A Marketer’s Look

at Baseball: Past,

Present, and Future

Dr. Michael Hyman, Dept. of Marketing

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What Makes Baseball

Special?

--Four Possibilities

Romance of Baseball

Traditional passing of baseball from father to

son

Watching games together

Memories of youth

Only Pastoral Game

Played outdoors on grass fields

Artificial rural environment (Field of Dreams)

Regular season in spring and summer

No tyrannical clock

Can’t freeze ball

Q: Still true indoors on Astroturf?

History Important to Fans

Provides needed context for evaluating seasonal and career records

Different eras

Dead ball, low ERA ’60s

Different player roles

Complete games, closers

Maris’ 61*

Steroids and HR records

Quantification is Vital

Play by play

Pitch/bat speed, score, inning

By season

BA by count/runners on base

Performance to date (ERA, OPS)

By career

BA and HRs against pitcher/ball park/team

Relative performance (range, saves)

Is Baseball a Business?

Not to Most Fans

“In baseball, as in other sports, the only lasting definition of success is championships. Forced to choose between winning a championship and breaking even, or not winning a title but turning a profit, almost any owner–save for the most craven and soulless–would choose the former over the latter. In a heartbeat. Baseball fans know the Detroit Tigers won the World Series in 1984. But which was the most profitable team in baseball that year? No fan knows, and even better, no fan cares.” (Costas 2000, p.47)

Contrasting Economic

Perspective

“A sports league is a business whose success and appeal to the public depend on both the quality of play and the perceived fairness of competition. It’s a business in which the competitors must simultaneously be partners. For each of these partners, the primary goal, the desired end result, is performance in pursuit of the championship of that league.” (Costas 2000, p.49)

Disloyal Franchise: Braves

In 1953, left Boston for Milwaukee because of poor attendance

Attracted 1.8+ million fans in first Milwaukee season

Despite strong attendance, moved to Atlanta in 1966 because of TV and radio revenues (Rader 1984)

$500,000 in Milwaukee vs. $1.5 million in Atlanta

Other Disloyal Established

Franchises

Browns (St. Louis) to Baltimore (Orioles)

Senators (DC) to Minn. (Twins) & Dallas

(Rangers)

Athletics (Philly) to KC and then Oakland

Dodgers (Brooklyn) to LA

Giants (NYC) to SF

Impact of 1994 Strike

“The impact was brutal and long-lasting, and not even the McGwire-Sosa summer of ‘98 could truly change it….Two fundamental changes would occur….The inviolable connection to the past would be broken, and the separation of baseball business from baseball on the field would no longer be possible….The second was even more important than the first. The perception of baseball’s romance as distinct from its business operations was permanently tarnished if not totally erased.” (Costas 2000, pp.31-32)

Forbes Team Valuations, 2003

Team Current One-year Operating

inc. ($mil) change inc. ($mil)*

New York Yankees $849 13% $16.10

New York Mets 498 3 11.6

Boston Red Sox 488 14 -2.1

Los Angeles Dodgers 449 3 -25.0

Atlanta Braves 423 0 9.5

Seattle Mariners 385 3 23.3

San Francisco Giants 382 8 13.9

Chicago Cubs 335 17 11.9

Texas Rangers 332 -7 -24.5

Cleveland Indians 331 -8 -1.0

Houston Astros 327 -3 -0.8

Baltimore Orioles 310 -3 12.4

St Louis Cardinals 308 14 -2.0

Colorado Rockies 304 -12 7.1

LEAGUE AVERAGE 295 3 -1.3

Arizona Diamondbacks 269 -1 -22.2

Forbes Valuations, 2003 (cont.)

