Weekly Column: Reinvestment in Minor League Sports Leagues

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the growth and importance of minor and lower level sports leagues.

You can read the full column below.

As the price to purchase professional sports broadcast rights and franchises continue to rise, there is a renewed interest in investing in minor league sports leagues and teams. The minor leagues for the National Hockey League (NHL), Major League Baseball (MLB), Major League Soccer (MLS), and international football like the English Football League (EFL) (e.g., a tier below the Premier League) are fast becoming investment opportunities as the leagues are flush with athletic talent and fewer barriers to entry, namely the asking price and complicated league bylaws and management structures. In each of the aforementioned leagues, 90-99% of the athletic talent at the highest professional levels are arriving from the minor leagues. The National Football League (NFL) and the National Basketball Association (NBA) do not have well established minor league systems as the best players almost exclusively go directly from the NCAA into the professional drafts except for international athletes. The latter two leagues are both the primary reason why name, image, and likeness (NIL) legislative opportunities were pursued for the off-the-field revenue for college athletes since a direct pathway to those was through college, not a post-high school draft.

Pricing is not the only reason for the increased investment in the minor and lower level leagues of professional sports. There are several reasons leading to the change in strategy. For one, MLB contracted its Minor League Baseball (MiLB) franchise affiliations from 160 to 120 teams in 2021, thus increasing the talent on teams and simultaneously increasing the value of each franchise/farm team through increased exclusivity. Secondly, MLB also reduced the MLB Draft from 40 rounds to 20 rounds. Overseas, the EFL and Premier League have both relegation and promotion opportunities, so there is added excitement when clubs like Burnley F.C. and Wrexham AFC (owned by Hollywood actors Ryan Reynolds and Rob McElhenney) both were promoted to the Premier League and EFL League Two beginning in 2023-2024, respectively. The EFL like MiLB and minor league hockey have three levels of play with some leagues adding rookie levels. In 2022, Endeavor actually sold its MiLB holdings to Silver Lake because of the potential for conflicts of interest between its representation/agency business and owning minor league teams.

Moreover, at the end of March 2023, MiLB and MLB agreed to the first-ever collectively bargained agreement (CBA) for baseball’s minor league system. It means higher salaries and more investment into the game and franchises. It is common for MLB franchises to not own their affiliate franchises, but to have player development contracts so as to have the players move from level to level (A, AA, AAA, etc.) after being drafted by the MLB club. The CBA, league contraction, and fewer players means that minor league teams become all that more important, visible, and potentially valuable.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.