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The Professional Baseball Agreement Expired Without A Deal. So Now What?



Editor's Note: Story has been updated with a new statement from Major League Baseball.

Sept. 30 had been circled on calendars in minor league offices for more than a year. Until then, minor league owners and operators talked about the expiration of the Professional Baseball Agreement between Major League Baseball and Minor League Baseball.

On Wednesday, that day came and went and nothing significantly changed. On Thursday, everyone woke up to find no existing agreement between the minors and majors.

The two sides continue to talk. MiLB released a statement signifying the end of the current PBA, as did members of Congress. MLB remained silent. The negotiations continue.

MLB did not release a statement on Sept. 30. But on Oct. 1, with the agreement  expired, MLB did release a statement saying: "Although the PBA has expired, we intend to work with Minor League owners to grow the game by building a new model that will serve fans, players and communities through the United States and Canada."

The word "owners" in that statement could prove to be significant. MLB can continue to negotiate with MiLB's duly appointed negotiating committee, as it has for months. In fact, the two sides are meeting this week.

But negotiating with MiLB owners would seem to indicate a message that MLB is finished negotiating with Minor League Baseball. Now that the current PBA has expired, MLB can decide to negotiate directly with minor league owners without dealing with the wishes of Minor League Baseball as a corporate entity. The current negotiating team is comprised of minor league owners, so that may not change who MLB deals with, but it does indicate that MLB's days of dealing with MiLB are largely over. And it does open up at least the possibility that, at some point, MLB could deal with individual owners if they desire.

The current agreement’s expiration does nothing to prevent the sides from continuing to work toward a deal. In 1990, MLB and MiLB went far past the expiration date of their current agreement to reach a deal in December.

At the same time, the dynamics of the negotiations have changed. With no current agreement,, MLB could opt to simply develop its own system and invite minor league teams one by one to join them, or it could continue to work out a deal to dramatically revamp minor league baseball in a negotiated agreement with MiLB.

The results of the approaches would likely be quite similar when viewed by the average fan. There are going to be 120 full-season clubs regardless—even MiLB’s proposal to MLB in August was limited to four full-season levels. MLB is going to take over operating the minor leagues—MiLB’s offices in St. Petersburg, Fla. are already winding down with employees departing for other jobs.

In either outcome, minor league team owners will continue to own and operate their clubs.

While those items are almost assured to remain constant no matter what way the remainder of these negotiations play out, there are many key issues that remain to be resolved. Each of these issues individually can be worked out. Taken as a whole, it’s why plenty of talks may remain.

Minor league team owners are concerned about the length of the deal. MLB’s proposal would last for as long as 10 years for some clubs but shorter periods of time for others. If minor league teams need to make facility upgrades, as they expect will be required in the license agreements, they would like there to be mechanisms that could extend terms beyond 10 years.

Minor league teams also have concerns about franchise valuations and mechanisms to assure that those values can appreciate.

Then there is the question of how much teams will be required to pay if they are entering affiliated baseball. Sugar Land and Somerset from the Atlantic League and St. Paul from the American Association are expected to be invited to join affiliated baseball for 2021 and beyond. In initial proposals last year, those teams were expected to be required to pay millions of dollars to enter affiliated baseball. But if MLB desires those stadiums, owners and markets and MLB teams want them to be their minor league affiliates, it isn’t in MLB’s interest to allow a franchise fee so large that it potentially discourages teams from joining.

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It’s also possible in an MLB-imposed system that those teams would simply be treated the same as any currently affiliated team.

And then there are the ancillary issues that also require plenty of work. MLB’s proposal to MiLB offers to split MLB-sold sponsorship revenues 50-50 with MiLB teams after MLB’s expenses are deducted. Minor league owners Baseball America consulted are generally receptive to the idea of MLB running national sales, but as with many of these complicated issues, the details are difficult to work out.

In almost every market there are potential conflicts between local deals teams have sold and potential national deals that MLB could sell. A minor league team with naming rights sold to one bank might have issues participating in an MLB-sold deal with a competing bank. The same could be said about pretty much any category that MLB could sell.

MiLB ran into many of these same issues when it came to selling national advertising. Under MiLB’s system, teams have had the right to opt out of categories (and give up any revenue derived from that sponsorship), but when it comes to pouring rights (what beverages teams sell) the balance between national sales and local sales becomes very tricky.

Another potential issue is length of the season. MLB has indicated that it may want to reduce the number of games, especially at Class A. That would be an issue for operators, as a 120-game season for example would cut 10 home dates per team, which could cost clubs hundreds of thousands of dollars in revenue.

Both sides have now posted statements about the negotiations. MLB waited until the current agreement had expired. On Wednesday's expiration date. MiLB negotiating committee chairman D.G. Elmore released a statement on behalf of MiLB saying:

“For more than a century, Major League Baseball (MLB) and Minor League Baseball (MiLB) have worked together to grow the game of baseball into America’s Pastime. The current agreement between MLB and MiLB expires (on Sept. 30). Minor League Baseball’s negotiators have been meeting with MLB to reach a new agreement—one that would continue the relationship with MLB and preserve affordable, family-friendly entertainment in each of our 150 communities across the nation. Minor League Baseball will continue to work in good faith over the coming weeks to reach a well-designed and fair agreement that meets MLB’s player development needs and continues the relationship between the two for generations to come.”

The switch from 160 communities to 150 (as noted in the statement) comes on the heels of the Appalachian League announcing that it will no longer be in affiliated baseball.

The co-chairs of the Save Minor League Baseball Task Force, Representatives Lori Trahan (D-MA-03), David McKinley (R-WV-01), Max Rose (D-NY-11), and Mike Simpson (R-ID-02) also released a statement:

“As the co-chairs of the Congressional Save Minor League Baseball Task Force, we are disappointed that today marks the end of the current professional baseball agreement. We strongly support the preservation of minor league baseball in our respective communities and across the nation. By the start of the 2021 season, many of these clubs will have seen little or no revenue for at least 18 months.  We urge the negotiating parties to come to an agreement, without delay, that is fair to the fans, players, and local communities alike.

“The future of professional, major league-affiliated baseball that is close-to-home and affordable hangs in the balance. Next year, we and the thousands of baseball fans we proudly represent look forward to hearing umpires shout ‘Play ball’ in ballparks across the United States.”

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