Team Current One-year Operating

inc. ($mil) change inc. ($mil)*

Philadelphia Phillies 239 3 -11.9

Detroit Tigers 237 -10 -5.3

Chicago White Sox 233 5 1.2

San Diego Padres 226 9 4.6

Anaheim Angels 225 15 -3.7

Pittsburgh Pirates 224 -7 -1.6

Cincinnati Reds 223 10 4.9

Milwaukee Brewers 206 -14 -6.1

Oakland Athletics 172 10 6.6

Toronto Blue Jays 166 -9 -23.9

Kansas City Royals 153 0 -11.2

Minnesota Twins 148 16 0.4

Tampa Bay Devil Rays 145 2 1.4

Florida Marlins 136 -1 -14

Montreal Expos 113 5 -9.1

Total $9,018

Std. Deviation $ 146

MLB Fan Cost Index, 2003

TEAM Avg. Avg. Beer Soda Hot Park- Pro- Cap FCI %

Ticket Child Dog ing gram change

Ticket

Boston 42.34 39.68 $5.25 $3.50 $3.50 $20.00 $3.00 $9.95 248.4 8.62

NY Yankees 24.86 24.26 $5.75 $3.00 $3.75 $10.00 $5.00 $15.00 186.7 4.65

NY Mets 23.50 22.53 $6.25 $3.50 $4.50 $10.00 $4.00 $14.00 182.6 3.13

SF 21.63 21.63 $5.50 $2.75 $3.50 $18.00 $5.00 $15.00 180.5 6.58

Seattle 23.92 23.92 $5.50 $2.50 $3.25 $20.00 $4.00 $9.00 175.7 1.32

Chi. Cubs 24.21 24.05 $4.50 $2.25 $2.50 $14.00 $5.00 $12.00 172.5 -5.05

Houston 20.78 20.45 $6.00 $3.50 $3.75 $10.00 $4.00 $12.00 165.5 4.84

St. Louis 22.91 20.11 $6.50 $2.50 $3.00 $10.00 $2.50 $14.00 164.0 6.56

Detroit 20.43 20.44 $4.50 $2.00 $2.75 $10.00 $5.00 $15.00 159.7 -0.64

Cleveland 21.82 21.82 $4.25 $2.25 $2.50 $12.00 $1.00 $15.00 158.8 -1.57

Atlanta 17.51 17.51 $5.75 $3.50 $3.75 $10.00 $5.00 $12.00 154.6 3.23

Philadelphia 17.24 16.40 $5.50 $3.00 $3.25 $8.00 $5.00 $14.00 149.3 8.63

League Avg. 18.69 17.77 $5.08 $2.62 $3.00 $10.06 $4.23 $12.28 148.7 3.29

LA 16.38 16.38 $7.00 $3.50 $3.50 $8.00 $4.00 $12.00 147.5 1.37

Chi. Wh. Sox 17.82 17.82 $4.50 $2.25 $2.75 $13.00 $4.00 $13.00 147.3 21.52

Pittsburgh 19.53 19.53 $4.00 $2.25 $2.25 $9.00 $5.00 $12.00 147.1 -2.62

Tampa Bay 14.49 14.49 $5.00 $3.75 $3.50 $10.00 $5.00 $15.00 147.0 6.24

San Diego 16.23 15.20 $5.75 $3.25 $2.75 $8.00 $5.00 $14.00 144.4 8.32

MLB Fan Cost Index, 2003 (cont.)

TEAM Avg. Avg. Beer Soda Hot Park- Pro- Cap FCI % changeTicket Child Dog ing gram

