Explaining The Economics Of Opening Minor League Baseball In 2021

Because of the weird economics of minor league baseball in a coronavirus-affected world, playing games in front of limited capacities of fans is actually less economically tenable for teams than playing fan-less games.

The coronavirus pandemic provides plenty of unknowns for the 2021 minor league season. Already, the start of the Double-A and Class A seasons have been delayed a month because of coronavirus concerns. Minor leaguers set to head to those levels will not be allowed to begin spring training until the major leaguers depart from spring training complexes at the end of March.

There is an acknowledgement that this year’s minor league schedules are subject to change. Major League Baseball commissioner Rob Manfred has until March 15 to decide whether the start of the Triple-A season is going to be postponed because of the coronavirus.

There are two separate issues at play for the minor leagues. One has to do with player movement. As important as it is for minor league teams to play games both for player development and for the financial stability of minor league teams, MLB is not going to risk its own season to ensure the minor leagues get their games in.

That means figuring out how to safely play games at Triple-A is much more daunting than Double-A and below. The frequent player movement between Triple-A and the majors, combined with Triple-A teams’ general reliance on commercial air travel, makes for a difficult combination. 

 

Reno begins the 2021 season at Sugar Land, 1,910 miles away from its home ballpark. Tacoma has a 1,985-mile trip to Oklahoma City to begin the year. Switching to bus travel is simply not viable. Charter flight costs are outside of the realm of possibility for Triple-A teams without MLB help to defray the costs.

That leaves few easy answers. MLB’s health and safety rules require MLB players to avoid almost all contact with the public and all travel is on charter flights. Bringing up a pitcher or hitter who just hopped a couple of commercial flights would run counter to the safeguards MLB has put in place in the major leagues. It also would increase the risk of exposure for those minor league players. That is why teams have continued to plan for the possibility of alternate training sites.

That’s only one issue. Minor league teams are also looking at the economics of playing in reduced-capacity stadiums. No one expects to be playing in full ballparks any time soon, and there are plenty of operators who say they don’t expect they will be playing in front of full-capacity crowds at any point in 2021.

Right now, simply having fans at all may be difficult in some parts of the country.

Currently, there are a number of ballparks around the minors where teams are not allowed to have fans. Every California League team would not be allowed to admit fans currently because of coronavirus restrictions. The story is similar in Washington state (which has multiple High-A teams as well as Triple-A Tacoma) and New Mexico (Albuquerque), as well as a number of other states.

The hope is that as the winter surge of the coronavirus pandemic subsides, cities will be able to allow fans to attend minor league games, even if it’s at reduced capacities.

However, as states like New York inch toward allowing fans at 10% of capacity, minor league operators who have run the numbers have realized a disturbing fact: they will lose money playing fan-less games, but they will likely lose even more if they play in front of crowds capped at 10% of capacity.

Teams are in a volume business. Using a conservative $22 per capita rate ($22 spent per fan through the gates for tickets, parking, concessions and merchandise), a team drawing 6,000 fans for a well-attended game can bring in $132,000 in revenue for one game. Just 2,000 fans through the gates means $44,000 in revenue. Pack a Triple-A ballpark for a fireworks night with 9,000 fans through the turnstiles and that’s roughly $200,000 in revenue on one very good night.

Now take away those fans entirely and the revenue disappears but many of the costs remain.

Most leagues make the home team responsible for the visiting team’s hotel costs (the logic being that the home team can get a better price on hotel rooms through sponsorship deals). With teams responsible for 23 hotel rooms, that will run $1,500 to $3,000 per day. The wide spread in hotel costs is very dependent on where a team is located.

Then, there are the costs to run the stadium for a fan-less game. No fans means that many gameday employees will not be working—no concessions stand workers, ushers and fan service employees.

But there are people who still need to work to put on a game—umpires (who also need hotel rooms), official scorers, security, scoreboard operators, grounds crew and clubhouse personnel. And after every game, the clubhouses need to be deep cleaned. Night games need banks of lights and the $100-$300 per hour electricity bills that come with them.

Conservatively, it’s another $2,000 a day to play a fan-less game in addition to the hotel costs. So that’s $3,500-$5,000 or more to play a game. That’s $24,000-$30,000 per week even though minor league teams aren’t responsible for paying their players and coaches.

The numbers don’t get much better when a team hits the road. The costs of running the games go away, but they are replaced by travel costs. The two buses now required on a road trip are expected to run around $2,000 a day ($12,000 a week). If a Triple-A team is flying, it’s looking at $12,000-$15,000 in travel costs for a round trip for the travel party.

 

For minor league teams that haven’t been able to host a game in 18 months, the idea of burning through a minimum of $65,000 or more a month to play fan-less games is untenable.

Letting a few fans in actually makes those numbers worse. Multiple minor league operators said they would likely lose more money with fans at 10% of capacity than they would without fans.

The minute fans are allowed in the stadium, game day staffing goes up significantly. There would be a need for concession stand workers, ushers, and customer service workers as well as cleaning crews to make sure the stadium is well cleaned every night (in the midst of a pandemic, a crew with leaf blowers blowing away peanut shells and wrappers post-game is not sufficient).

Multiple teams estimated that if they have fans in the stands, the costs go up by an additional $3,000-$4,000 per game.

So now teams would be looking at likely a minimum of $6,500 in costs per day for games where they are allowed to bring in fans. At 50% capacity, that’s not a problem as the revenues that those games will bring in will far exceed the expenses.

But if fans are capped at a much smaller percentage, the equation changes dramatically. At 10% of capacity, multiple teams said they would be only able to bring in season ticket holders and groups who purchased their tickets for the canceled 2020 season.

That makes sense. The season ticket holders for 2020 who didn’t request refunds are among a team’s most loyal and supportive fans. They should be the ones who get first crack at attending a game where the attendance is strictly limited.

But those are all fans who paid for their tickets months ago. As such, that means teams will not be making any new ticket revenue when they come into the ballpark. At 10% of capacity, having fans at games will increase expenses by thousands of dollars, but will bring in very minimal revenue (only whatever those fans spend on concessions/merchandise).

Allowing those season ticket-holders and groups in will begin to take a remaining liability (the make-goods on tickets sold in 2020) off the books, which will help ensure the 2022 season is a better one financially. But for teams that are understandably cash-strapped, trying to figure out how to make the numbers work for 2021 remains a very difficult challenge.

Multiple operators at different levels of the minors said that somewhere between 20-25% of capacity is where the equation begins to shift. Many teams will likely still lose money on games at that level of allowed attendance, but operators say the losses will be minimized, and the benefit of once again playing games, servicing sponsors and ticket holders from 2020 and moving on toward a more normal 2022 would be worth it. Multiple teams said they won’t begin to break even or begin to be profitable until they can return to closer to 40% capacity.

It all adds up to a very tricky equation. Teams are hopeful that as vaccination rates increase, the season will get closer to normal as summer arrives. But there are still plenty of hurdles to playing minor league baseball in 2021, especially when it comes to games in April and May.