Considerations For When You Buy A Minor League Baseball Team

Most adult baseball fans would love the opportunity to own a minor league baseball team, either one which is affiliated with a MLB team or even an independent professional baseball team.  The reasons vary, but they could include anything ranging from:

  • wanting to buy a minor league baseball team since childhood
  • attempting to build a terrific organization to pass onto your children
  • because you want to bring professional baseball to your community
  • you were involved with professional baseball at some point earlier in your career
  • you want to build the business and sell the team for a respectable profit
  • you love being around baseball and the players
  • you need it as part of a larger strategy for your business
  • you want to own, or have ownership in, a team with a direct tie to your favorite MLB team

While the reasons vary, one consistent thing is that if you plan on running the venture for a significant duration then you had better regard it as a a business instead of as a hobby.   The reasons for this also vary, but know that you must take it seriously if you love the game of baseball.

Going into mid-2010’s, your desire to buy a minor league baseball team has to be more rooted in smart business than in previous decades.  With so much required before the team throws its first (or next) pitch, you have to look at your lines of revenue in order to give yourself and your partners a solid chance of earning a decent short-term ROI, not to mention participating in any valuation increase from the time your bought the team.

Here are just some of the lines of revenue from the traditional model:

  • tickets (all forms – single, group, season, suite rental, specialty)
  • concessions
  • beer
  • parking
  • merchandise
  • sponsorships (all forms)
  • camps & clinics
  • revenue from promotions (not included in any of the above)
  • miscellaneous

The future model will include all of the above plus:

  • “micro revenues” such as monetizing your website and social media
  • new forms of merchandise
  • intellectual property
  • affiliate revenues tied to previously-wasted sponsorship inventory
  • creation of new high-traffic inventory against which you can sell ad space
  • equipment endorsements (passive or direct)
  • additional lines of revenue (e.g. merchandise being sold nationally)
  • additional outlets to increase team brand exposure to boost all forms of revenue

You also want to balance upside opportunity with certainty.  This means that the prospective minor league baseball owner or investor should weigh the opportunities to make good profit (and good cash flow) between the affiliated (MiLB) and independent league teams which exist and are looking for investor/ownership capital.

Even assuming that your financial investment is 100% liquid and represents a very small portion of your liquid net worth, you still will want to weigh several factors.  These include:

  • Who runs the league in which your team will play?  Will you have a say in how things are run?
  • Are there certain entity structures which are encouraged or discouraged for your team?
  • Who affects certain hard costs such as travel, per diem amounts for players, the maximum or minimum you can pay on-field personnel, etc?
  • How long has the league been in existence?
  • Do the teams in the league have a track record of stability?
  • Can you get along with the other owners in the league?
  • Does your league have committees, or is one person responsible for decisions such as how many weekend games you can get to maximize attendance?
  • How will your purchase of the minor league baseball team be financed?

At the local level you will need to factor in:

  • What rights do you have at the stadium?
  • Can you keep the majority of revenues collected?
  • If the stadium is funded by bond issuance, who pays for what with the city?
  • Are there union costs you have to incur?
  • What are the workman’s compensation costs likely to be?
  • Is there a political situation in the city or county which could affect your ability to play?
  • How responsive are the fans to the current team?  If a new team, what data is available supporting the likelihood that the fans will support the team?
  • Can you make staff changes in the front office, announcers, grounds crew, etc?
  • Who handles the team’s financial records and taxes?
  • What will make your team unique in terms of entertainment options to the local audience?
  • If taking over a previous team, how much damage has the previous front office staff done either by intent or neglect?  Can you undo any damage quickly and, if so, what will it require?
  • Who controls the physical facility such as how long the lights can stay on, city ordinances for sound or fireworks, and compliance with fire codes/ordinances?
  • Can you advertise your upcoming games around town with street signs and other marketing techniques, or are you prohibited from doing by city laws?

Again, this is just a small sample of what you will be dealing with as someone looking to buy a minor league baseball team.

Hopefully you start to realize that being a successful minor league baseball team owner is more challenging than what most people realize when they are dreaming of ownership.  Should you decide to pursue the opportunity then you should consider pursuing several of the new lines of revenue to give yourself some “cushion” or a “buffer” during your first year of owning a pro sports team.

Please contact us for help on these new revenue streams.  If you also need some assistance on the process of buying a minor league baseball team then also contact us so that we can point you in the direction of longtime experts who have helped both team buyers as well as team sellers.

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