.

“It is possible to create brand identity beyond being an affiliate. There are a number of indie ball teams who have been incredibly successful in doing that without the benefit of having either marquee alumni or the ability to talk about a specific team they feed into. But those success stories are certainly less frequent than the success stories of affiliated clubs.”

Laurila: You worked for the St. Paul Saints, who have been among the more successful independent league franchises.

Bush: “They have a tremendous track record. They’ve been successful for most of that team’s history, and much of that comes down to the ability to be a renegade. They’ve had the perception of existing outside of the realm, rules, and auspices of major league baseball. That’s something that works in St. Paul, but while it’s been really embraced in that market, you can’t necessarily play that role as an indie-ball team in every market. It’s not necessarily something that would work everywhere.

“It’s going to be interesting to see what the indie ball leagues are going to look like. Major League Baseball has made it clear that they want to have a closer relationship with independent leagues as part of their ‘One Baseball’ initiative moving forward, and will we lose some of the charm of indie ball in that bargain? I don’t know.”

Laurila: How long have the Saints existed?

Bush: “The current iteration began in 1993 as part of the Northern League. There were rumors initially that they would be becoming a Triple-A club, and I would think that market, and that ballpark, would be of interest to Major League Baseball to bring into their affiliate system.”

Laurila: Did you see the report that Somerset (currently an indie-ball franchisee) could be replacing Trenton as the Yankees’ Double-A affiliate?

Bush: “No, but it’s not surprising to me. I recently spent a little bit of time looking at Triple-A baseball, and in the Midwest you’ve got already got Des Moines and Omaha. You could very easily add St. Paul, and then you have Rosemont, which has a beautiful new facility located in Chicago. Gary has had a great ballpark for a number of years. Indianapolis is also in the area. You look at that and start to realize, “Wow, there’s a whole upper-Midwest contingent that we could build for Triple A.’ Major League Baseball could, without too much trouble, create a three-division Triple-A system where you’ve got East Coast, Midwest, and Western US.”

Laurila: With territorial rights in mind, why would the Twins agree to having a Triple-A affiliate so close to Target Field that fans could literally take public transportation to either venue?

Bush: “I think that worm is turning. The relationship between the Saints and the Twins, when the Saints first launched, was completely adversarial. But over the years, that dynamic — to both teams’ credit — has evolved. I know that the Twins would be interested in St. Paul being an affiliate. The closest other potential Triple-A markets from the Twin Cities are Des Moines and Omaha, and you’re probably going to fly both places. Why not look across town?”

Laurila: Playing devil’s advocate, what if the 2025 Twins are a last-place team that has elite prospects in Triple-A? They could potentially lose a non-insignificant amount of ticket sales in a given year.

Bush: “They absolutely could, and that will factor into the decision. I would think there is no way that could move forward without the Twins having an equity stake in the Saints. Ultimately, I think the Twins would look to hedge their bet, as would any team. We’ve seen Sugar Land mentioned as a potential Triple-A affiliate, and they’re in the Astros’ backyard. So I think that any indie ball team brought in through the 120-plan will see their parent club have an equity stake moving forward. That will probably take the shape of the parent club funding whatever expansion fee needs to be paid in order for them to become part of the Minor League Baseball family.”

Laurila: Are minor league ticket price likely to rise under ‘One Baseball’?

Bush: “I have a hard time believing they would. What’s been reported so far in the new PBA is that when Major League Baseball eliminates the Minor League Baseball office in St. Petersburg, they will keep the same ticket tax of eight and a half percent that Minor League Baseball was receiving. There will be no change in that relationship. I also don’t think — maybe I’m being naive — Major League Baseball has an interest in getting into the day-to-day operations of individual clubs. I believe that minor league teams will continue to enjoy a lot of autonomy in how they operate in their home communities. I would envision minor league baseball teams continuing to operate as the businesses that they have for quite some time.

Laurila: The business end of contraction is something most fans probably haven’t spent much time thinking about…

Bush: “No, and another thing that’s going to be interesting to look at when the 120 is announced is the makeup of the markets that are losing baseball. What do their facility agreements look like as tenants between the municipality and the team? And what is left on the debt service of having built that ballpark?

“In the Appy League, a lot of the ballparks have been paid for because they’re older, smaller and weren’t that expensive to build. But some of these other markets that may lose teams could have ballparks that aren’t paid off yet. They may have invested in capital improvements that haven’t been paid off. A lot of those are paid for with bonds that the municipality is responsible for, and the lease would have covered that. With no tenant left to pay for that building, is the municipality left on the hook? Are there municipalities that will be left to rot on the vine?”

Laurila: Lawsuits could be forthcoming…

Bush: “There is certainly the potential for that.”

Laurila: In the meantime, all that teams, their ownership groups, and the municipalities can do is wait to see what MLB announces.

Bush: “Yes, and even beyond [contraction], the operations of these minor league teams, which have been completely shut down for this season, are still on hold for next year. Without a PBA, without an understanding of who is playing where, there is no ability to create schedules. That means there is no ability to market next season. It’s as if time has stopped for all minor league teams. It’s just an incredibly difficult place for them to be.

“Not all of this is Major League Baseball’s fault. I like to believe that the PBA would have been settled if not for a global pandemic that has caused everyone to completely shift and scramble. Major League Baseball is no different. They simply haven’t had the bandwidth to fully step into these negotiations, and that’s part of what’s led to this 11th hour deal. Unfortunately, there are a lot of people caught in the middle.”

Laurila: Could you envision a scenario where contraction is tabled for a year?

Bush: “No. I can’t imagine that, because Major League Baseball is totally committed to getting the team count down to 120. A one-year extension while they sort this out probably isn’t in the cards. A more likely scenario is that they announce a delay to the start of the 2021 season. I could envision the minor league season not starting until June.”

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