Ticket

Colorado 15.21 15.21 $5.25 $3.00 $3.25 $7.00 $5.00 $14.00 141.3 0.00

Baltimore 18.23 18.23 $4.25 $2.00 $2.50 $7.00 $5.00 $12.00 140.4 -0.71

Oakland 15.65 14.94 $5.00 $2.25 $3.00 $12.00 $5.00 $12.00 138.2 11.07

Cincinnati 17.53 16.66 $5.00 $2.25 $3.25 $8.00 $4.00 $10.00 136.4 7.26

Toronto 16.88 16.88 $3.74 $2.20 $2.37 $13.60 $3.40 $10.19 134.1 8.22

Texas 5.98 15.98 $5.25 $2.25 $2.25 $8.00 $5.00 $10.00 130.4 -13.18

Anaheim15.97 15.38 $5.25 $2.00 $2.75 $8.00 $5.00 $10.00 130.2 14.46

Milwaukee 16.86 12.54 $4.75 $2.00 $2.50 $6.00 $4.00 $12.00 124.3 -4.93

Minnesota 14.40 6.61 $5.50 $3.00 $3.00 $7.00 $4.00 $13.00 118.0 -2.57

Arizona 14.60 13.80 $5.00 $2.50 $3.00 $6.00 $1.00 $10.00 116.8 1.41

KC 12.13 12.13 $3.25 $2.00 $2.25 $6.00 $5.00 $12.00 112.0 -1.47

Florida 12.78 10.26 $5.25 $2.00 $3.00 $5.00 $5.00 $10.00 111.6 0.67

Montreal 9.00 8.40 $3.39 $2.04 $2.04 $8.15 $4.08 $10.20 94.6 11.46

Avg. ticket price is a weighted avg. of season ticket prices for general seating categories, determined by factoring the tickets in each price range as a percentage of the total number of seats in each ballpark. Luxury suites are excluded. The Fan Cost Index™ is the price of 2 adult average-price tickets, 2 child average-price tickets, 2 small draft beers, 4 small soft drinks, 4 regular-size hot dogs, parking for 1 car, 2 game programs and 1 cap.

Source: http://www.teammarketing.com

Team Revenues, 2002

All figures is millions of dollars

Team Local Local Local Gate/ Total Total Oper.

Cable Radio Broadcast Related Revenue Expenses Profit

Yankees $57.00 $0.00 $0.00 $157.80 $214.80 $196.11 $18.69

Mets 0.00 5.25 41.30 122.48 169.03 152.19 16.84

Seattle 22.50 6.30 0.00 133.24 162.04 151.71 10.33

Atlanta 4.20 5.30 33.50 117.02 160.02 150.57 9.45

Boston 9.57 5.30 9.05 128.22 152.14 163.55 -11.41

Cleveland 6.83 5.46 6.40 132.46 151.15 153.77 -2.62

LA 5.20 7.28 16.30 113.85 142.63 172.21 -29.58

SF 6.00 5.70 6.80 123.52 142.02 124.18 17.84

Texas 9.90 5.15 13.70 105.55 134.30 139.26 -4.96

Baltimore 15.96 3.64 5.25 107.87 132.72 126.56 6.16

Chi. Cubs 13.50 0.00 20.60 96.45 130.55 120.65 9.90

Colorado 15.75 4.68 0.00 108.99 129.42 119.81 9.61

Arizona 5.90 3.90 9.30 108.14 127.24 131.15 -3.91

Houston 13.00 3.20 0.00 109.71 125.91 119.74 6.17

St Louis 3.15 4.24 3.12 112.79 123.30 128.40 -5.10

Detroit 9.45 6.50 3.12 95.65 114.72 99.39 15.33

Team Revenues, 2002 (cont.)All figures is millions of dollars

Team Local Local Local Gate/ Total Total Oper.

Cable Radio Broadcast Related Revenue Expenses Profit

Milwaukee 4.78 2.08 0.00 101.40 108.26 89.51 18.75

Pittsburgh 7.28 3.64 0.00 96.71 107.63 94.65 12.98

Anaheim 5.20 4.16 6.00 87.25 102.61 96.89 5.72

Chi.Wh.Sox 9.90 5.30 6.76 79.37 101.33 100.63 0.70

Philadelphia 7.00 2.50 4.50 80.27 94.27 85.70 8.57

San Diego 6.48 4.16 0.00 82.45 93.09 81.20 11.89

Oakland 6.24 2.10 4.16 80.24 92.74 76.44 16.30

Tampa Bay 4.73 3.85 3.20 79.81 91.59 97.68 -6.09

Toronto 11.00 2.50 4.00 73.62 91.12 108.72 -17.60

Cincinnati 6.24 3.64 0.00 76.75 86.63 82.36 4.27

KC 5.50 2.00 0.00 77.10 84.60 82.37 2.23

Florida 10.30 3.67 0.00 66.69 80.66 77.31 3.35

Minnesota 5.30 1.20 0.00 68.14 74.64 69.09 5.55

Montreal 0.50 0.21 0.00 62.55 63.26 65.66 -2.40

Total 288.36 112.91 197.06 2986.09 3584.42 3457.46 126.96

Mean $9.61 $3.76 $6.57 $99.54 $119.48 $115.25 $4.23

Source: http://www.forbes.com, March 29, 2002

NY Yankee Revenues,

1995 to 1998

Thousands of dollars 1995 1996 1997 1998

Revenue

Ticket & stadium $34,035.00 $45,717.00 $62,111.00 $80,505.00

Local TV & radio 41,421.00 49,105.00 52,924.00 53,170.00

National TV 7,097.00 12,400.00 14,300.00 15,400.00

Sponsorship & adv. 5,939.00 8,591.00 13,542.00 13,548.00

Postseason ----------- 8,247.00 2,247.00 11,492.00

Other 9,105.00 8,530.00 12,596.00 5,555.00

Total revenues $97,597.00 $132,590.00 $157,720.00 $179,670.00

Source: NY Yankee Partnership Summary Financial Data, Sports Business Journal

3/6-12/00, p.12

As Business, Baseball

Benefits Financially

from Marketing

Without Marketing . . .

