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MONOPOLY LEAGUE BASEBALL  
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Amos Barshad
September 12, 2024
The Lever [[link removed]]

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_ Why is a private equity firm reaping the benefits of hundreds of
millions in taxpayer subsidies while taking over Minor League
Baseball? _

Boston Red Sox pitcher Chris Sale pitches for the Portland Sea Dogs
in 2022., AP Photo/Mary Schwalm

 

It’s a late August afternoon in Portland, Maine, and the crispness
in the air makes it clear that, up here, summer is fading fast. But
the sobriety of autumn hasn’t hit yet: It’s Elvis Night tonight
and out front of Hadlock Field — the home stadium of the Sea Dogs,
the city’s treasured Minor League Baseball team — the people,
simply, are going nuts. 

An Elvis impersonator backed by a ramshackle live band smashes through
“Hound Dog” while the Sea Dogs’ mascot Slugger, in a bedazzled
white pantsuit and big black sunglasses, busts out karate kicks
[[link removed]]. The band’s guitarist
— a sixtysomething man bald except for the very back of his head,
where the hair flows bountifully — flings his instrument over his
back to shred a solo.

The banners behind the band advertise Horch Roofing’s “seamless
gutter leak repair” services. Mustached security guards mimic the
Elvis impersonator’s moves. Grinning, Elvis swings into a lovely
rendering of the trademark hip shake, then shouts, “Man, they still
work!” Squealing in delight, the fans mob Slugger and Elvis for
selfies. 

Major League Baseball is the highest level of the sport, where players
get paid millions to join the Yankees and the Red Sox. Minor League
Baseball is an interconnected series of lower leagues where guys who
hope to one day make it to the majors scrape together a living playing
in towns like Wichita and Amarillo for teams with names like the Wind
Surge and the Sod Poodles. Tickets are cheap; babies and grandparents
are everywhere. 

The Portland Sea Dogs are quintessential Minor League Baseball.
They’re also part of a newer American tradition: a private equity
roll-up. In 2022, the team was acquired by Diamond Baseball Holdings
(DBH), a subsidiary of Silver Lake, a Silicon Valley-based investment
firm with over $100 billion in worldwide assets
[[link removed]]
whose portfolio companies generate over $248 billion in annual
revenue. There are 120 Minor League Baseball teams operating directly
below Major League Baseball — DBH now owns more
[[link removed]]
than 30 of them. 

As DBH has grown it’s been boosted, in part, by public taxpayers. In
the three years DBH has been in operation, DBH-owned teams have
extracted nearly $300 million in public money from local governments
throughout the country, according to the Maine Center For Economic
Policy
[[link removed]]. 

Columbus, Georgia, is coughing up $50 million
[[link removed]]
in stadium renovation costs. Spartanburg, South Carolina, will spend
more than $100 million
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in part to build a whole new stadium for a DBH-owned team. Those funds
don’t go directly into DBH’s bank account — but when local
municipalities foot massive bills for stadium repairs and
construction, DBH avoids having to spend the money themselves.

A few months before Elvis Night, the Maine State Legislature approved
a $2 million tax break
[[link removed]]
for the Sea Dogs. While Maine’s contribution is small compared to
other municipalities, the $2 million brings up the same essential
question: Why are local taxpayers giving private equity-owned teams
any money at all?

There is little proof that subsidies to sports teams benefit the
public
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There is a lot of proof
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private equity ownership negatively impacts the industries it enters
and the
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public
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at [[link removed]] large
[[link removed]]. But if Portland
refused to play ball, it might have encountered the same existential
threat facing DBH-owned teams all over the country: the Sea Dogs,
Elvis nights and all, could leave town for good. 

Pat Garofalo is the director of state and local policy at the American
Economic Liberties Project, a think tank that promotes antimonopoly
policies. “I’ve spent a lot of time working on ways to stop sports
stadium subsidies,” he said. “There’s almost complete consensus
among economists: None of this money does anything; the economic
benefits are virtually nonexistent.”

