The 2020 Minor League Baseball Season is Going, Going, Gone!

Last week, Minor League Baseball officially announced that the 2020 season will be canceled due to the COVID-19 pandemic. Unlike the major league teams who can generate significant revenue from television contracts and can play the games without fans, minor league teams rely largely on fans in the seats for their revenue. Other than the signage advertising around the ballpark, the revenue comes from ticket sales, food concessions, private events, merchandise sales and parking. All of which require fans to come out to the ballpark.

The COVID-19 pandemic hit minor league baseball like the perfect financial storm. Minor league baseball is not a seasonal business. Once the 2019 baseball season ended, the teams’ front office staff immediately got started preparing for the 2020 season. They are out in their communities selling and renewing season tickets, group events, advertising and promotions like fireworks nights or on-field promotions. And like all businesses, they must outlay expenses to generate revenue. The teams began spending money on the 2020 season in the fall of 2019 with the understanding that the cash collections will begin slowly in the new year and ramp-up to the peak once the games begin in April. And, if I may point out the obvious; the cash collections shut down in March leaving the teams with substantial cash flow issues.

We are working with all our minor league team clients assisting them as best we can through this difficult season. They are projecting losses from hundreds of thousands of dollars to several million dollars. There are discussions about obtaining other sources of cash to get them to next Spring’s influx of cash like the Paycheck Protection Program, the Economic Injury Disaster Loan, the Main Street Lending Program or securing lines of credit. Every team that we consult with is making very difficult decisions about laying off the full-time front office personnel. Every team is proactively contacting their advertisers and season ticket holders discussing 2020 refunds or reaching new levels of creativity to hold onto the 2020 money and offering additional perks for the 2021 season. They are working on generating revenue through alternative uses of the ballpark once their state allows crowds large enough for movie nights, small concerts or high school graduations, while conforming to all the social distancing and sanitary protocols. These events will provide some cash flow and benefit the community.

In so many communities throughout the country, the minor league team is a summertime fixture. Cities have invested millions of dollars in state-of-the-art stadiums to generate hundreds of jobs, a sense of community and a place for families, friends and co-workers to gather and interact. Gather and interact, the rally ending double-play of the COVID-19 pandemic. The ballpark is where high school and college students work in the concession stands to make some “kicking around” money and retired baseball lovers can work as ushers or ticket takers to supplement their fixed income. The local vendors who supply the ballpark and team with the goods and services to host several thousand people each game have been financially harmed by no baseball this year. And like ripples in the pond, it goes on and on.

One of the core values of the minor league baseball industry is charitable giving in their communities. It is safe to say that all teams have a charitable arm of their business and many have created an active charitable organization with dedicated employees and volunteers. These organizations raise money year-round to support local charities and causes in their communities. Fundraising activities in the ballpark include 50-50 raffles, tennis ball toss, player jersey raffles and many other unique ideas.

Outside the ballpark, many teams hold a wintertime “hot stove “dinner honoring local sports and community heroes. Not to sound like a broken record, but these local organizations and causes will suffer without baseball this year.

The owners and operators of minor league baseball teams are caring and creative people. While none of us can predict how the COVID-19 pandemic will end, I have confidence that because of people who work in minor league baseball, this industry will survive albeit under the conditions of “the new normal.” We look forward to next April when we will hopefully hear the roar of the crowd and the crack of the bat fill these stadiums.

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About the Author(s)
Gary is a Principal in the Blue Bell, Pennsylvania of HBK. He has been with the firm since the merging of the former Resnick Amsterdam Leshner, P.C. with HBK CPAs & Consultants in November 2016. Gary has worked with hundreds of clients in a broad range of industries, including, among others: minor league sports franchises, television broadcasters, government contractors, investment advisors, providers of information technology, food services and professionals in many fields.His holistic client service approach is based on more than 25 years of experience advising small business owners.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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