What Is A Minor League Baseball Team Worth? It's Complicated.
What is a minor league team worth?
Ask a dozen people deeply involved in the game that question and you will get a number of answers.
Several will rightfully point out that the team is worth whatever you can find someone else willing to pay. They’ll look at what other teams in the same classification—or with similar markets or ballparks—have garnered in recent sales and say that’s a rough estimate. Some will take a much more practical approach—take the balance sheet, look at the yearly profits and multiply that by a multiple of three, five or maybe seven. Others will talk about the level of classification, the stadium, the lease, and the scarcity of available affiliated teams and come up with a number based on that.
This simple question has complex answers.
It’s also a much more important question than the average fan understands. If you are looking for an explanation of why Major League Baseball and Minor League Baseball are in the final stages of a tense, difficult Professional Baseball Agreement negotiation over the future of the minors, it’s in part because of the price of minor league teams.
There are MLB owners who believe they were forced to overpay for overpriced minor league teams over the past decade. That has led those owners to be some of the most strident in their beliefs that the entire affiliation system that has guided MLB-MiLB pairings for the past 50 years needs to be completely overhauled.
For minor league owners, the biggest goal of these negotiations is to ensure that franchise values can eventually return to what they were before these PBA talks began. And for the future of the sport, they also believe they need to have a path to steady franchise appreciation in the future. Many minor league owners are quite willing to give up MiLB’s independence and let MLB run the minors going forward. They can even potentially accept a cut of a one-quarter of the minor league membership. But they are unlikely to agree to a deal that doesn’t protect future minor league franchise values.
For MLB, any new deal with the minors has to fix the affiliation system. One of the main reasons the relationship between the majors and minors reached this point is MLB’s frustration with the current affiliation arrangements and the lofty minor league franchise valuations that have come from them.
As some MiLB owners put it, you can partially blame the Carolina League for MiLB’s current predicament.
For more than a decade, there have been two main affiliation issues that rear their head every two years. Player Development Contracts bind parent organizations with minor league affiliates. PDCs are signed for two years at a time, though teams can extend their deals for greater periods so long as those extensions are in two-year increments.
In Triple-A, there have been more West Coast Triple-A clubs than there are West Coast major league teams. In high Class A, there are generally more teams that want to be in the Carolina League than there are available Carolina League teams.
Under the current rules governing PDC agreements, major league and minor league teams are limited in what they can offer to help make a deal. MLB teams cannot offer extra inducements to land an affiliation agreement—they can’t offer to buy the affiliate a new video board or even dangle the possibility of minor league rehab assignments. But they can simply buy a minor league team. If they do so, they know that they don’t have to worry about being stuck with a bad affiliation situation in upcoming years.
Those sales are very good news for minor league owners who happened to be in the right league at the right time. But they also have caused significant friction between MLB and Minor League Baseball.
After six years of being stuck out west—and in the very hitter-friendly environment of Las Vegas—the Mets bought the Syracuse Triple-A club in 2018 to have a closer-to-home affiliate. When the Mets found their East Coast Triple-A affiliate, it meant that the Nationals became the loser in the biennial game of musical chairs. Because its Triple-A affiliation in Fresno was so far from D.C., the Nationals kept some of their close-to-the-majors relievers at Double-A Harrisburg, reasoning that if they needed to make a quick callup, it would take too long to bring their pitchers all the way cross country.
Similarly, the Brewers found themselves kicked out of Triple-A Nashville just as the team moved into a brand new park. Milwaukee’s Triple-A affiliation ended up in Colorado Springs, playing at a ballpark more than a mile above sea level. The Brewers’ stint out west ended when Colorado Springs was dropped to the Rookie-level Pioneer League and replaced by San Antonio, which was promoted from Double-A to Triple-A.
There have been issues in Triple-A, but they are far less frustrating for MLB teams than the ones created by high Class A. For much of the past two decades there have been California League teams that were viewed as undesirable for reasons beyond just geography.
Bakersfield’s infield was notoriously rocky, and the stadium was oriented improperly to the west, leading to games having to wait to start until after the sun had set beyond the batter’s eye in center field. On top of that, Sam Lynn Ballpark had the shortest center field in the affiliated minors—just 354 feet from home plate.
HIgh Desert and Lancaster were nightmares for pitchers and for teams trying to develop pitchers. Teams would hold pitching prospects back in low Class A and then jump them directly to Double-A to avoid exposing them to the inflated scoring that often occurred at those two parks.
After spending 2007 and 2008 affiliated with high Class A Lancaster, the Red Sox decided to purchase Salem in the Carolina League. The Astros and Rangers purchased expansion clubs in the Carolina League to get out of the California League after stints in Lancaster and High Desert. Minor League Baseball eventually eliminated High Desert and Bakersfield from the California League, partly to satiate MLB.
Stuck in Colorado Springs at Triple-A, the Brewers also found themselves displaced out of the high Class A Brevard County of the Florida State League in an affiliation swap. After managing to affiliate with high Class A Carolina in 2016 and 2017, the Brewers decided to buy the Mudcats rather than risk another game of high Class A musical chairs.
Getting an exact number on how much the Brewers paid for the Mudcats is difficult—Baseball America has heard at least five different amounts. But everyone BA spoke with acknowledged that the price of the team was far beyond a logical price considering the Zebulon, N.C., market, no-frills ballpark and attendance figures.
With most Florida State League teams owned by MLB clubs and a number of teams trying to avoid the California League, the price of acquiring a Carolina League club (the only assured way to avoid ending up on the losing end of the affiliation swap) kept going up, even if the balance sheets for these Carolina League clubs seemed to indicate that these purchases were at asking prices far beyond logic.