“The…most evident effect of the Yankees' demise was to accelerate the decline in AL attendance. In 1961…the…AL drew 10,163,016 customers. Attendance then fell steadily until it reached a low point of 8,860,764 in 1965.... For decades, other AL teams had relied on the Yankees to draw big crowds and failed to develop effective marketing programs. Now, the King was dead. The AL would have to solve its attendance problems without the drawing power of a star-studded Yankees team.” (Miller 1990, p.98)

Veeck: 1st Baseball Marketer“It isn't enough for a promotion to be entertaining or even amusing; it must create conversation. When the fan goes home and talks about what he has seen, he is getting an additional kick out of being able to say that he was there. Do not deny him that simple pleasure, especially since he is giving you invaluable word-of-mouth advertising to add to the newspaper reports….

Although you are dependent upon repeat business, you have NO PRODUCT to sell. The customer comes out to the park with nothing except the illusion that he is going to have a good time. He leaves with nothing except a memory. If the memory brings on either yawns or head pains you've lost him until next year.

Veeck Understood Services

MarketingWith its unfailing instinct for merchandising, baseball has sold its customers on the idea that they can only enjoy themselves when the home team wins. This is great for the two pennant winners, but… If you have a particularly bad team, you are faced with the considerable problems of coaxing your customer into the ballpark that first time. The next problem is to make him want to come back….

[O]ur main interest is in how we can use the arts of promotion to keep the fans totally involved in what is happening on the field, even while nothing is happening. Because, and you had better believe it, they are not going to pay to sit out there and daydream when they can sit home and daydream for free.” (Williams 2000, pp.13, 20, 23)

Veeck Promotions

Gave away lobsters, pigs, horses, geese, white mice, eels, 200-pound blocks of ice, nylon stockings, a swayback horse, 1000 pounds of chicken feed, and 500 jars of iguana meat

Hired flagpole sitters, tightrope walkers, and jugglers

Put clown prince Max Patkin in first base coach’s box

Held a night for an average fan (Joe Earley)

Introduced ‘The Name's the Same’: everyone with same last name of famous person gets in free and sits behind him

On Mother’s Day, all mothers who bring a picture of their offspring get in free

During WW II, held morning games for workers on third shift

Put player’s pictures on backs of tickets (made collectible)

Introduced Bat Day (now frequently imitated)

Let Eddie Gaedel, a midget, bat during game

Veeck Promotions (cont.)

‘Grandstand Managers Night’: 1000 fans sat behind home plate and held up YES or NO signs in response to strategy questions posed by coaches while manager rested in rocking chair

Used hydraulics to move fences in when home team was batting

Introduced names on backs of uniforms

Introduced post-home run curtain call

Introduced first exploding scoreboard

Dressed players in short pants (White Sox)

Installed shower in bleachers

Convinced Harry Caray to sing ‘Take Me Out to the Ballgame’ during 7th-inning stretch

“Nothing was too ridiculous. The more incongruous, the greater the unthinkability, the more Veeck's buoyant spirit took pleasure in it.” (Williams 2000, p.54)

(Sources: Veeck (1965) and Williams (2000))

Failed Veeck Promotion

“Not every idea works. There was Disco Demolition

night.... [F]ans [were invited] to bring disco records to

the park and destroy them between games of the

double-header.... Fifty thousand people attempted to

get into Chicago's Comiskey Park that night in 1979,

well over capacity. After the first game of a twi-night

doubleheader with Detroit, about 7,000 fans jumped

onto the field, shouting obscenities, tearing apart the

batting cages, and setting fire to disco records in the

outfield. The White Sox were forced to forfeit the game.

