It's difficult to get a handle on overall team finances, not only
because most minor league teams are privately held but also because
the sport's governing body is as prone to cry wolf as its major
league counterpart. However, several numbers shine through the
gloom and doom.
CFO Magazine reported that the 27 Class AAA teams had annual
growth rates of 13 percent in 2001, and that their margins might be
as high as 70 percent. Teams also cost more when they sell these
days. Round Rock's Miller estimates that the asking price for a
Class AA team is $9 million and a Class AAA team $15 million;
compare that to the mid-1980s, he says, when a minor league team
could be had by assuming its debt, often as little as $100,000.
Why the huge leap in value? First and foremost is attendance, which
can provide a couple million dollars in cash flow without all that
much effort. Another is subsidized costs. The major leagues pay
almost all player expenses, and their home cities and towns have
financed 27 new minor league stadiums since 1999. In
Frisco, Texas,
for example - where the
Texas Rangers and Mandalay Sports
Entertainment will jointly run the RoughRiders - the city paid $23
million for an 8,800-seat ballpark with 29 luxury suites and a
private club.
"The old parks weren't comfortable, and they weren't clean," says
Arthur Johnson, the
author of
Minor League Baseball and Local
Economic Development. "Compared to them, the new parks are
money machines. You get a decent lease, and most of the teams do,
and you're going to fill it up."
Which leads to the other key difference: marketing. The new breed
of minor- league owners understands it in a way the old-timers
never did. Past owners thought they were selling baseball to
baseball fans. Today's owners know that selling tickets isn't about
the game, but about the family that goes to the game.