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Iowa Cubs and 8 other teams sold to Endeavor Group Holdings

The longtime Cubs Triple-A affiliate has been purchased by a sports conglomerate and private equity firm.

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Principal Park
Principal Park
Dylan Heuer

The Iowa Cubs, the long-time Triple-A affiliate of the Chicago Cubs, today announced that they have agreed to sell the team to Endeavor, a “global sports, entertainment and marketing company based in Beverly Hills, California,” through their subsidiary Diamond Baseball Holdings.

The I-Cubs were not the only team that were sold to Endeavor. Additionally, the group announced the purchase of the Memphis Redbirds (Cardinals Triple-A), Scranton/Wilkes-Barre Rail Riders (Yankees Triple-A), Hudson Valley Renegades (Yankees High-A) and San Jose Giants (Giants Low-A). Endeavor will also purchase all four Atlanta affiliates, the Gwinnett Stripers (Triple-A), Mississippi Braves (Double-A), Rome Braves (High-A) and Augusta Green Jackets (Low-A).

The Iowa Cubs had been owned by an investment group headed by former NBC News and Gannett News executive Michael Gartner since 1999. In a letter to the fans, Gartner stressed what the team had accomplished under his ownership and that current team president and general manager Sam Bernabe would continue in the same position with the new owners.

Rumors about Endeavor and private equity interests buying up minor league teams have been percolating since October. (The Athletic sub. req.) Endeavor also owns the mixed-martial arts UFC, Learfield Sports (who handles marketing for many NCAA schools), Professional Bull Riders, IMG Sports and the talent agency WME (formerly William Morris), among other holdings. They have created Diamond Baseball Holdings (DBH), along with Silver Lake, their private equity firm, to run the minor league teams.

These changes have been made possible in part because of the re-organization of Minor League Baseball that took place before the 2021 season. Initial reports had Endeavor interested in buying 40 minor league teams, or fully one-third of current franchises. MLB has reportedly put the brakes on such ambitious plans until they have time to assess the impact of Endeavor’s entry into the minors. DBH may be able to purchase additional teams in the future (near or far) if MLB approves. Endeavor is clearly targeting the affiliates of the most popular teams, so it wouldn’t be a shock if they ended up buying another Cubs farm club some time in the future.

Endeavor reportedly targeted teams that were associated with big markets and the biggest clubs. Des Moines is definitely not one of the biggest markets in Triple-A, but their attendance is traditionally near the top of the minor leagues and their forty-year affiliation with the Cubs undoubtedly interested them in the team. In addition, Iowa was motivated to sell because of the renovations required to Principal Park necessary to get it up to standards in the new Player Development Contract with MLB, and also doubtlessly because of the advanced age of the primary owner Gartner. (He’s 83.)

Endeavor is reportedly paying a significant premium over the previously-assessed value of these nine teams.

Endeavor has plans to make these teams more profitable by consolidating operations across many teams and using their Learfield Sports arm to expand marketing for the teams. They also could end up scheduling UFC or PBR events at minor league stadiums in another example of corporate “synergy.” There is also some talk of expanding the reach of MiLB’s broadcasting rights through Learfield or other organizations. Endeavor also owns a sports betting technology firm, which like means that there could also be more gambling at minor league stadiums in states that permit that.

Whenever there is a change in baseball, especially a change in ownership, there is understandable concern about what will happen. This concern takes on some added urgency when a private equity firm comes. The standard procedure for private equity is to come in and start slashing costs by laying off workers. Certainly Endeavor’s rumored plans should calm no minor league employee’s nerves about their jobs. It will also be a challenge for a large private equity firm in Beverly Hills to understand and meet the needs of fans in far-flung cities, unlike the local ownership groups of the past. It’s not impossible for Endeavor to do so, but it will be a challenge for them to keep the fan experience at this places high.

Additionally, this deal presents a possible major conflict of interest. Through IMG and WME, many players have agents that work for firms owned by Endeavor. Now player salaries are negotiated and paid by major league teams and not minor league ones, but it certainly raises an eyebrow if the ownership of a talent agency has such a close working business relationship with the companies with which they’re negotiating.

There are also concerns from the owners of other teams that Endeavor would have an outsized influence in any negotiations with MLB in the future, especially if they are allowed to expand their holdings to 30 or 40 teams. MLB claims that they have guardrails in the operation of the minors to insure that this will not happen. Whether or not that’s true, it is clear that it is in MLB’s best interest not to let any one minor league ownership group to have too much power the next time MLB has to negotiate a player development contract in 2030.

At least one concern about private equity, their tendency to be in the deal for short term profits and then flip what’s left of the company a few years later, is probably (hopefully?) not valid in this case. It does seem like Endeavor is in this for the “long-term,” however long that is. They certainly see the potential for profits by integrating minor league baseball in with their other holdings. I wouldn’t bet against the firm flipping the teams in the future if that assumption turns out to not be true, but for now, I do think their plan is to invest and not to plunder and flip. If that’s true, then this could be a good thing.

Minor league baseball has gone though a ton of changes over the past 12 months. It would not be hyperbole to say that it’s the biggest change in Minor League Baseball since the end of the independent minors and the start of farm systems during the Great Depression. This investment by private equity injects even more uncertainty in the future of Minor League Baseball. But whatever changes happen behind the scenes, let us hope that the minors continues to be affordable family fun for baseball fans everywhere.