Key questions as minor league baseball officially cancels 2020 season

In news that was entirely unsurprising, minor league baseball president Pat O’Conner announced Tuesday that this year’s minor league season has been canceled.

“These are unprecedented times for our country and our organization as this is the first time in our history that we’ve had a summer without minor-league baseball played,” O’Conner said in a statement. “While this is a sad day for many, this announcement removes the uncertainty surrounding the 2020 season and allows our teams to begin planning for an exciting 2021 season of affordable family entertainment.”

While the news was expected, that didn’t lessen the general fear and uncertainty about the immediate future of professional baseball swelling below the level of Major League Baseball. The reason for the cancellation — the ongoing coronavirus pandemic that has gripped the globe for most of 2020 — is beyond the control of officials at any level of the game. But as unfortunate as those circumstances would be even in normal times, for MiLB teams, the timing is especially fraught.

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The Professional Baseball Agreement, the document that governs the relationship between MLB and its affiliates, expires in September. Last fall, in advance of baseball’s annual winter meetings, news leaked of baseball’s plan to cut the total number of affiliated teams in the minors from 160 to 120. That news kicked off a fiery volley of rhetoric between the respective league offices as both sides positioned themselves on the public relations and political fronts.

That building fight screeched to a halt when the coronavirus stole the spotlight, putting everything into months of limbo. Teams throughout the minors waited out the combative talks between MLB and the MLBPA regarding the season at the sport’s highest level, all while holding out hope of salvaging at least part of a campaign of their own. Those hopes were abandoned with Tuesday’s announcement.

The fallout from the minors’ lost season will take months to untangle, even as the mostly dormant talks regarding a new PBA invariably resume. Still, let’s try to take a snapshot of the current landscape of the minor leagues after Tuesday’s sad news.

1. Why did this happen?

The pandemic was the reason, of course. From a more technical standpoint, however, it was this: To play baseball, you need to have players. Minor league teams weren’t going to get them and were officially informed as such this week.

The structural foundation of the PBA is that minor league organizations provide the infrastructure — the cities, teams, stadiums, leagues, umpires, etc. — with which their Major League Baseball overlords can develop their future players. Thus big league clubs supply players to their affiliates and pick up the vast majority of the associated labor cost.

However, when MLB announced its own return last week, it was not a full resumption of operations. Teams have been announcing player pools of up to 60 players for the truncated big league season, but that’s it. Players not on the active roster, which starts off at 30 players per team and decreases as the season progresses, are assigned to a taxi squad. The taxi squad players will include a number of high-level prospects who will receive some developmental work. However, this will be done through practice, simulated games and workouts as opposed to the normal competition of minor league games.

Simply put: Big league teams will not be assigning players to their affiliates. Thus minor league teams could not have conducted a season even if they wanted to.

2. What happens to the players?

As mentioned, many of the top prospects are being included in their organization’s player pool, even if there are no plans to have them see big league competition this season. Those players will receive some much needed developmental repetitions. Some of those players, and other lesser prospects who would otherwise qualify as organizational depth, will indeed see action in the majors as teams try to navigate this unusual, 60-game season. The situation for those players is straightforward.

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For others, it’s also straightforward, but in a less encouraging way. Teams released scores of minor leaguers in recent weeks in advance of the season-resumption announcement. Many of those players would have been released at the end of spring training anyway, but according to Baseball America, the number of players released during that wave of transactions appears to outnumber similar moves in recent seasons.

However, there are also numerous players caught in between. They remain on their organization’s reserved list but haven’t been added to the 60-player-per-team pool. But with Tuesday’s announcement, they have no place to play. On Monday, Baseball America’s J.J. Cooper reported that if a player in this large class gains consent from his organization, he would be allowed to seek a spot in one of the independent minor leagues this summer. Some independent leagues, such as the American Association, plan to play in a reduced form. Others, such as the Frontier League, have already canceled their season.

Continued pay for minor leaguers has been a hot-button issue since the shutdown began, with each team’s policy being scrutinized. There is still no uniform approach. Some teams, such as the Kansas City Royals, have pledged to pay players until the end of what would have been the regular minor league season. Others, such as Oakland and Washington, reversed initial decisions to stop paying their minor leaguers. As of Tuesday, every team was pledged to pay players a $400 weekly stipend at least through the end of June. Most teams have extended that at least through July.

One silver lining is that minor league players will receive service time credit even with the season being canceled. The minor league version of service time is crucial for the class of players beyond the top-prospect lists. It determines what level they can be assigned to, with the higher levels receiving higher pay. More importantly, it determines when they will be eligible for the Rule 5 draft, which forces their organization to either place them on the 40-man big league roster or expose them for selection by another club.

