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Major Shifts Likely in the Way Business is Done Between Major League & Minor League Baseball

By Jim Juliano, Member

Since our last issue of Legal insights in September, things have been happening for the Minor League Baseball (MiLB) industry. You may recall that the foundational agreement between MiLB and Major League Baseball (MLB) expired on Sept. 30.  To this date, the parties have been negotiating a new agreement.

All indicators point to a major shift in the way of doing business between MLB and MiLB.  MLB has taken the position that the number of MiLB teams affiliated with MLB teams should be reduced from 160 to 120 teams, thus severing ties, or at minimum re-assigning, at least 40 MiLB teams.  The teams being affected have not yet been entirely determined, although the Yankees recently issued a public statement re-arranging several teams within the Yankees MiLB organization.  That announcement apparently surprised at least one team owner, who replied with a critical public statement.

MLB has also taken the position that MLB will directly govern the MiLB teams with a franchise system rather than the separate governing structure that has been in place for many years.  We have seen reports of reorganizing MiLB teams and leagues to different levels altogether.

Another point of contention raised by MLB has been the upgrade of the MiLB ballpark facilities and the timing of those upgrades.  Investment of capital by the owner of the MiLB ballpark or the owner of the team will be necessary in most cases.  Depending upon the individual team circumstances, capital investment money for ballpark upgrades may be difficult to identify.

At this stage, individual MiLB teams are reviewing their options.  The COVID virus has caused the cancellation of the entire 2020 season, and the 2021 season has yet to be scheduled in light of the virus and the above uncertainties.  Legal issues are being considered, including the status of ballpark leases, sponsorship and naming rights agreements, league affiliations, and affiliations between MLB and MiLB clubs.

All of these points, plus more, remain under discussion. We will update as we receive additional information.