It was a disaster.” (Williams 2000, pp.60-61)

Orioles Promos: ’60s & ’70sIn-season promotions

Up to 30 special promotion nights per season

Free merchandise and tickets

Basebelles

Young women dressed in shorts and Orioles logo shirts served as ushers and between-innings entertainment

Shifted to more family-oriented garb in ’70s

The Bird mascot

Selected a Ms. Oriole

Off-season promotions

Hosted annual winter open houses and stadium tours

Formed basketball team of Orioles players to play charity games (Miller 1990)

Sponsorships: Early D’backs

America West bought…

Minority stake of team ($6 million)

Ad time during games ($2.5 million yearly)

Deal excluded ads by other airlines

Stadium suite

Pepsi bought…

Exclusive in-stadium pouring rights

Stadium signage

Sponsorship of ‘coach's corner’ TV show (Sherman 1998)

Is Today’s

Commercialism

Excessive?

MLB Properties

Wholly-owned subsidiary to market

official products with team logos

mlb.com

Web Promotion

Main Page

Audio & Video Services

Gameday Audio

Gameday Video

Fan Forum Index

Fantasy Baseball

Baseball History Index

Yankees History Index

Yankees History, Audio & Video

Yankee Stadium History

Yankee Merchandise

Featured Selections

Jerseys

Memorabilia

Baseball Cards

Bedding

Home Furnishing

DVDs

Yankee Tickets (Pricing)

General Info: Overview

General Ticketing: More

Ticket Specials

Promotion Schedule

Gift Certificates

Spring Training Tickets

Season Ticket Plans

Season Ticket Plan

Comparison

Group Tickets: Overview

Group Tickets: Plans &

Dates

Suites & Party Facilities

Suites & Party Facilities:

Prices

Stadium Tours

Souvenirs

“It is no longer sufficient to simply go to the ballpark to root for the home team. Forget for a moment that this year’s home team resembles last year’s home team in uniform only….Now we must take something back from the ballpark as well, something tangible, with real market value. Now we need an autograph, a foul ball, a ticket stub.” (Paisner 1999, p.3)

Collectibles Mania

“There had always been a quietly viable market for baseball collectibles, but there had never been anything like this: commemorative bats, limited-edition coins, Franklin Mint curios, collectible Wheaties boxes, stamp-signed photos and plaques, gold-foil baseball cards, crystal baseballs cut and appropriately engraved by Tiffany's….Then there was the real deal: the game-used bats and hats and gloves and cleats of the stars themselves. The undershirt worn…by David Wells from the perfect game he pitched during a Beanie Baby Day promotion at Yankee Stadium…along with a stadium-issued Valentino Beanie Baby…sold at auction…for $862.50.” (Paisner 1999, pp.3-4)

Collectibles No Longer Fun

“What had changed… was the way collectors had siphoned the emotional value from game-related items and replaced it with market pricing. Children no longer traded baseball cards with their friends, preferring to hoard them in their original wrappings to preserve their future worth. Autographs were no longer clambered for but collected in orderly fashion in exchange for a signing fee. Game-used balls were no longer displayed on mantels; signed score sheets were no longer tacked on bedroom walls. Today's collectors handled their 'merch' like drug dealers, wrapping their overpaid-for items in sandwich bags and stuffing them into sock drawers or bank vaults for safe keeping. There was less percentage in actually enjoying these artifacts than there was in acquiring and maintaining them.” (Paisner 1999, p.6)

Merchandising Possibility for

McGwire’s 70th HR Ball

Split ball into ½ million threads

Sew each thread into an official looking ball

Sell each ball for $29.95

Kid friendly price

Re-sew cover onto new windings and donate to Hall of Fame

Value of deal: $15 million (Paisner 1999)

Cult of Celebrity

Society Craves Celebrities

Fan—not marketer—inspired phenomenon

Movie studios in early 1900s tried to focus on stories and genres, but fans interested in actors

Fan clubs and actor-centric publications flourished, so studios adapted

PR depts. created actor personae consistent with roles rather than reality

Willing suspension of disbelief by fans

Know studios fabricate actor personae, but this favorite actor is true to his/her image (Barbas 2001)

Media Glorifies Athletes

“I won’t deny that the heavy majority of sportswriters, myself included, have been and still are guilty of puffing up the people they write about.... If we’ve made heroes out of them, and we have, then we must also lay a whole set of false values at the doorsteps of historians and biographers. Not only has the athlete been blown up larger than life, but so have...celebrities in all fields.... I’ve tried not to exaggerate the glory of athletes. I’d rather… preserve a sense of proportion, to write about them as excellent ball players.... But I’m sure I have contributed to false values... [by] ‘Godding up those ball players’.”

