Minor League Baseball has canceled its entire 2020 season, which never started due to the ongoing Covid-19 pandemic, and the long-expected decision is now set to impose significant business impacts upon all of the affiliated minor leagues.
The final trigger behind the decision, technically, was Major League Baseball informing MiLB it would not be supplying players and coaches for the 2020 season, as it was legally able because of the health crisis to suspend working agreements among teams. MLB is now preparing to start a modified, 60-game schedule later this month and as part of that effort, some of the traditional functions of minor league clubs are being replaced with expanded 60-man player pools used to develop major league rosters.
Beyond those baseball operations mechanics, though, the business outlook for a 2020 MiLB season to function was essentially doomed from the start. The pandemic hit in the United States just as baseball season was about to start, but health restrictions forced facilities closed and still requires strict limits on any sort of public gatherings.
But MiLB clubs generate more than 85 per cent of their revenue from gate receipts – precisely the income source being cut off without attendance. And the crisis is hitting right in the heart of the MiLB’s roughly five-month season.
“We are a fans-in-the-stands business. We don’t have national TV revenues,” said Pat O’Conner, MiLB president. “There was a conversation at one point: ‘Well, can we play without fans?’ And that was one of the shortest conversations in the last six months. It just doesn’t make any sense.”
Added Kevin Kulp, president of the Harrisburg (Pennsylvania) Senators, Class AA affiliate of the Washington Nationals, “In the end, there were just too many obstacles to overcome…Minor League Baseball has been affected to an extreme degree due to the seasonality of our business.”
The cancellation marks the first season without MiLB since the organization’s formation in 1901. MiLB is one of the largest attendance draws in the entire US sports industry, attracting 41.5m fans last year.
Within days of the pandemic’s arrival this past spring, financial concern among MiLB and team executives was severe. O’Conner now says the situation has grown even worse as Covid-19 is likely to render a multiyear financial impact upon many clubs. And he added that without significant additional financial assistance arriving soon from the US federal government, more than half of MiLB’s 160 North American teams could be forced to sell or go insolvent.
“We are in dire straits,” O’Conner said. “This is the perfect storm. There are very many teams that are not liquid, not solvent.”
Many teams have already received help from the federal Paycheck Protection Program. But that effort was not sufficient to avoid multiple rounds of furloughs among many clubs. And MiLB is now eyeing passage of a new House resolution that would provide at least $1bn in 15-year loans to businesses with less than $35m in 2019 revenue and “have contractual obligations for making lease, rent, or bond payments for publicly owned sports facilities, museums, and community theaters.”
The full-season cancellation arrives as MiLB remains in negotiations for a new Professional Baseball Agreement with Major League Baseball, one that has been fraught with conflict as MLB seeks a dramatic overhaul of the affiliated minors, led by a 25 per cent reduction in the number of franchises.
O’Conner said talks on a new PBA have slowed essentially to a halt over the past six weeks as MLB was locked in fractious negotiations with the MLB Players Association to restart its season. In April, MiLB was reportedly ready to agree to the contraction. But with the affiliated minors’ 2020 season officially called off, O’Conner said his organization is still pursuing a fair deal.
“There’s no question that what the pandemic has done is made us somewhat weaker economically,” he said. “I don’t think it’s challenged our resolve. I don’t think it’s impacted our desire to stick together and get a good deal.”
MiLB’s emerging national sponsorship business, while still in its developing stages, has remained intact despite the loss of this entire season. O’Conner said the organization’s set of 12 national-level partners are still in place, but some activation spend that had been planned for 2020 will be shifted to other years.