Meet the Private Equity Firm Squeezing America for Baseball Stadium Subsidies

Minor league teams, but a major league consolidation scam.

Photo credit: Jeff Amann

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Last week, the Arkansas Travelers, a minor league baseball team based in North Little Rock, Arkansas, were sold to a new ownership organization called Diamond Baseball Holdings. Local coverage of the sale included the team’s CEO agitating for an upgrade to its stadium, and making vague threats to move the team if those upgrades don’t materialize.

In this, North Little Rock is not alone. Diamond Baseball Holdings, in just the last three years, has rolled up a quarter of America’s Minor League Baseball teams. It now owns more than 30 of the 120 minor league teams that are officially sanctioned by Major League Baseball, in states all across the country, from California to Oklahoma to Iowa to Virginia to Massachusetts.

Baseball America calls Diamond Baseball Holdings “the most powerful ownership group in the history of Minor League Baseball.” It bought 16 teams in 2023 alone. Much of the local press coverage of those purchases lingers on the fact that Diamond Baseball Holdings beautifies local minor league stadiums, with upgraded scoreboards, seats, and batting cages, and that it brings in fancy new sponsors.

Left unremarked upon is that it often demands public money for that stadium construction, subsidies which have collectively cost communities hundreds of millions of dollars.

Indeed, Diamond Baseball Holding’s business model is clear once you get past the puffery and the popcorn: Consolidate the minor league market and foist costs onto taxpayers, with the ever-present threat of moving teams out of communities that don’t comply. It’s a tale of consolidation and extraction running right underneath America’s pastime.

Diamond Baseball Holdings is itself part of the portfolio of a private equity firm called Silver Lake, which also invests in the hated professional sports merchandise monopolist Fanatics, the hated global soccer power City Football Group, the hated New York sports management firm Madison Square Garden Sports Group, and tech firms including Airtable, Waymo, and Stripe.

There are many problematic aspects to the private equity business model, which often relies on stripping companies for parts, loading them up with debt, and harming workers in the name of quickly making a profit and exiting an investment. The American Prospect’s David Dayen wrote that “It is genuinely hard to find a more destructive economic force in America today than the private equity industry.”

Silver Lake’s sports investments, in particular, seem targeted on building monopolies and extracting resources from communities, as its roll up of Minor League Baseball makes painfully clear.

For example, earlier this year, the Maine legislature approved a $2 million tax credit for Diamond Baseball Holdings to upgrade the stadium of the Portland Sea Dogs, even though the construction was already mostly finished. As Maura Pillsbury of the Maine Center for Economic Policy pointed out, before receiving that money, Diamond Baseball Holdings had received $275 million collectively in stadium subsidies across the country for its minor league baseball teams.

Now, compared to the $1 billion that is regularly extracted from taxpayers in one go by a professional sports franchise for a new stadium these days, that may not sound like a lot. But we’re talking about $275 million from small communities such as Fishkill and Altoona, New York, or North Augusta, South Carolina. That’s real money no matter what, but especially in the context of smaller municipalities or counties that don’t have the economic oomph of a major metro area.

And while the case for subsidizing professional sports stadiums is incredibly weak at the best of times — with independent analysts from across the political spectrum united in the conclusion that those facilities provide no real economic benefits for a city — it’s even weaker for minor league facilities, because there is no expectation whatsoever that minor league sports attract any real level of out-of-town interest.

All a minor league stadium does, in fact, is shuffle entertainment money around the community and provide some low-paid seasonal work for a few folks. There’s no economic case for publicly subsidizing those facilities, full stop.

But I do understand why leaders in communities Diamond Baseball Holdings moves into take seriously the threat that a minor league team will leave or disappear if demands for public resources aren’t met. After all, a few years ago, Major League Baseball nuked the old minor league system, and, as part of its restructuring, kicked more than 40 teams out of the world of officially sanctioned minor league baseball entirely — and in the process, weakened previous rules that capped the number of teams any one owner could control, opening the door to Diamond Baseball Holdings’ takeover.

A bunch of those suddenly unsanctioned teams ended up folding, and no one wants to be next in line for a relocation or elimination if the major league overlords aren’t kept happy and decide to, once again, arbitrarily rework part of the system.

Just like in the major leagues, though, the fact that a relocation threat is real doesn't justify the underlying policy failure that is sports subsidies, or negate the fact that the hundreds of millions of public dollars spent on minor league baseball stadiums could have done much more for local communities if invested in just about anything else.

Unfortunately, I’d expect to see subsidy demands ratchet up as Diamond Baseball Holdings takes over more and more of the minor league market, for the simple reason that that’s what monopolists across the country do in a variety of industries: Consolidate, cut, and then play communities off against each other for the scraps of what are left.

The end result: A strikeout for everyone but the corporate financiers on top.

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SHAMELESS SELF-PROMOTION: I testified last week before the Pennsylvania House Labor and Industry Committee on consolidation in the health care sector and its effect on workers. You can watch some highlights here.

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— Pat Garofalo