Minor League Baseball's Business Plan
Minor league baseball is a highly promoted, year-round entertainment enterprise — with loudly touted but minimal contributions from the Majors.
Regions Field, home of the Birmingham Barons, opened in 2013.
It can be difficult to think about a minor league baseball stadium as a place of business. Fun and games transpire in these ballparks, not work. After all, they always start by proclaiming that it is time to “play ball.”
But just like at a restaurant or movie theater or music venue, there is an enterprise behind the entertainment. It doesn’t matter that the customers might be dripping nacho cheese on their shirts and laughing at fuzzy mascots.
“Minor league baseball is a business just like any other, and the goal is to make more money than you spend,” Mobile BayBears General Manager Chris Morgan says. “We have expenses, and we need to bring in revenue in order to operate.”
The BayBears, along with the Birmingham Barons and Montgomery Biscuits, play on the Double-A professional level and are all affiliated with a Major League Baseball team. Contrary to popular belief, however, most MLB organizations do not pay the bills for their minor league clubs.
“A lot of people think the major league parent club essentially underwrites the minor league franchise, and that couldn’t be further from the truth,” Morgan says. “The major league parent club’s obligation to a minor league franchise really is minimal.”
Basically, MLB organizations pay the salaries of the players and coaches on the minor league teams, and they compensate the teams for per-diem meals during road trips and the pre-game spread in the clubhouse for home games. In addition, whenever players are moved to or from a minor-league team during the season, the MLB organization pays those travel expenses.
And that is about it.
The minor league teams are responsible for covering nearly all other operating costs, including paying for busing and hotel rooms on road trips. The cost of game-day operations falls almost entirely on the minor league teams, with the exception of playing equipment (bats, balls and helmets, for example), which is provided by MLB.
“Whenever we put on our fireworks shows, those have a cost behind them. Printing tickets or handing out pocket schedules, we have to pay for that,” Montgomery Biscuits General Manager Scott Trible says. “We get reimbursement each month from the parent club for things like equipment and food. But they don’t help us market games or sell tickets or pay our day-to-day operating costs.”
As a result, even though the minor league playing schedule lasts for only five months (early April through early September), the organizations operate 12 months a year with dozens of full-time employees. The offseason is spent selling tickets and advertising, securing sponsorships, planning promotions and using the stadium for other revenue-producing events.
“The business model for minor league baseball has evolved since I started in 1993. It’s more of a year-round business in so many different ways,” Birmingham Barons General Manager Jonathan Nelson says. “Even when the team is not playing, we’re still actively preparing.
“We try to fine tune things all year long and see what areas we can improve upon, whether it be a promotion or the mascot race we do in the middle of the game. It’s a continual process and a cycle of getting ready for the next game, next series and next season.”
Establishing a promotional calendar is one of the most time-consuming operations for a minor league club and one of the most important. Minor league baseball is a sport where fans attend as much for the overall ballpark experience as for the game itself. So promotional events and giveaways are often more important than the playing product on the field.
“The bulk of the people who attend these games aren’t necessarily minor league baseball fans,” Morgan says. “They’re going to root for the team to win, but if the team loses that’s not going to really affect them. So promotions are important, because you have to think of ways to bring fans out to the game.”
Teams have some sort of promotional event for nearly every home game. Post-game fireworks are easily the most popular promotion and usually take place once a week during home stands. But as Trible says, “We can’t do 75 fireworks shows a year.”
So teams will give away caps, T-shirts, bobblehead dolls and miniature bats. They will have special discount nights for seniors or members of the Armed Forces. There will be dog days, when pooches are allowed in the park, and special post-game concerts.
And, of course, there are numerous discounts on food and drinks, from Dollar Hot Dog Night to the popular Thirsty Thursdays (and sometimes Tuesdays), with discounted prices on beer and soda.
“A lot of people come to the ballpark to eat and drink,” Morgan says. “Minor league baseball is a one-stop shop. You get entertainment and a meal.”
Increasingly, teams are finding ways to use their ballparks to generate revenue during the offseason as well. Ballrooms and other areas within the stadiums are used for business meetings, trade shows, fundraisers, banquets and even wedding receptions.
“We try to make Regions Field (home of the Barons) a viable entertainment option and an active business partner in Birmingham,” Nelson says.
It is important for the clubs to generate revenue because of all the costs that go into holding 70-plus games each year. Trible points out that something seemingly as simple as animation on a scoreboard can take several days to produce.
“There’s a misconception that you just click some buttons and all this stuff comes on,” Trible said. “But behind that, there is a team of people who have worked to make sure that it’s the best possible experience it can be for the fans.”
Montgomery’s Riverwalk Stadium is home field for the Montgomery Biscuits.
In addition, while MLB regularly inspects minor league ballparks to ensure they are properly maintained, the responsibility for that maintenance falls on the minor league clubs. Most of the stadiums are publicly owned, and teams usually have some sort of revenue / maintenance agreement with the city.
“We have a revenue-sharing lease with the City of Montgomery. So basically whenever we sell a ticket or a hot dog or a sponsorship, we’re giving a portion of that to the city as part of our lease,” Trible says. “With that, they take on the majority of the maintenance. For example, the city will send people to fix a plumbing problem in the stadium.
“There are certain things defined on the lease, and every minor league lease is different. Some people may negotiate whether lightbulbs are covered or door locks. But for the most part, since the city owns the facility, they take care of a lot of the maintenance stuff. When it comes to improvements, we’ll have conversations with the city and talk about what we’d like to do and whether it is feasible.”
Stadium upkeep is just one of the many aspects of the business surrounding minor league baseball. And while the goal is for the franchise to have a profitable bottom line, in the end it’s all about creating game-day enjoyment for the fans.
“We have to focus on the business operations and running the ballpark and really doing all the bells and whistles that go into (a minor league organization),” Nelson says. “But mostly, we want to make every game a memorable experience for the youngest fan to the oldest fan to all the different groups that come out here.”
As with any company, that just makes good business sense.
Cary Estes and Matthew Coughlin are freelance contributors to Business Alabama. Estes is based in Birmingham and Coughlin in Pensacola.