–Red Smith, as quoted in Williams (1994), p.1

Athletes: True Meritocrats

“With competition for the entertainment dollar reaching the bare-knuckle stage, personality has become more important than ever….What makes it so sad is that the athlete has a role in our society that reaches even beyond showmanship. The athlete is one of the last symbols of...the physical man. The average man finds…his own daily conflict has been reduced to the drive downtown, the paper work in the office, the return trip. The conflict is undefined, the enemy is indistinct, the battle remains permanently unsettled. He doesn't really know whether he has won or lost….

There is in all men who work with the brain some sense of guilt toward the man who does what our instinct tells us is the work of the male animal–to live by your sweat and your muscle and your animal reflexes. The ballplayer wins and loses day by day, as the primitive man won or lost day by day.” (Veeck 1965, pp.152-153)

Manufacturing Celebrities

Benefits Teams

“Corporations and nonprofit institutions have

developed elaborate programs to build up

‘stars,’ reasoning that the better known their

leaders are, the more recognizable their

products and services are to consumers. Sports

clubs have a vested interest in building up the

visibility of their players so that they can draw

larger audiences.” (Rein et al. 1997, p.77)

Manufacturing Celebrities

Well-Established Practice“[W]ith the widespread availability of televised sports images, sports celebrities enter our consciousness incessantly, raising unlimited opportunities for promotion. Seeking to capitalize on this trend, sporting goods companies use athletes to endorse their equipment. Teams employ PR to produce the most palatable images of their players.... Part of the support staff of emerging sports stars are their own PR specialists who reconstruct the celebrities.... This means that [a player] may get speech lessons, media-encounter training, dress-for-stardom advice, and identification with his or her very own charity.... Today's athletes move through the media channels using many of the same promotion strategies as movie stars.” (Rein et al. 1997, pp.285-286)

Early Manufactured Celebrity:

Yogi Berra

“Yogi is a completely manufactured product. He is a case study of this country's unlimited ability to gull itself and be gulled. Yogi had become a figure of fun originally because with his corrugated face and squat body he looked as if he should be funny, and because when he turned out to be a great ballplayer in spite of his odd appearance a natural feeling of warmth went out to him, as to the ugly duckling who makes it big in a world of swans. It pleased the public to think that this odd-looking little man with great natural ability had a knack for mouthing universal truths with the sort of primitive peasant wisdom we rather expect of our sports heroes. Besides, there was that marvelous nickname. You say ‘Yogi’ at a banquet and everybody automatically laughs.” (Veeck 1965, p.57)

Celebrity Video Clips

Derek Jeter

Centerstage, Clip 1 (2 minutes)

Centerstage, Clip 2 (5 minutes)

Roger Clemens

MLB Interview (1st 6 minutes only)

Jackie Robinson

MLB Interview with daughter Sharon (1st 5 minutes

only)

(Note: To view these clips, a Real Media player must be installed

on your PC.)

Cult-Related Problems

Distracts from sports focus

Players hired for athletic skill, so may fail or reject

charge as role models

Glorifies wrong people (e.g., entertainers) as role

models

Famous for being famous (celebrity) rather than

great (hero) (Boorstin 1961)

People become commodities

Celebrity Worship Syndrome (10% of people)

Unhealthy obsession (Maltby et al. 2001, 2004)

Ownership of MLB

Teams by Media

Conglomerates

TV’s Long-time Financial

Influence“By 1956, the economics of NY Giants baseball had been revolutionized, thanks to the advent of television and the steadily increasing income it yielded. In 1946, before the television era, live admissions–at the Polo Grounds and on the road–contributed almost 80 percent of the Giants' baseball-related income, broadcasting a scant 5 percent. In 1950, broadcasting revenue exceeded road-game income, and the share of income contributed by the live gate fell to 70 percent, while the television-radio share was up to 15 percent. By 1956, broadcasting income contributed more than 30 percent of the Giants total team income. As a result, even while Polo Grounds attendance was declining, the Giants did not slip into the red.” (Fetter 2003, pp.267-268)

For more, see: Early_NYC_TV_Baseball.pdf (viewing requires installation of Adobe Acrobat reader on your PC)

Operating Costs, Free TV, and

Revenue Capture

MLB teams costly to buy and run

Expansion fee, start up cost, stadium construction

Payroll (players and admin.)