And yet, since 2000, the American public has spent a collective $19
billion [[link removed]]
on major league sports stadium construction and renovation. Stadium
projects tend to come in clusters as every few decades, sports owners
get antsy and agitate for improvements on their allegedly aging
infrastructure. As publicly-funded stadium projects move forward in
New York
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Tennessee
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Oklahoma [[link removed]], and
Florida
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sports economists say the country is on the cusp of a new construction
boom. 

The Tennessee project, a new stadium for the NFL’s Titans, secured
$1.2 billion
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in taxpayer money, the largest single amount the public has ever given
a sports team. 

Looming behind sports teams’ demand for public money is that cynical
threat: If you don’t pay, we leave. Fans from Seattle
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to St. Louis [[link removed]] have been
scarred by the departure of their beloved major league teams over the
last fifteen years; so far, two of the minor league teams that DBH has
acquired — the Down East Wood Ducks and the Mississippi Braves —
are scheduled to move to new towns. 

“No one wants to be the mayor who lost the team, who saw a piece of
the community up and depart,” Garofalo says. “That’s why you see
this play succeed again and again. Owners always have the nuclear
option.”

Victor Matheson, a professor at the University of the Holy Cross and a
sports economics specialist, points out that “learning how to
extract subsidies out of local taxpayers” is a replicable strategy.
Any given small-town government, Matheson said, won’t know “how
the playbook runs.” After successfully navigating the thicket of one
local legislative process, a company can show up in a new place and
“seriously outgun any local municipality.” 

When contacted, DBH declined to comment. 

Will The Ball Pigs Survive?

A statue of Slugger at Haddock Field in Portland, Maine. (Image
courtesy of the Portland Sea Dogs)

Miles Wolff, 80, is one of the godfathers of the minor leagues. As the
owner of North Carolina’s Durham Bulls, he helped build the
freewheeling, gimmick-loving culture of the sport. When I called him
up recently, he asked me a question. “Do you understand how Diamond
Baseball hopes to make money? I’m mystified.” 

For Wolff, it’s astounding that DBH is acquiring clubs that had been
locally owned for decades. Wolff tells me he knows of one group that
had no intention to sell. “They loved owning it. But after a while,
Diamond kept upping the figure, and they thought, ‘We simply can’t
turn this down.’”

Wolff is not the only one who’s confused. In a largely gushing
article profiling DBH, the website _Baseball America_ noted
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“Private equity is looking for market-beating returns. And
generally, private equity isn’t looking to buy and hold for the long
term. It’s hard for many to figure out how that will work in Minor
League Baseball.”

So why is this happening in charmingly tumbledown Minor League
Baseball, of all fields? Brett Christophers — a professor at Uppsala
University and the author of _Our Lives In Their Portfolios: Why Asset
Managers Own The World_ — isn’t surprised to hear that private
equity is moving into minor league baseball, mostly because he isn’t
surprised to hear that private equity is moving into _any_ field. 

While private equity has “never been anything but expansionist,”
he says, in recent years, the industry has had “increasing
difficulties finding appropriate targets in their traditional
sectors,” which means they’re anxiously sitting on unspent
capital: money that isn’t being invested and cannot provide their
desired massive returns. That money is known in the industry as “dry
powder,” meaning unused gunpowder. 

DBH’s parent company, Silver Lake, is one of the giants of the
private equity world. Along with its Silicon Valley headquarters, it
has offices in New York, Hong Kong, and London; it’s invested in
Airbnb
[[link removed]],
self-driving car company Waymo
[[link removed]],
and Chinese internet giant Alibaba
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among other multinational firms.

Its incursion into Minor League Baseball may be explained,
Christophers says, by the fact that private equity companies often
look to invest not necessarily in “highly profitable enterprises,”
but in “monopolistic assets” that “throw off regular and
predictable cash flows.” That cash flow can be used to pay off debt
and, in turn, make investments in more and more fields, further
accelerating the “expansionist” nature of the industry. 

DBH began buying up clubs in 2021 after Major League Baseball, the
corporate overlord of the minor leagues, lifted certain restrictions
[[link removed]]
on how many teams a single company could own. DBH’s founders are
known to be chummy with Rob Manfred, the commissioner of Major League
Baseball. As one minor league owner told the sports publication _The
Athletic_
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about DBH, “Nobody else would be doing this if they didn’t have
some understanding of what Manfred wanted, or at the very least, his
blessing.” 

