Dueling Letters Highlight Dramatic Differences Between MLB, MiLB On Elimination

Image credit: U.S. Capitol Building (Photo by Corey Serum/Getty Images)

When Baseball America first explained in detail Major League Baseball’s proposal to dramatically change the shape of Minor League Baseball, one underlying question from people in that industry kept popping up: Are these guys for real?

MLB’s proposal was significant. It would completely rework the minor leagues in a way that hasn’t been done in roughly a half a century, if not more. Cities that have had affiliated Minor League Baseball for a century would see their teams eliminated.

What everyone in MiLB wanted to know was: Was the proposal a dramatic initial negotiating ploy or was it a serious proposal?

That question won’t fully be answered until Major League Baseball and Minor League Baseball announce a new Professional Baseball Agreement, which is the framework of the agreement between the two organizations. It’s what governs the relationship through which MLB provides and pays the players and MiLB operates the teams.

But some strong indications were given in a pair of letters that preceded MLB and MiLB’s scheduled meeting at the Owner’s Meetings. Reading both, it’s quite clear that MLB’s plan is a serious proposal. MLB is willing to endure some significant public pushback in its desire to reduce and rationalize the minors.

The initial letter was sent by 105 U.S. Congressional Representatives to MLB Commissioner Rob Manfred and all 30 MLB teams. That letter asked MLB to strongly reconsider its proposed course. The letter-writers wanted MLB to understand the impact “on the long-term support that Congress has always afforded our national pastime on a wide variety of legislative initiatives.”

That letter brought back a quick response from MLB deputy commissioner Dan Halem. Addressed to the U.S. Representatives, the four-page letter spelled out MLB’s rationale for its proposal to take away affiliated baseball from some 42 existing MiLB markets.

The explanation covered many of the same points that had been known for nearly a month. MLB wants to improve both compensation and conditions for its MiLB players. MLB wants to reduce travel by reorganizing leagues and in some cases reclassifying teams from one league to another. And MLB is looking to improve facility standards for MiLB stadiums.

But what was notable is Halem laid out publicly the rationale for the proposed changes. In doing so, his rationale did not leave obvious grounds for negotiation.

The letter explained that MLB believes more than 40 current MiLB teams have facilities well below its expectations, and came to the conclusion that “it may not be a useful expenditure of public funds to upgrade any facility in a market in which the affiliate consistently loses money, lacks a significant fan base or is located in a place that makes travel for Minor League Players burdensome or player development difficult.”

Similarly, when discussing the number of teams, Halem states: “The majority of Major League Club owners believe that there are too many players in the Minor League system.”

Halem also said: “Most of the players on the rosters of rookie, short season and low-A teams are there to fill rosters so the Minor League teams can stage games for their fans, not because the Major League Clubs require all of those players to develop Major League talent.”

Within a couple of paragraphs, MLB explained its rationale by noting that it sees some current MiLB teams as superfluous and it views expenditures to bring numerous ballparks up to increased standards as possibly money poorly spent.

That leaves a dramatic gulf between MLB’s goals and MiLB’s needs as negotiations get rolling. There is nearly a year left to resolve the rather massive differences, but the two sides lack common ground on fundamental core issues. They are starting with disagreements on the very nature of how the minors should function.

If MLB’s concerns about facility standards were based around beliefs that MiLB teams would be unable to meet the increased demands, that would leave MiLB room to offer firm, strict requirements to ensure teams either meet the standards or face Draconian penalties.

MLB argued that it does not believe it is in those markets’ best interest to try to meet the new standards. MiLB believes that keeping affiliated minor league baseball in those markets is vital.

Similarly, MLB’s opening negotiating position is that there are simply too many MiLB teams—more than it needs or desires. If MLB’s stated concern was getting MiLB to help to pay for the increased compensation costs of boosted MiLB player salaries, negotiation could potentially revolve around what MiLB’s contribution would look like to help cover those costs.

But with MLB saying that it does not need 50 or more of its current minor league players and a significant number of its teams, MiLB is left to argue that those teams and players are valuable. Only after winning this argument would MiLB even get to the point of trying to come to some sort of agreement with MLB on who would handle the potential increase in player pay.

There is also some rhetorical flourish in Halem’s letter, as would be expected. He says that MLB teams spend $500 million a year in bonuses and salaries for MiLB players while MiLB sent $18 million to MLB last year in the form of the ticket tax. The vast, vast majority of the $500 million Halem cited is in the form of signing bonuses for players—that is a cost of player acquisition. Teams spent $316.5 million on draft bonuses in 2019 and more than $100 million in bonuses for international amateurs.

As negotiations get going, MLB is saying that it’s important to its interests to cut affiliated minor league baseball by roughly 25 percent (from 160 teams to 120). For MiLB, agreeing to such a reduction is almost unthinkable.

For MiLB, that means agreeing to cut 25 percent of its teams. It also means agreeing to rules proposals from MLB that would hand much of MiLB’s current authority regarding affiliation agreements to MLB teams. Agreeing to both of those conditions would potentially take away much of the MiLB office’s authority.

A number of MiLB owners are also convinced that it would dramatically reduce the valuation of the remaining affiliated MiLB teams. And they say that such a move would hurt baseball as a whole by turning off fans in markets around the country. They also say that such a move would prevent some of the next generation of potential baseball fans from ever connecting with the sport.

MLB makes a point that it isn’t eliminating baseball in those markets. It has floated the idea of MLB-sponsored college summer wood-bat leagues for some cities. Larger markets could become part of MLB’s proposed “Dream League,” which would be partly subsidized by MLB. Such a league would be a quasi-independent league for undrafted players. And they note that currently MiLB teams do move from city to city, leaving teams without baseball under the current format.

Minor League Baseball does not have a lot of clear avenues for response. In these negotiations, MiLB can try to use public opinion mixed with potential Congressional pressure to “save its teams.” MLB also faces the potential for a long list of lawsuits from both teams and municipalities affected by the potential reductions.

But MiLB doesn’t have a truly viable option to walk away from the negotiations. In a nightmare scenario where no agreement is reached before the 2021 season, the current MiLB system would likely shut down. MLB could keep its players at its spring training complexes in 2021, playing games on the multiple back fields at each facility. In 2020, it’s unrealistic to believe that MiLB teams would counter by fielding teams of players they procure themselves for 2021, turning the leagues into quasi-independent leagues.

It’s conceivable that the 2020 season will begin with no clear sign of how minor league baseball will look in 2021. And it’s possible that many MiLB teams will begin next season not knowing if they will be back in 2021.

But MiLB does know now, MLB is serious about this proposal. They are for real.