In ’50s and ’60s, only home games broadcast

Tech limitations precluded road broadcasts

TV fans financial contribution limited to supporting advertisers

Could have 16,000 people at Ebbets Field and 2.5 million watching game on TV

How to capture more revenue? (Fetter 2003)

Media Company Ownership

Only media conglomerates have motive and

resources

Treat sports programming as entertainment

Media company owns team (Angels,

Braves, Cubs)

Team owns media company (Yankees, Red

Sox)

Large Media Market Teams

Should Dominate League

“A league that seeks to maximize its revenues will not want each of its teams to have an equal chance to win the championship. Leagues want high television ratings. These are best achieved…when teams from the largest media markets are playing in the championship series. Other things being the same, MLB would like to see the [Yankees, Mets, Dodgers, Angels, Cubs, and White Sox] appear in the World Series more frequently than the [Brewers, Reds, Royals, or Padres]. By the same token, MLB does not want to see the Yankees win or the Padres lose every year because that too would engender apathy in many cities.” (Zimbalist 2003, pp.35-36)

Current Model: YES Network

In ’60s to ’80s, most Yankee games on free TV (WPIX)

In late ‘80s, signed 12-year MSG network deal for $493 million

100+ games on cable and 25 games on free TV

Launched YES Network in 2002

100+ live games on network (cable plus satellite)

Additional programming

Delayed and classic games

Interviews, Yankeeography and Nets

Roughly 25-30 games on free TV (WCBS)

Annual Revenues for YES

For YESNetwork web pages, see: YESNetwork_com.htm

Source

In NYC, cable operators charged $24 yearly per

person for programming ($24 x 6.8 million TVs)

Fees in outer markets

Ad revenue

______________________________________

Total for 2002 (Zimbalist 2003, pp.12-13)

Revenue

$163 million

$30+ million

$50+ million

___________

~$250 million

Threat of Media Ownership

Too little sport and too much profit orientation

Less protection of MLB’s rich traditions

Warps game to make it more amenable to TV

Creates competitive imbalance

Murdochs and Steinbrenners buy players to fuel media networks and other enterprises

Subverts revenue sharing

Fees (~$60 mil) understate value of cable rights by 50%

In 2002, Zimbalist estimated YES worth $850 mil

Four Possible Futures

Listed by Likelihood

and Event Horizon

Summary (of Assumptions)

Baseball is an historically grounded sport

Baseball is a business

Marketing of games, merchandise, and

players keeps baseball economically viable

Perpetuates a cult of celebrity

Teams now subsidiaries of large corporations

Media corporations increasingly dominant

Media increasingly important to financial

success

Future #1: Customizable

ViewingViewers increasingly media multi-taskers

Decentralized control of viewing

experience

Simultaneous viewing of multiple games

possible with current TV technology

Interactive TV makes customized viewing

possible

Future #2: Media League

Ownership trends suggest re-alignment into

large market media league and secondary

league

Fan loyalty to player/manager/owner-

celebrities rather than teams or

geographical locations

Perhaps like UK soccer leagues with first

and second divisions

Future #3: Soundstage League

Centrally located soundstage leagues

Multiple stadia in a few locations

1000’s of video cameras surround field

No live viewing minimizes security risks

Totally customizable viewing or Web-based narrowcasting

Webcasts via mlb.com already reality

Future #4: Post Singularity

Advances in genetic engineering, AI, and nanotech change nature of our world (Smith and Westerbeek 2004)

Cloned/genetically engineered and trans-human athletes

Streaming video from athlete’s perspective

Being John Malkovich

Map athlete’s brain to duplicate consciousness

Create virtual reality indistinguishable from reality

Nanobots at every nerve ending deliver simulated sensations (e.g., could be Derek Jeter of 2050)