Effectively, the rules change created the opportunity to pursue a
monopoly and, with the tacit blessing of Major League Baseball, DBH
stepped up to take it. 

For Garofalo, of the American Economic Liberties Project, DBH’s
growth is just one colorful story within the boom of consolidation
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that has impacted nearly every sector of the American economy. Private
equity “seeks places where they can buy into preexisting monopolies
or quickly create them,” Garofalo said. “Once DBH is in control of
half of the league, who knows what they can do with that power.” And
as they build their monopoly, their teams will continue to extract
public money. 

When asking for public funds, DBH-owned teams often say they need the
money to upgrade their stadium to be in line with Major League
Baseball’s most recent guidelines on things like the conditions of
locker rooms and training facilities
[[link removed]].
Without public money, they implicitly suggest they might need to leave
for a city that would provide them with upgraded facilities. 

That’s what happened in Portland, where the stadium needed to build
a new clubhouse. But DBH knew Major League Baseball would require it
to make upgrades when it purchased
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the Sea Dogs in 2022 from the family who had founded the team 28 years
earlier. Why wouldn’t they just be expected to pay for the upgrades
themselves? 

Maura Pillsbury is a tax policy analyst at the Maine Center For
Economic Policy, which advocates for policies beneficial to working
families. “It’s part of their cost of doing business that they
were able to pass on to Maine taxpayers,” Pillsbury said. 

Pillsbury provided expert testimony to the Maine Legislature against
the $2 million subsidy, pointing out that the money would benefit an
owner in an industry well known for its labor exploitation. Sea Dogs
players make a minimum of $1,000 a week during the approximately
twenty-week season and around $250 a week in the offseason. Those
minimums were only granted in 2022 when, for the first time ever,
Minor League Baseball players unionized
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Only an estimated 10 percent
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of all minor league players make it to the majors, where they may be,
one day, in line for a rich payday. As one professional baseball
player put it
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minor league teams “essentially prey on guys’ dreams.” Ahead of
their next round of collective bargaining, the unionized minor league
players will surely be keeping a close eye on how DBH’s roll-up
impacts their industry. 

DBH’s public-money extraction has happened without much pushback.
But when the public gets to weigh in directly, they often kill
spending on sports infrastructure. This past April, Question 1 in
Jackson County, Missouri — a ballot measure proposal to raise $2
billion for two hugely popular Kansas City sports teams — was
crushed
[[link removed](April_2024)]. 

The sports economics researchers Rick Eckstein and Kevin Delaney have
argued that subsidies are often pushed through against popular will by
“local growth coalitions
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— effectively, cabals of influential politicians, local
businesspeople, and newspaper editorialists. 

Watching DBH-owned teams rack up public money at the scale of hundreds
of millions of dollars, Wolff, former owner of the Durham Bulls, seems
both envious and incredulous. “I’m part of the generation where
there wasn’t money,” Wolff said. “You were buying a franchise to
lose money. It boggles my mind that people will spend this much
[public] money for a new ballpark.”

The public investment doesn’t necessarily trouble Wolff so much: He
himself once attempted to raise public money to build a new stadium
for the Bulls [[link removed]]. (The
attempt failed after a public referendum.) What really worries Wolff
is the potential impact of DBH’s monopolization on the culture of
the sport he loves.

In the old days, he said, “You had a hundred different owners doing
different things and you never knew what you were gonna get.” Wolff
ticks off some of his favorite gimmicks: the massive sign of a bull in
Durham that snorts actual smoke
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farm pigs in St. Paul that bring balls back
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to the umpire. Along with those time-tested bits are newer beloved
traditions. For the Brooklyn Cyclones, a themed Seinfeld Night has
recently become an annual hit. The keynote event is an Elaine dance
contest
[[link removed]].

Now, Wolff said, “It’s all gonna be pretty corporate, like going
to a McDonald’s. With that many clubs, you can’t be doing things
that different.” If a DBH-owned team wants to try something like
employing ball pigs, he frets, first they’ll “have to ask the
lawyers.”

