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Monday, December 06, 2021

What Does Endeavor, Silver Lake’s Push Into Baseball Mean For the Minors?

As soon as next week, Endeavor, a global sports and marketing company, is expected to announce the purchase of six or more minor league teams. Another six or more sales are expected soon afterward with more to come in the next year. MLB has to approve all sales, but that is not expected to be an issue.

Endeavor Group Holdings is a publicly traded company that has an umbrella of companies stretching across sports, entertainment and marketing. Silver Lake Partners, a private equity group, owns a significant share of Endeavor.

In any normal year, the purchase of 10-plus minor league teams would rate as seismic news. In the case of Endeavor, it’s going to be a slowing of its original pace. Limits have been put in place that will ensure Endeavor cannot purchase more than nine teams in any one classification and no more than 24 teams total before the end of the 2022 season.

That is seen as most likely a temporary limit so that MLB and current minor league owners can assess the effects of Endeavor’s big move into minor league baseball.

Multiple people involved in minor league baseball said they wouldn’t be surprised if Endeavor eventually ended up owning 30-40 of the 120 affiliated minor league teams.

RoyalsRetro (AG#1F) Posted: December 06, 2021 at 11:19 AM | 17 comment(s) Login to Bookmark
Tags: minor league

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1. DL from MN Posted: December 06, 2021 at 01:21 PM (#6056390)

Endeavor also owns IMG. 24/120 minor league teams is a sizable amount of control.

2. Jack Sommers Posted: December 06, 2021 at 03:56 PM (#6056413)

And if they ever get up to 30-40 teams, that is massive leverage, regardless of whatever limitation are put on executive committee memberships

The big question almost everyone in minor league baseball is wondering is how does all of this make financial sense for Endeavor/Silver Lake? Or put more succinctly, what do they know that no one else in the minors knows?

Great question. No clear answer in the article though.

3. RoyalsRetro (AG#1F) Posted: December 06, 2021 at 03:59 PM (#6056416)

I can't imagine there's a market for this in minor league ball, but the first thing I thought of was sports gambling.

4. Walt Davis Posted: December 06, 2021 at 04:00 PM (#6056417)

Syndicate baseball. It's a question of whether (a) fans who go to minor-league games care whether they are witnessing a "full-out competition" in the first place and, if they do, (b) will they perceive a game between two Endeavor teams to be legit competition?

The way the minors are already set up, "competition" is a challenged concept** already so I'm not sure this will be a big deal. Unfortunately it will probably lead to a more cookie-cutter experience at minors parks but I'm not sure how many of those old quirks remain.

** Players "owned" by the ML team whose primary goal is development not winning in the minors; players moved on/off teams for those reasons, not competition; minors affiliation with a given ML team is not based on becoming a more competitive minor-league team; etc.

5. John Northey Posted: December 06, 2021 at 05:06 PM (#6056423)

Wonder if they are looking to form a new version of pro-ball where they control all the team and tell MLB to screw off. Regional fan bases and rivalries are everything it seems lately. Could be an interesting situation. Some pushing on MLB would be nice to see.

6. the Hugh Jorgan returns Posted: December 06, 2021 at 07:21 PM (#6056437)

Wonder if they are looking to form a new version of pro-ball

Imagine if they had a version of baseball where games only took about 2 hours! That would be an awesome game to watch.

7. The Yankee Clapper Posted: December 06, 2021 at 07:43 PM (#6056442)

Owning more than 1 team in a league should be prohibited. It’s an obvious conflict of interest to be avoided, even if it’s complicated by the MLB team’s control of the MiLB players & coaches.

8. Walt Davis Posted: December 06, 2021 at 08:58 PM (#6056451)

#2: I suppose there may be some economies of scale ("cookie-cutter") -- same marketing strategy, centralized ad sales, national/regional food vendor contracts, bulk discounts on bobbleheads. Heck I'm not sure what a minor-league GM does but maybe one exec can run several teams. How do they make money? Volume! Volume! Volume!

9. The Honorable Ardo Posted: December 07, 2021 at 12:09 AM (#6056468)

Re: #5, it isn't to put pressure on MLB. It's almost certainly being done with behind-the-scenes encouragement from the Commissioner's Office.

Typical short-term thinking. It benefits both Manfred and MLB teams for the "minor league experience" to be as homogenous as possible, even if it discourages local attendance and leads to fewer baseball fans in the future.

10. Bret Sabermatrician Posted: December 07, 2021 at 06:42 AM (#6056479)

11. McCoy Posted: December 07, 2021 at 07:24 AM (#6056481)

A baseball team isn’t like a hotel or a department store. Their assets are mainly players. A private equity firm can’t really squeeze out every last dollar from a company with no real assets. But PE firms aren’t trying to destroy a company. They tried to make a company worth more when they sell it than when they bought it. Often doing that through cost cutting. So for a minor league team that might mean less travel or less long distance travel. Might mean increased ticket prices and parking prices.

12. sanny manguillen Posted: December 07, 2021 at 09:20 AM (#6056486)

This obviously doesn't have any on-the-field competitive impact. Those days are long over. It seems like the closest analogy would be Araserv providing concessions at a lot of ballparks - an MLB vendor realizing economies of scale.

13. DL from MN Posted: December 07, 2021 at 09:36 AM (#6056488)

A baseball team isn’t like a hotel or a department store. Their assets are mainly players.

Unless they're trying to squeeze dollars out of the players themselves. They own talent agencies.

14. Cris E Posted: December 07, 2021 at 09:59 AM (#6056490)

These private equity firms are only good for squeezing as much money out of a business until they get to shut it down and move on.
My assumption is MLB is on board so they can continue to shrink the minors without making it seem like they're directing it.

The minors are already living on razor-thin margins so I'm not not sure there's much there to extract. Perhaps front-office headcount could come down, or some purchasing could be pooled, but that would mean tying up millions of investment dollars to save the cost of individual FTEs, which makes no sense.

I think there's something else afoot, to either work against MLB to through unionization to explicitly push more money into the minors and expand the market for IMG's services, or maybe be an MLB patsy to wring the last drops of profit from the minors. My bet is that Endeavor is going to try to cash in on the improved housing dollars somehow.

15. BDC

Posted: December 07, 2021 at 01:51 PM (#6056517)

All the minor-league teams could have the same mascot, Genero.

16. Starring Bradley Scotchman as RMc Posted: December 07, 2021 at 05:14 PM (#6056561)

Imagine if they had a version of baseball where games only took about 2 hours! That would be an awesome game to watch.

Use the same rules as in my old junior high school gym class: one pitch per batter.

17. RoyalsRetro (AG#1F) Posted: December 08, 2021 at 10:33 AM (#6056616)

@BaseballAmerica
Endeavor has agreed to buy nine minor league teams.

- Triple-A Gwinnett
- Triple-A Iowa
- Triple-A Memphis
- Tripla-A Scranton/Wilkes-Barre
- Double-A Mississippi
- High-A Hudson Valley
- High-A Rome
- Low-A Augusta
- Low-A San Jose

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Monday, December 06, 2021

What Does Endeavor, Silver Lake’s Push Into Baseball Mean For the Minors?

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