A Major Setback Sets the Stage for a Minor Comeback: The Cancellation of the 2020 Minor League Baseball Season
By: Mark Derner* Posted October 9, 2020
Organized baseball in America has an illustrious history, yet due to the coronavirus pandemic Minor League Baseball (MiLB) cancelled its first season in 120 years.[1] Following the seasons’ cancelation, fifteen Minor League Baseball teams filed a federal lawsuit against five insurance companies, alleging action and inaction by federal and state governments contributed to catastrophic financial losses for ball clubs.[2] Chattanooga Professional Baseball, L.L.C. v. Philadelphia Indemnity Insurance Co.,[3] alleges the federal government failed to recognize the severity of the pandemic, did not contain the virus and furthermore, failed to prevent the virus’s migration across the country.[4] The teams contend they are eligible to collect on business interruption claims despite a policy provision excluding losses caused by a virus and acts or decisions including failure to act by any person, group, organization or governmental body.[5] Lead counsel for the MiLB teams contends that it was not coronavirus that ended the Minor Leagues’ season, it was Major League Baseball’s (MLB) refusal to provide players to fill minor league rosters that put the nail in the coffin.[6] MiLB players take the field in Minor League stadiums and don jerseys of Minor League teams, yet they are on payroll of Major League Baseball.[7] In addition to paying and managing the players the MLB has the ability to withhold players, a power they exercised in June of 2020.[8] Simply put, MiLB teams are unable to play because Major League Baseball has withheld the players; which is something lead attorney Anthony Sandler, calls a “classic business interruption.”[9] Sandler compared this pandemic to recent catastrophes like the September 11th attacks, Hurricane Sandy, and Hurricane Katrina where insurance companies provided business interruption insurance payments to businesses affected in the wake of those tragedies.[10]
The cogs of justice move slowly and it could be years before this case reaches trial or settlement; however, there are serious impacts now.[11] Currently, there are 160 Minor League Baseball teams affiliated with Major League Baseball in a variety of markets around the United States.[12] Teams like the Binghamton Rumble Ponies who serve a market of 45,000 people to the San Antonio Missions who find themselves in a market of 1.5 million people.[13] Regardless of the population or geographic area, Minor League Baseball teams face the same problem: their stadiums are empty and so are their rosters.[14]
The most obvious impact is on the players who are in the pipeline to baseball stardom.[15] Minor League players, already underpaid and usually competing for limited spots on Major League rosters, will lose a season of their careers and therefore, will lose opportunities to succeed.[16] The players will be compensated, but barely.[17] Major League Baseball is committed to pay roughly 8,000 Minor League players a $400 per week stipend until the end of the scheduled season, September 7th, 2020.[18] The MLB has always had an upper hand over the Minors because the MLB supplies the affiliates with players and coaches.[19] Where the Minors and Majors differ is the revenue opportunities: while the MLB ended up commencing the season playing in empty stadiums, this was not an option for Minor Leagues because the MiLB does not have widespread TV or streaming deals like their major league affiliates.[20] Nearly the entire revenue model of Minor League Baseball revolves around staging games in front of fans.[21]
The impact goes beyond players who fill the rosters, affecting the communities that keep these franchises alive.[22] Each Minor League Baseball team averages twenty-one full time employees and 200 seasonal workers, while higher affiliates like Class AA and Class AAA employ even more.[23] Without revenue from games, teams have been forced to lay off and furlough employees throughout the pandemic.[24] The Sacramento Rivercats, a Class AAA affiliate of the San Francisco Giants, recently had to cut seasonal part time staff from 500 employees to zero, while the full time staff was cut from over 50 down to 20.[25] This is a trend which is likely to continue because the payroll protection loans, issued early in the shutdown, have since dried up.[26]
Minor League Baseball’s cancellation and future contraction of teams also represent the dissipation of many entry level-jobs into the sports industry.[27] Aspiring broadcasters looking to get first-hand experience calling games for the Winston-Salem Dash or sports management graduates who want to work in operations for the Brooklyn Cyclones will not have the opportunity to do so this season.[28]
Regardless of the bleak outlook on the season, Minor League ownership has been inventive with how to use their empty ballparks within state coronavirus guidelines.[29] The Pensacola Blue Wahoos and Salem-Keizer Volcanoes have turned their ballparks into Airbnb properties to rent out for a night of fun.[30] Other minor league franchises have used their stadiums as farmers markets and restaurants, yet none of these options meet the revenue brought in by a seventy game home schedule.[31] As the Minor League teams experienced firsthand this summer, nothing can replace a night at the ballpark.
*Staff Writer, Jeffrey S. Moorad Sports Law Journal, J.D. Candidate, May 2022, Villanova University Charles Widger School of Law.
[1] See R.J. Anderson, Minor League Baseball Cancels 2020 Season, CBS Sports (July 1, 2020), https://www.cbssports.com/mlb/news/minor-league-baseball-cancels-2020-season-heres-what-it-means-for-prospects-and-teams/ (noting Minor League Baseball will not be played for first time in 120 years).
[2] See William Weinbaum, Minor League Baseball Teams Sue Insurers Over Coronavirus Claims, ESPN (June 23,2020), https://www.espn.com/mlb/story/_/id/29351776/minors-teams-sue-insurers-coronavirus-claims (detailing federal complaint filed by fifteen Minor League teams).
[3] No. 2:20-cv-03032 (E.D. Pa. filed June 23, 2020).
[4] See Weinbaum, supra note 4 (reporting details of complaint against insurance companies).
[5] See id. (“We will prove in a court of law why the exclusions don’t apply.”).
