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Minor League Teams Turn To Congress To Ease Financial Burden

Milb Stock Photo (Photo By Zach Lucy Four Seam)
(Photo by Mike Janes/Four Seam)

A pair of bills working through Congress could help provide significant relief for minor league teams which have suffered sizable financial damage because of the canceled 2020 season.

Both bills have a long way to go before being signed into legislation, but they would provide help to minor league teams that are in dire financial straits.

Minor League Baseball has been actively lobbying for a bill sponsored by Representative Lori Trahan (D-Mass.). H.R. 7023 would provide loans to small businesses that must make lease, rental or bond payments on publicly owned stadiums, museums and community theaters.

MiLB teams would be among the beneficiaries of the low-interest, relatively long-term (15-year) loans which could help provide solvency for teams during a very difficult financial year. Those loans would have to be repaid, but would provide low-cost liquidity to teams that have seen their revenue dwindle dramatically because of the shutdown.

Minor League Baseball has a number of MiLB owners who have been focused on the bipartisan Restart Act (S. 3814). While the Restart Act, co-sponsored by Senators Michael Bennet (D-Colo.) and Todd Young (R-Ind.) is not specifically designed to help MiLB teams, the structure of the bill would provide a vital lifeline for minor league clubs.

The Restart Act is designed to help small businesses that suffered dramatic revenue losses because of the coronavirus pandemic by giving them loans to cover six months of payroll, benefits and other fixed expenses. To qualify, businesses need to have fewer than 5,000 employees and see revenues decline by at least 25 percent.

In the bill, the percentage of the loans that would be forgiven (i.e., not required to be repaid) is based on the percentage of revenue decline when comparing 2020 to previous years. For MiLB teams, the revenue declines this year have been dramatic thanks to the complete cancellation of the 2020 season. Multiple MiLB owners estimated that most teams will see an 80-90 percent decline in revenues this season.

And smaller businesses (those with less than 500 employees) would have more generous forgiveness terms than larger businesses—most MiLB teams would fall under the provision.

While not designed for MiLB teams, multiple MiLB owners said this bill would potentially provide the lifeline they need during the most difficult economic year in MiLB history.

“If you think about the boxes you have to have checked to be hard hit by this, we check all of them,” said Jason Freier, owner of the Fort Wayne TinCaps and the Columbia Fireflies and one of the proponents of the bill. “Across MiLB we have been good and stable businesses and good employers for decades. We will be for decades more, the problem is we can’t operate under the current circumstances.”

The Restart Act has a long way to go to become reality—it was introduced in the Senate in May but still has many steps to go before it is passed, including making it out of committee. A companion bill in the U.S. House of Representatives (HR 7481), sponsored by Jared Golden (D-Maine) and Mike Kelly (R-Pa.) was introduced on July 2.

The bill in the senate currently has 10 co-sponsors, five Republicans, four Democrats and one Independent. Unlike the more narrowly focused amendment to the CARES Act, the Restart Act would benefit MiLB, but minor league baseball would be only one of a large number of groups pushing for the bill—restaurants, concert venues, hotels, casinos and many other businesses that have been significantly adversely affected by the shutdowns caused by the pandemic would all benefit. The bill is crafted (and may be further tweaked) to only benefit the most adversely affected industries, thereby keeping the total cost down.

Even if the thresholds for eligibility are tightened, it will be unlikely to disqualify most MiLB teams from eligibility as they have been hit very hard financially this year—most teams will go from September 2019 to April 2021 without any significant revenue.

“Even with something like Restart it’s going to take years for teams to be in as good of shape as they were before. This is the difference between (it being) two or three years or a decade,” Freier said.

Both the bill sponsored by Trahan and the Restart Act are currently in committee. Either or both would need to pass the House and Senate and be signed by the President (or have his veto overturned by the House and Senate) to go into law.

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