How To Make Corporations Behave

The Sea Dogs’ mascot performs at Elvis Night at Haddock Field.
(Image courtesy of the Portland Sea Dogs)

During the debate over the $2 million tax subsidy in the Maine
Legislature, a state representative named Cheryl Golek stood up in the
House Chamber. 

“I love the Sea Dogs,” the Democrat said in her perfect New
England accent. “I could stand here and tell you stories, the fun
times, the memories. But I’m standing here dumbfounded that we are
debating giving a billion-dollar company _money_ when we have so much
need in our state.” 

Maine is facing an acute housing crisis
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it also has a severe workforce shortage
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credited in part to inadequate affordable child care access
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With the millions being thrown around, Golek said, “My God, how long
could we keep our shoulders open” with that money? “How long could
we increase food supply to those in need? How many people could we
house that are homeless?” 

The afternoon before Elvis Night, I met Rep. Golek in her district
just north of Portland. We sat at a coffee shop across the street from
the headquarters of the regional clothing chain Cool As a Moose. Golek
— emphatic, quick to grin — told me she comes from “extreme
generational poverty” and grew up in nearby Cooks Corner, a heavily
wooded area near the Androscoggin River, in a family that “hunted to
eat.” 

She began advocating on poverty-related issues as part of a local
organization, Equal Justice Partners Circle
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around 2016. Soon after, she said folks started asking her when she
would run for office. In 2018, she took a Maine AFL-CIO candidate
training course. In 2022, on her first attempt, she won her seat
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in Maine’s House of Representatives. 

“I’m not anti-corporate,” she said. “I just think we can
utilize tax credits better for the people of this state. The bottom
line for me was: Do we really understand who this company is?”

Many Minor League Baseball fans may welcome a DBH takeover, especially
if that takeover brings stadium improvements and higher-profile
entertainment options. The general manager of the DBH-owned Fresno
Grizzlies has boasted
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that after DBH took over, the Grizzlies were able to book mid-tier
country singer Thomas Rhett. 

But some minor league fans have gotten wise to the bigger picture. On
a Reddit thread dedicated to discussing the DBH-owned Harrisburg
Senators, one fan posted
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“Surely it isn’t hard to find examples of when a single entity
controlling 25% or more of the participants in a market ended up being
bad for consumers or workers... let’s see... airlines, Ticketmaster,
ride-share apps, grocery stores... but yeah *this* time it’s gonna
be great!”

In Maine, Golek wasn’t the only dissenting voice on the subsidy.
Writing for the _Maine Beacon_, former Portland Mayor Ethan Strimling
urged the state’s legislature
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the bill. In 2018, when he was mayor, Strimling successfully pushed
back against spending public money on the Sea Dogs under threat of the
team relocating if the money wasn’t spent. 

Sitting in a diner booth, Strimling — who, if he wasn’t actually a
politician, could certainly play one on TV — told me the story. 

“They wanted us to spend half a million bucks replacing all their
lights,” he said. “We were trying to rebuild our elementary
schools where all these black and brown kids were going into
classrooms with roofs leaking. So I just said, ‘It doesn’t make
sense.’” Ultimately, Strimling said, the lights _were_ replaced:
The Sea Dogs just paid for the repairs themselves.

Before he was mayor, Strimling was a Maine state senator serving on
the taxation committee. There, he said, he constantly fielded requests
for “corporate welfare” for everyone from Hollywood productions to
the hunting and fishing retailer Cabela’s. He said that the sports
teams’ threat to leave town is echoed by one industry after another.
Cabela’s, for one, threatened to place a retail center outside of
Maine
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if they weren’t afforded certain tax breaks. The Legislature held
firm — and Cabela’s is still in Scarborough, Maine
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To business leaders asking for corporate welfare, Strimling likes to
say, “You guys cry wolf every fucking time.” 

As politicians, Strimling said, “People come to us all the time
asking for unreasonable things. So honestly, I don’t blame [DBH] for
doing everything they can to make more money. I blame the elected
officials. Why do we give it to them?”

Outside the United States, the idea of giving public money to
professional sports teams is perceived as bizarre. After the co-owner
of the world-famous English soccer team Manchester United recently
floated the possibility of using public money for stadium renovations,
a government source told the press
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“It’s just not something we’d entertain. Where would it
end?” 

