By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Yes, that happened. Thanks, San Jose Giants.
Fans bring in the revenue, but the secret sauce in the profitability model for minor league baseball as opposed to its Major League parent is in the player, manager and coaching costs. Put simply, for minor league teams there are none.
Whereas with MLB teams, their largest line items far and away are the costsof the on-field staffs' salaries (mostly players, but also coaches, managers and trainers), for minor league teams those costs are all subsidized by the parent ball club. Hell, even the cost of the bats and balls are split between the MLB club and its minor league affiliate.
It's basically the equivalent of owning a factory and having all of the workers paid for by some invisible sugar daddy.
The other aspect of minor league baseball that makes ownership so enticing is the willingness of cities and counties to help subsidize, or in many cases fully subsidize, the cost of new stadiums to help stimulate the local economy.
It's a phenomenon that buoyed new stadium construction in big league markets, including Houston, throughout the late '80s and the '90s: Convince municipalities that erecting a fully paid for baseball Taj Mahal will attract baseball fans, families, tourists and the all-important corporate dollars out to the park.
Watch the people spend money, watch them stimulate the economy, repeat (roughly 70 nights a year in the minors).
And it's worked.
The new stadiums are a huge part of the draw, allowing patrons to feel like they're getting some semblance of a Major League experience at a decidedly lower pricing point. (Truth be told, most fans are much closer to the action at a minor league game than they could ever hope to be at a big league game.)
In Frisco, the Mandalay-owned Roughriders (Texas Rangers' AA affiliate) play in Dr Pepper Park (built in 2003), an award-winning palace of a minor league yard with nine interconnected pavilions and a swimming pool. In Round Rock, the Ryan-Sanders Baseball-owned Express (the Rangers' AAA affiliate) play at the Dell Diamond, where kids can play on the playscape or swim in the swimming pool.
Basically, these ballparks have become a microcosm of affluent suburbs, where having a swimming pool is merely a baseline for rating one's level of privilege.
Round Rock President Dave Fendrick puts it best: "At a minor league game, maybe 20 percent of the fans are hardcore baseball people. The other 80 percent are there to be entertained and to enjoy a night out at a great ballpark.
"We have a great ballpark."
"We never do anything here in Round Rock without thinking that we are representing the Ryan family."
Talk to Round Rock Express President Dave Fendrick about the success of the Express and mention Nolan Ryan. You'll hear an already energetic man bubble with praise and convey respect:
"Everything about this franchise is representative of the Ryans: first-class, upright, ethical. In any decision, we always ask ourselves, 'What would the Ryan Family do?'"
And not surprisingly, like he did as a Hall of Fame player for more than two decades, Nolan Ryan sets the example for minor league baseball owners on how this business is run.
In Forbes' annual rankings of the top 20 most valuable minor league baseball franchises, both Ryan-Sanders franchises here in Texas make the list, with Round Rock coming in third overall at a value of $26 million (annual revenue of $14 million, operating income of $5.2 million) and Corpus Christi ranking 18th with a franchise value of $17 million (annual revenue of $9 million, operating income of $2.7 million).
In fact, Round Rock is one of only 10 minor league baseball teams in the country, across all levels, to average more than 8,000 fans per game.
No business succeeds without capitalizing on built-in advantages, and to that end, one of the best business partners that the Express and the Hooks have is the map of the United States. Geography. Quite simply, the proximity of both ball clubs to their respective parent teams allows for a synergy where fans of the MLB ball clubs can follow their team's future stars up close and in person at the minor league level.
Before becoming the Rangers' AAA affiliate, Round Rock was the AAA farm team for the Astros. When the Astros decided to move their AAA functions to Oklahoma City, Round Rock didn't skip a beat at the turnstiles due in part to the Astros being backfilled by the equidistant Rangers.
"If it were any other Major League team besides the Rangers replacing the Astros as our parent club, it would cause a real challenge. Fans like to see the players who will eventually play for their big league club," said Fendrick.
In addition to the marketing benefits of geographic proximity, there's a tangible convenience factor for the parent ball club as well, particularly in the case of a AAA team like Round Rock, whose players are routinely summoned to the big league club.