Rule 5 eligibility is a crucial benchmark in the career of a minor leaguer from both a competitive and financial standpoint. Luckily, for any minor leaguer who does not play this season but would otherwise have been Rule 5-eligible this winter, that will still be the case.

3. Will minor league teams survive this?

Teams at the Double-A and Triple-A level will survive, even though many have had to lay off or furlough staff in recent months. One thing that nearly all teams at those levels have is the certainty of being a high-level affiliate of a big league club next season and beyond, however the negotiations for a new PBA are resolved. They reside in larger municipalities than lower-level clubs and thus have more corporate support and a larger season-ticket base. Nevertheless, even for those clubs, the loss of an entire season is a major setback.

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Unlike MLB, which has massive revenue streams from its broadcast and digital partners, nearly the entire revenue model of minor league baseball revolves around staging games in front of fans. Even most of their corporate sponsorships and merchandising endeavors are built around this dynamic. Teams have pivoted to creating as many new revenue streams as they can. One team turned its ballpark into an Airbnb. Others have screened movies, drive-in style.

Several Texas-based organizations joined a college wood-bat summer league, planning to stage those games in front of limited-capacity gatherings. While the full list of alternate-site locations for MLB taxi squads has not yet emerged, many of those sites will be those of nearby affiliates. While the taxi squads won’t participate in games in front of fans, presumably MLB teams will have to compensate minor league clubs for the use of their facilities.

Still, even as minor league teams scramble to recover as much revenue as they can, the receipts will invariably be a drop in the bucket of a normal season’s income. Last week, fifteen minor league teams filed a federal lawsuit against five insurance companies, claiming “action and inaction by federal and state governments” contributed to “catastrophic financial losses” for ballclubs.

This means that some clubs in the lower levels of the minors, many of which have been mentioned in conjunction with MLB’s contraction proposal and thus lack certainty about future marketing efforts, will struggle to survive.

Compounding the issue, teams will have to reach out to season-ticket holders and corporate partners about contingency plans for monies already collected and, in most cases, already spent. Options could include simply rolling the commitment over to next season, or converting 2020 expenditures into gift cards, which would help teams preserve cash flow. Invariably, as many industries beyond baseball have struggled in recent months, some fans and companies will seek refunds, and it’s possible that a few cash-strapped teams will not have the funds to make them.

All of this will be sorted out in the weeks to come, now that the season has been definitely called off.

4. How does this impact negotiations for a new Professional Baseball Agreement?

Recent talks between MLB and MiLB have been sporadic, as big league owners had their own season to worry about. Those talks should resume in earnest soon. When they do, MLB negotiators will proceed with the knowledge that many minor league clubs are operating in precarious terrain. That was true before the minor league season was called off, but now that it has been, MiLB’s worst-case scenario has become reality.

To put it succinctly: Nearly every avenue minor league owners had to create leverage in their effort to stave off contraction has been blocked.

5. What will minor league baseball look like when it returns?

Before the pandemic, there was considerable public and political pressure building on MLB negotiators to reach an accord with MiLB that did not involve contraction. Jobs could be lost. Economic activity could be curtailed. But the coronavirus turned the heads of the politicians, who had to concern themselves with similar issues on a much larger scale.

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Now, some of the clubs believed to be on the cut list might go out of business anyway, and MiLB owners everywhere are looking for any life raft they can grab. MLB negotiators hold all the cards. Its trump card is that if no agreement is reached, then MLB can simply walk away and create their own feeder system from scratch.

That’s not likely to happen. Mostly, that’s because of the expense that would come with setting up an entirely new minor league system. New teams, new venues, a new infrastructure and what would likely be a whole slew of litigation by MiLB owners and municipalities of contracted teams. Of course, the litigation could occur anyway unless MLB insists on that option being waived in the final PBA agreement.

The most likely outcome is that a new PBA will be agreed to, and it will be on MLB’s terms. Given the terrain, desperate MiLB owners will latch onto pretty much anything that comes their way. Thus expect to see a reduced list of affiliated teams next season, a shuffling of affiliations, and a restructuring of the leagues themselves as Major League clubs seek greater geographic efficiency.

When the minor league season ended last summer, business was good, perhaps as good as it had ever been. Most teams were profitable, with more than 40 million fans clicking the turnstiles of minor league parks across the nation. When we next see affiliated baseball at the minor league level, we don’t exactly know what the landscape will look like. We don’t, in fact, know if we will even be able to recognize that landscape at all.

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