Imagining a way to use public money giveaways to actually benefit the
public, Strimling points to a City of Portland policy called “tax
increment financing,” passed while Strimling was mayor. Under the
policy, when public money is given to a corporation to fund a certain
project, that project must pay its workers above a certain
threshold. 

Strimling extends the concept back to when he was mayor, and the
Portland Sea Dogs asked for public money to repair the stadium’s
lights. 

“If they had said, ‘Look, we’ll make sure that the workers who
put those lights in get health care or a higher wage’ — then
you’re having a conversation,” he said. “There are actually some
good ways that public money can be used to influence private
businesses to do the right thing. In fact, you kind of have to,
because they won’t do it on their own.”

The People’s Teams

A statue titled “For the people of Portland” at Haddock Field.
(Amos Barshad)

Former wrestler and Minnesota Gov. Jesse “The Body” Ventura
(Reform Party) once told
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the House Judiciary Committee that stadiums should be thought of like
another publicly funded institution: “When we build a public
library, we don’t have to pay to get in. But when we build a
stadium, we have to pay the owner every time we go to a game.”
Nestled within that statement is a bold vision of an altogether
alternative model. What if the public owned its teams?

In 2022, Michael Waters at the worker-owned sports site _Defector_
wrote about the Columbus Clippers, a minor league baseball team in
Columbus, Ohio that, since the 1970s, has been owned and operated as a
“public utility” of the city. As Waters wrote
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“The case for public ownership centers on a total reimagining of
what sports teams are and who they are for. Are they investment
vehicles for the wealthiest people in the world, or can they be
something more like a public good, not so different from a park or
museum?”

Unsurprisingly, the major sports leagues have taken concrete steps to
prevent such alternative-ownership models. The NFL’s Green Bay
Packers are technically owned by thousands of fans who hold shares in
a company called the Green Bay Football Corporation
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Without this unique ownership model, the Packers might have been moved
out of tiny Green Bay years ago. But the NFL has rules
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in place that effectively means no other team can replicate the
Packers model. 

In the 1980s, after inheriting the San Diego Padres from her husband,
McDonald’s owner Ray Kroc, Joan Kroc wanted to hand it over to the
city of San Diego
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It never happened; in response to Kroc’s plan, Major League Baseball
passed its own resolution prohibiting public ownership. 

In the 1990s, Rep. Earl Blumenauer (D-Ore.) proposed the Give Fans a
Chance Act [[link removed]], a bill
explicitly forbidding leagues from prohibiting public ownership.
Despite repeated pushes by Blumenauer, the bill never came close to
becoming legislation.

The idea of a major professional sports team becoming publicly owned
feels quixotic until you remember that, all over the country, the
public is already spending its own money on private sports teams. As
_Defector_’s Waters put it, “If cities were to begin to demand
ownership shares in exchange for their generous subsidies, then local
fans might begin to share in the prosperity of the professional teams
that quite literally would not exist without them.” 

As DBH continues to expand, they’ll do so safe in the knowledge that
the next municipality that shells out public money for baseball likely
won’t expect anything in return. This spring and summer, DBH
continued its growth: the Charlotte Knights, the Arkansas Travelers,
and the Binghamton Rumble Ponies have all recently joined the
company’s portfolio. DBH boasts
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they are not done yet. 

For Golek, the Main House representative, the conversation over the
Sea Dogs’ money was never a conversation about sports financing. To
be honest, she doesn’t really care what sports teams do. For her,
the mandate has always been to find ways to help people. 

“I would have liked to see the tax credit go to something that was
going to directly impact people’s lives,” she said.
“Entertainment’s great. Housing and food’s better.” 

She circles back to DBH’s parent company, Silverlake, and their $100
billion in assets. She points out that Maine’s gross domestic
product in 2023
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was $73 billion. 

“OK, this company has more money than our entire state. And you want
me to give them a tax break?” she asks. “To this day, I can’t
wrap my head around that. I will forever remain baffled by this
bill.”

Each day, The Lever ’s staff tirelessly investigates, researches,
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