Diamonds in the Rough

Minor league baseball is afraid of becoming a victim of its own success.

Matt White, CFO of the Pawtucket Red Sox, began his career in baseball as a college student, flipping burgers all summer at McCoy Stadium. “I just loved the place,” says White, who returned to work in the ticket office after graduation. What’s not to love? Minor league baseball is the great American pastime with a small-town-America feel–easy autograph fishing for the kids, a hot dog and a beer for less than five bucks, and a seat close enough to hear the dugout chatter.

After a year in the ticket office, though, White set aside the field of his dreams for a more conventional finance track: a graduate degree in accounting and a job with Arthur Andersen auditing high-tech firms. Then, in 1999, the renovation of McCoy opened up a new need for finance talent in the front office, and White jumped at the chance. Promoted to CFO that same year, he reports to work each day at the ballpark that groomed such baseball greats as Jim Rice, Roger Clemens, and Nomar Garciaparra.

Last season, with only two rainouts and a record attendance of 647,928, says White, “we had a truly unbelievable year.” That’s true of most of Minor League Baseball. Last year’s centennial was testimony to the spiritual and physical renaissance of small-town baseball–almost 39 million fans attended games in 2001, the most since 1949 (when there were three times as many teams). Thanks to that support, more than half the teams in the minors now play in stadiums that, like McCoy, were built or completely renovated since 1990.

There should be joy in Mudville. But, like a pitcher working on a no-hitter, Minor League executives seem afraid to jinx their success by enjoying it. At their winter meetings in December, Minor League Baseball president Mike Moore warned his colleagues that “this industry is headed down a road of potential self-destruction if changes are not made.”

“We see warning signs across the board, from the Rookie leagues up through triple-A,” echoed Pat O’Conner, COO of Minor League Baseball. “Cash calls, reorganizations, and distress-type sales are not signs of a stable situation.” Even given professional baseball’s notorious penchant for crying poverty (see “A League of their Own.”), O’Conner and Moore are throwing some pretty high heat.

Perhaps what has them spooked are the inevitable growing pains that have accompanied the success of such a tightly controlled and insular group of small businesses. Indeed, the success of the 160 teams affiliated with Major League clubs (and known officially as Minor League Baseball) has given rise in the last five years to some 50 teams in five independent leagues that receive no direct support from the Majors. The popularity of the minor leagues has introduced new owners, more-complex financing, and a new level of risk that the traditional world of baseball views with a mix of awe and concern.

Cinema or Sandlot?

Over the past decade, those financial changes have gone hand-in-glove with cultural changes to the game itself, as minor league baseball stumbled onto a family entertainment market that was starving for a place to spend money. “You don’t go to minor league baseball just to watch baseball,” declares Lexington Legends CFO Stacy Martin. The Legends’s Applebee’s Park features a merry-go-round, a speed-pitch machine, and a kids’ section complete with playground. During the game, putt-putt contests, face-painting, and other activities compete for the attention of younger fans.

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