Current Professional Baseball Agreement Between MLB, MiLB Nears End

Though it is a virtual certainty that the sides will not reach a deal by the time the Professional Baseball Agreement expires on Sept. 30, that does not mean there will not be a deal. The sides can continue to work on a new deal after the old one has expired.

There have been a number of discussions over the past few weeks, with the additions of multiple subcommittees that are working through some of the bigger issues in more detail.

Very little direct information from the negotiations is leaking, which is a sign that progress is being made. There is a general feeling that while a deal almost assuredly will not be wrapped up in September, one may be completed in October.

Many of the aspects that fans (and many in the game) want to know remain unknown. MLB has not let MiLB know which clubs are among the 120 teams that will fill the four full-season classifications under the new system. It is likely that the list of 120 teams and the league setups will be one of the final items unveiled during these negotiations.

In the broad strokes, the contentiousness that surrounded the negotiations for months has largely subsided. Now that minor league owners know the details of MLB’s proposal, the general consensus among owners Baseball America has talked to is there is nothing in the proposal that would prevent a deal.

Minor league owners have accepted that the system for 2021 and beyond will include only 120 full-season minor league clubs. MiLB’s own August proposal to MLB accepted that. Minor league owners’ concerns revolve around the desire to ensure that franchise values are protected and have an opportunity to appreciate.

As far as the economics of the proposal, minor league owners see potential benefits. The costs under MLB’s proposal will assuredly be lower than what they currently pay. Revenues for MiLB teams could be significantly higher.

But much depends on the details that go beyond the broad strokes MLB initially laid out in its proposal. That is where minor league owners have concerns.

Minor league owners want to know more details about the compensation formula that would ensure they receive payment if they were left without an MLB affiliate at the expiration of a Professional Development License (PDL). MLB’s proposal said teams in compliance with franchise requirements would be compensated if MLB opted to head elsewhere at the expiration of their franchise term.

Minor league owners want to make sure that any buyout formula reflects fair market value. Anything less puts a potentially artificially low ceiling on sales prices for minor league owners since it would be hard to convince a potential owner to pay significantly higher than the cost of the buyout provision.

Similarly, minor league owners want to ensure that if MLB pulls its Professional Development License, the buyout provision only covers the cost of the MLB-issued license, allowing the minor league owner to continue to operate a team, even if the owner has to become an independent league owner. It’s one thing if a minor league owner loses his affiliated club. It’s another if MLB comes in and takes over the market in the process.

There are also concerns about the length of the franchise agreements. MLB’s proposal would have terms as long as 10 years for many teams, but for other clubs, the terms would be shorter with automatic renewals to lengthen the term if certain upgrade requirements are met.

The maximum 10-year term is a concern for many owners, who note it would be difficult to get municipal help on funding stadium upgrades without longer terms that stretch closer to the length of municipal bond terms. Such an issue could likely be resolved by simply allowing MLB teams to waive their rights to opt-out until 20 years or longer has passed.

The fact that there could be teams on different renewal cycles is another concern.

Hypothetically, if 100 teams are on 10-year terms, another 12 are on eight-year cycles and eight are on six-year cycles, the teams on the shorter cycles will be in a disadvantageous position, because they would have few other options if an MLB team opted to depart at the end of their PDL term.

Other concerns revolve around length of seasons. There are expectations that MLB is going to look to reduce the number of games, especially at the Class A level. Every lost date is lost revenue for a minor league club. Midseason all-star games are also expected to be eliminated, although minor league teams are less worried about that, as they would prefer dates for all teams rather than one all-star game for one club over a three-day period where everyone else goes dark.

Those are all details that can be worked through. The structure of how they are worked out is also still up in the air.

Throughout these negotiations, there has been a suspicion among some in Minor League Baseball that MLB would simply wait until the current PBA expires and then impose its own system, inviting MiLB owners to join its new development leagues.

As the deadline nears, there is much more of a belief that MLB will continue to work to negotiate a deal rather than impose one. But there are MiLB owners who believe that to avoid an imposition, the negotiating team on MiLB’s side needs to be shaken up one more time, as some raised concerns over whether the current negotiating team can get to an agreement.

“This will happen one of two ways, MiLB owners will throw out the old guard and present MLB with a negotiating team that can deliver a deal or MLB will simply impose a deal,” said one MiLB owner.

Multiple MiLB owners said they agreed with that sentiment, although others strongly disagreed.