The Greyhounds and the Cardinals ended their contractual agreement after the 1937 season. Paducah quickly arranged to sign a two year deal with St. Louis. As 1938 opened Union City was in need of a higher level hookup for their ball team, and found it again with the Cincinnati Reds. The Reds also agreed to bring all their class A, B, and C clubs to Union City for spring training. The Reds liked the Union City area because of the playing facility, the enthusiasm of the town, and its central location to Cincinnati. Geographically, the Cincinnati management could visit the training site and return to the home office in a day. Union City was also centrally located for sending players throughout the country after the training camp. Generally "central" equated to "less expensive".

Turk Massey was back as sportswriter for the Union City Daily Messenger, and J. E. Hannepin was the new president of the Kitty League, replacing Dr. Frank Bassett. At a January meeting at the Rainbow Club in Fulton, Shelby Peace was elected vice president, following the resignation of Ben Howard of Union City. Peace held the position of secretary in 1937. The directors voted to keep the $1000 salary limit again, and to have a 126 game schedule beginning on May 10, and ending September 11. Directors attending the meeting were W. C. "Rip" Fanning of Lexington, R. L. Myre, Paducah, Hugh Wise, Owensboro, H. G. Gilland, Jackson, C. D. Crabtree, Hopkinsville, J. M. Eckles, Mayfield, K. P. Dalton, Fulton, and Cecil Moss, Union City.

All the teams were moving forward with plans for the 1938 season. Fulton was again a farm club of the Brooklyn Dodgers via a hookup with the Nashville Vols. Ray Clouts the catcher in 1937, was selected as the new manager. Paducah's Indians/Chiefs had a contract with the St. Louis Cardinals and would be managed by Pete Mondino. Owensboro thought they had a contract to continue with the Cleveland Indians, however before the season started, Judge Kennesaw Landis, commissioner of baseball, ruled the Indians were in violation of farm club rules and voided the agreement. Owensboro's manager was Hugh Wise. Mayfield retained their agreement with the St. Louis Browns and had Benny Tate for a manager. Hopkinsville was aliened with Milwaukee and was managed by Red Smith, a man who sent more Kitty Leaguers to the big leagues than any other. Lexington would work with the Boston Braves through an agreement with Evansville, and continued Rip Fanning as their manager. Jackson with manager Dutch Welsh, was the only team without a higher classification helping contract. Six of the eight managers in the league were catchers for their teams.

Russell Rankin was named business manager for the Greyhounds, replacing Morgan Sedberry. Fred Nailling was named secretary-treasurer in place of C. G. Guill, a long time baseball supporter and city official, who died in February, 1938. Cecil Moss was re-elected president.

The league named umpires for 1938 included Ellis Beggs, W. H. Speck, and Don Karcher returnees from the previous year. New selections were Jimmie Futrell, Buford Webb, Ranny Throgmorton, a former Vanderbilt football player, E. E. Bower, and Al Chapman.

Before the season started Judge Landis set the Cardinal farm system on its ear when he declared them in violation of several rules. As a result of Landis rulings a number of players were declared free agents and allowed to resign with any club other than the St. Louis Cardinals. Monette, Missouri, lost all their players, including Walter Ward of Union City, who had signed with the Cards and been sent to Monette at the end of 1937. Tom Graham, a former Greyhound also was declared a free agent. Both young men quickly signed with Union City. Meanwhile Harold "Hap" Bohl a third baseman and experienced manager, was signed to guide the Union City team.

The opening day roster of the 1938 Greyhounds included the following players: pitchers, Walley Bleidistel, Bill Bishoff, Tom Graham, Ed Manus, Walter Ward, Bill Luke, and Rollie Stratham; infielders, Cy Redifer, Dick Bicksell, George Valine, Bob McBride and Hap Bohl; outfielders, Sam Agee, Dan Davies, Tony Guisto, and Glen Weatherbee; and catchers Lakeman and Jordin. Other players during the season included Jesse Bellflower, a catcher, Arthur Sheldon, outfield, and Elbert Hodge, returning as a pitcher.

The Greyhounds lost the opener in Fulton by a 6-5 score in front of 700 fans. The first four games scheduled at home were rained out. This set the tone for the season in 1938. Cy Redifer hit in 24 consecutive games early in the year. It was one of the few bright spots. The Greyhounds held first place for one day in late May. By the end of May they were in third place. At the end of June they were in seventh place with a 23-28 record, but still in contention. The Mayfield team earned the right to meet the all stars on July 19. The Union City representatives were Elbert Hodge, and first baseman Cy Redifer. The all stars won 10-3.

In late July the Greyhounds were entrenched in the cellar and Bohl was replaced as manager by Lewis "Red" Lutz, a catcher from the Cincinnati chain. There was little help provided by the Reds and Union City sunk deeper into the bottom spot. Fulton was having their problems also and recalled Kid Eberfield to co-manage with Clouts. At one point the Hounds were on an eleven game losing streak. The first merchants night, a game bought out by a number of Union City merchants, with free admission was successful in getting 4500 fans out to the game. Unfortunately the Hounds lost 10-1 to Owensboro.

The season ended with the teams in the following order: Hopkinsville, 73-53; Jackson, 73-55, Lexington, 67-58, Mayfield, 64-59, Paducah, 66-62, Owensboro, 64-64, Fulton, 55-75, and Union City, 46-84. Hopkinsville beat Mayfield in the playoffs and Jackson beat Lexington. With Jackson ahead two games to one over Hopkinsville, the series was canceled on September 23, due to poor attendance and cold weather. Mr. Hannephin announced his resignation as league president, and the Union City directors announced their first losing season, both financially and on the field, in the teams history.