[6] See Michael Braga, Minor League Baseball Teams the Latest to Sue Insurance Companies for Failing to Pay Business Interruption Insurance, USA Today (July 8, 2020), https://www.usatoday.com/story/money/2020/07/08/covid-19-losses-should-born-insurers-baseball-teams-say/5383892002/ (observing lead attorney for Minor League teams contends MLB, not Coronavirus, was reason for the seasons end).
[7] See id. (noting 160 Minor League teams unable to secure players from Major League Baseball for first time in 100 year plus history).
[8] See id. (illustrating MLB has the power to withhold players however the Minor League Teams believe withholding the players led to direct physical loss).
[9] Id. (“The teams are unable to play because they are not getting their players from MLB, that is a classic business interruption.”) (quoting Anthony Sandler).
[10] Id. (“This is no different than cases after 9/11, Hurricane Sandy and Hurricane Katrina. The courts view it very dimly when insurers collect premiums then when a major catastrophe hits, then say they can’t pay.”) (quoting Anthony Sandler).
[11] See id. (finding minor league teams average about twenty employees and more than two million dollars in annual expenses annually and now expect total losses to exceed one hundred million dollars across the minors).
[12] See Weinbaum, supra note 2 (detailing vast reach of 160 Minor League affiliates).
[13] See id. (illustrating effect on cities and towns across country whose only common denominator is Minor League baseball).
[14] See Robert Sanchez, Minor League Baseball is in Crisis, Sports Illustrated (May 19, 2020), https://www.si.com/mlb/2020/05/19/minor-league-baseball-is-in-crisis (noting attendance across minor league topped forty million attendees for fifteen straight seasons); see also J.J. Cooper & Josh Norris, The 2020 Minor League Season is Canceled. So what happens next?, Baseball America (June 30, 2020), https://www.baseballamerica.com/stories/the-2020-minor-league-season-is-canceled-so-what-happens-next/ (reporting players not part of MLB teams’ extended 60 man roster will likely not play organized baseball this year).
[15] See Cooper, supra note 12 (acknowledging loss of Minor League season effectively halts baseball development and creates uncertainty regarding pay).
[16] See id. (reporting many players will try playing in independent leagues however those leagues have been reduced dramatically and there will be no opportunity to be called up to big leagues).
[17] See James Wagner, Minor League Baseball Season is Canceled for the First Time, N.Y. Times (June 30, 2020), https://www.nytimes.com/2020/06/30/sports/baseball/minor-league-baseball-season-canceled.html (observing compensation moving forward for Minor League players will be four hundred dollars a week).
[18] See Kyle Glaser, How Each MLB Team Plans to Pay Minor Leaguers in 2020, Baseball America (Aug. 3, 2020) https://www.baseballamerica.com/stories/how-each-mlb-team-plans-to-pay-minor-leaguers-in-2020/ (reporting some Major League teams will pay Minor Leaguers a $400 per week stipend through July 31, while other teams will pay through end of originally scheduled Minor League season).
[19] See Braga, supra note 6 (discussing MLB’s control over players through payment, management and ability to withhold).
[20] See Maury Brown, 15 Minor League Clubs Sue Insurers Over Financial Losses Due to Pandemic, Forbes (June 23, 2020) https://www.forbes.com/sites/maurybrown/2020/06/23/15-minor-league-clubs-sue-insurers-over-financial-losses-due-to-pandemic/#2d8be2c97116 (identifying that Major League Baseball benefits financially from local and national television agreements even without live fans in stadium).
[21] See id. (highlighting Minor League teams’ revenue streams which are dependent on gate revenue, concessions and merchandise, all flowing from attendance).
[22] See Braga, supra note 6 (reporting hundreds of people relying on in-season activity for part of their income will now struggle); see also Wagner, supra note 15 (acknowledging in addition to cutting employees chance teams may fold if they go eighteen months without revenue).
[23] See id. (illustrating how majority of earnings per game go to operating costs like part-time and full-time employees’ salaries and stadium rent).
[24] See id. (discussing teams have been forced to furlough and lay off full time workers due to canceled season).
[25] See id. (describing reluctant payroll cuts team president Jeff Savage made this season despite anticipating record attendance in new stadium).
[26] See Cooper, supra note 12 (reporting although many teams took loans from paycheck protection program likely more jobs will be lost due to expiration of those loans).
[27] See Maury Brown, 2020 Minor League Baseball Season is Canceled Amid Coronavirus Pandemic, Forbes (June 30, 2020) https://www.forbes.com/sites/maurybrown/2020/06/30/the-2020-minor-league-baseball-season-is-canceled-due-to-pandemic/#77a25af07cd3 (highlighting among other financial fallout issues diminishing openings for entry level jobs in sports).
[28] See id. (finding thousands of sports management and journalism college graduates not able to get opportunities due to cancellation of season).
[29] See generally Cooper supra note 12 (referencing inventive options teams have used to try recouping revenue this summer).
[30] See Katherine Acquavella, Twins Minor-League Affiliate Lists Ballpark on Airbnb as Rental, CBS Sports (May 25, 2020), https://www.cbssports.com/mlb/news/look-twins-minor-league-affiliate-lists-ballpark-on-airbnb-as-rental-offers-full-access-to-field-clubhouse/#:~:text=The%20Pensacola%20Blue%20Wahoos%2C%20the,up%20for%20rent%20on%20Airbnb.&text=For%20the%20first%20time%20ever,scenes%20ballpark%20experience%20in%20history (reporting Pensacola Blue Wahoos renting out stadium for $1,500 dollars per night for up to ten people).
[31] See Cooper, supra note 12 (illustrating that the Altoona Curve is renting out stadiums as farmers markets to recoup losses).