Assumes sports, because real, preferred to fake

Why Kirk leaves Nexus in ST Generations

Conclusion

“[A] veteran Boston sportswriter [wrote]…‘If ever a paradox were true, it is that big league baseball is strictly a business to those who make money off those who think it is strictly a sport.’ Although the sport and business are still…linked, the greatest challenge facing baseball is to preserve some degree of separation between the two. It is, after all, the sport, not the business, that is the only reason for the existence of the institution of major league baseball in the first place, the only reason there is any money to be made from it at all.” (Fetter 2003, pp.388-389)

Baseball: In the Entertainment

Business“This is an illusory business. The fan goes away from the ballpark with nothing more to show for it than what's in his mind. When you sell a chair, or a house, or a car, you can develop a contented customer based on the quality of your product. Three years from now, he can look at it with a feeling of satisfaction–‘Best buy I ever made.’ But in baseball, all he ever walks away with is an illusion; an ephemeral feeling of having been entertained. You've got to develop and preserve that illusion….The only thing about a baseball game that matters as the ephemeral notion that you had a good time.” (Veeck, quoted in Williams 2000, p.64)

Bibliography

Barbas, Samantha (2001), Movie Crazy: Fans, Stars, and the Cult of Celebrity. New York, NY: Palgrave.

Boorstin, Daniel J. (1961), The Image: A Guide to Pseudo-Events in America. New York, NY: Harper Colophon Books.

Carter, David and Darren Rovell (2003), On the Ball: What You Can Learn About Business from America’s Sports Leaders. Upper Saddle River, NJ: FT Prentice Hall.

Costas, Bob (2000), Fair Ball: A Fan’s Case for Baseball. New York, NY: Broadway Books.

Fetter, Henry D. (2003), Taking on the Yankees: Winning and Losing in the Business of Baseball, 1903-2003. New York, NY: W. W. Norton & Company.

Guttman, Allen (1978), From Ritual to Record: The Nature of Modern Sports. New York, NY: Columbia University Press.

Lupica, Mike (1999), Summer of ‘98: When Homers Flew, Records Fell, and Baseball Reclaimed America. New York, NY: G.P. Putnam’s Sons.

Bibliography (cont.)

Maltby, John, Lisa Day, Lynn E. McCutcheon, Raphael Gillett, James Houran, and Diane D. Ashe (2004), “Personality and Coping: A Context for Examining Celebrity Worship and Mental Health,” British Journal of Psychology, 95, 411-428.

Maltby, John, Lynn E. McCutcheon, Diane D. Ashe, and James Houran (2001), “The Self-Reported Psychological Well-Being of Celebrity Worshippers,” North American Journal of Psychology, 3(3), 441-452.

Miller, James Edward (1990), The Baseball Business: Pursuing Pennants and Profits in Baltimore. Chapel Hill, NC: The University of North Carolina Press.

Paisner, Daniel (1999), The Ball: Mark McGwire’s 70th Home Run Ball and the Marketing of the American Dream. New York, NY: Viking.

Rader, Benjamin G. (1984), In Its Own Image; How Television Has Transformed Sports. New York, NY: The Free Press.

Rein, Irving, Philip Kotler, and Martin Stoller (1997), High Visibility: The Making and Marketing of Professionals into Celebrities. Chicago, IL: NTC Business Books.

Bibliography (cont.)

Sherman, Len (1998), Big League, Big Time: The Birth of the Arizona Diamondbacks, the Billion-dollar Business of Sports, and the Power of the Media in America. New York, NY: Pocket Books.

Smith, Aaron and Hans Westerbeek (2004), The Sport Business Future. New York, NY: Palgrave.

Veeck, Bill (with Ed Linn) (1965), The Hustler’s Handbook. New York, NY: G. P. Putnam’s Sons.

Williams, Pat (2000), Marketing Your Dreams: Business and Life Lessons from Bill Veeck, Baseball’s Marketing Genius. Chicago, IL: Sports Publishing Inc.

Williams, Peter (1994), The Sports Immortals: Deifying the American Athlete. Bowling Green, OH: Bowling Green State University Popular Press.

Zimbalist, Andrew (2003), May the Best Team Win: Baseball Economics and Public Policy. Washington, DC: Brookings Institute Press.