In addition to cutting from 160 to 120 minor league teams in its initial proposal, MLB quickly made it clear that it also desired to completely revamp the affiliation system. Affiliations would be much longer lasting and would be driven by MLB team’s desires. Such a system would ensure that never again will an MLB team feel the need to purchase a minor league club to avoid an undesirable affiliation arrangement.
Changing the way MLB and minor league affiliation agreements are reached and the length of them will likely deflate Carolina League franchise valuations. But minor league owners in large part don’t seem bothered by that. Many of them will agree that some minor league team values have been inflated by external factors like affiliation swaps.
The concern minor league owners have is they believe the value of all MiLB clubs has taken a significant hit because of the current negotiations. Right now, many minor league team owners will say that the value today is significantly below where it was a year ago. Yes, the coronavirus pandemic has played a role in that, but that is a smaller and more temporary impact than the PBA talks.
Until this PBA negotiation, most owners and most prospective buyers viewed minor league franchises as being permanent. A minor league team may end up with a different MLB affiliate, but few ever considered the possibility that MLB may completely remove its affiliation. Minor league teams have been sold as recently as October 2018, when Peter and Susan Davis bought the Pioneer League’s Missoula Osprey from then-Northwest League President Mike Ellis. In an interview with The Seattle Times’ Larry Stone, Peter Davis said he wasn’t aware of the possibility of minor league contraction until MLB’s proposal became public.
But the PBA only promises that MLB will provide players and coaches for the length of the current PBA. There is no automatic renewal to the PBA, and now it has been made abundantly clear that a minor league franchise agreement lacks permanence. At the end of the terms of a PBA, MLB can simply remove its affiliation agreement.
Minor league owners wonder who would want to buy a team in the future if the perception is that those teams’ MLB affiliations could later disappear.
This is one reason some minor league owners would actually prefer to be run by Major League Baseball. Right now, MLB is at arm’s length from the minors. Since MLB doesn’t actually operate the minors, it can and has made the argument that they simply provide players and coaches as part of a contractual agreement. As such, they argue they have no responsibility to compensate the owners of minor league teams who would be left out of affiliated ball in a cut from 160 to 120 teams. In this year’s talks, MLB has made clear that it has no issue with Minor League Baseball figuring out compensation for eliminated teams, but MLB’s view is that it has no responsibility to do so itself, since those teams have only an expiring affiliation agreement with MLB.
If MLB runs the minor leagues going forward, it opens up the possibility that MLB may potentially agree to long-term responsibility (of sorts) for minor league franchises in a franchisee-franchisor relationship.
A typical minor league owner’s wish list for a new deal begins with a very long term (some owners suggest 15 years, others want 20) for a new agreement. But potentially even more important than the length of the new deal would be language that assures minor league teams that MLB will continue to provide players for their franchises for as long as the MiLB team fulfills reasonable requirements for facility upkeep and a quality operation. In such a formulation, MLB could only reduce the number of MiLB teams going forward by compensating owners of teams it decides to lop off.
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If there were compensation for any team eliminated by MLB, it would likely serve as a restraint on any future ideas of further minor league reductions—it’s one thing to promise MLB owners cost savings by cutting minor league teams, it’s something entirely different if cutting the minors involves cutting checks.
There are plenty of logical reasons to believe that the two sides will eventually come to some sort of agreement. While minor league franchise valuations are more directly important to MiLB teams and owners than MLB clubs, both sides have reasons to preserve them, unless MLB actually wants to take over the entire minor leagues (something that seems quite unlikely to all involved).
If minor league franchise values stay low and owners see little possibility of future appreciation, it would be harder to attract and retain quality minor league owners. Well-run, profitable minor league teams, not coincidentally, are generally the same MiLB teams that provide the best environments for minor league players.
MLB has made clear that its goals for any new deal with Minor League Baseball will include facility upgrades—expect requirements for upgraded lighting, expansion of locker rooms to handle the now-larger staffing needs and locker rooms for female coaches, trainers and staff.
Multiple minor league owners have said they expect those improvements will cost between $2 and $4 million per club. The expectation is that there are very few minor league ballparks around the country that already meet all of the upcoming facility requirements.
It is possible that current minor league rules that prohibit MLB teams from spending money to help improve the facilities at non-team-owned minor league parks will be eliminated—it’s seen as an illegal inducement according to current affiliation agreement rules. But it’s likely some or all of that money will be expected to come from the minor league team, with possible help from local municipalities.
Minor league owners prefer to spend on upgrades that will produce additional revenue. An MiLB owner’s facility improvements are usually going to be fan-based. They will look to add new picnic areas, video boards, bars or premium suites. What MLB is looking for are upgrades that will benefit the players and teams, but are unlikely to lead to additional revenue.
Spending significant money that isn’t going to add to revenue is much easier for minor league owners to justify if it’s the cost of maintaining an appreciating asset. Cash flow plays a part of this as well. If MLB’s franchise fees and other costs provide a system that allows most teams to make a modest year-to-year profit, it helps provide both incentives and cash flow for the spending to upgrade the park.
And there’s one other reason for minor league owners and MLB teams to work to find an acceptable system for both sides. The financials involved, while significant for minor league owners, are minuscule by the standards of MLB teams, which annually generate nine-figure revenue numbers. While there are exceptions, most minor league teams are doing well if they generate more than $1 million in profit in a year. As one owner put it, minor league teams are generally growth stocks, not income stocks.
How much is a minor league team worth? Tough question. But one that may be more important in the PBA negotiations is how much will it be worth in 2025 and beyond.