Monday, December 10th, 2018

Five Reasons Baseball is the Healthiest Sports League

August 7, 2010 by  
Filed under Business of Baseball

While the word “lockout” is being increasingly used in discussions about the NBA and NFL, and the NHL Players Association is still searching for an executive director, Major League Baseball is enjoying one of the most prosperous and competitive eras in its history.  Owners and players seem to be getting along, attendance is good, and division races are hot.  Here’s a look at five reasons (in no particular order) why baseball is the most healthy professional sports league in 2010:

Books on Baseball Friend Kristi Dosh is an expert on the business of baseball and has graciously allowed BoB to use one of her recent columns.  See Kristi’s full bio below.

1. The words “strike” and “lockout” are as far from the collective minds of baseball owners, players and fans as they’ve ever beenThere is no doubt in my mind, or that of anyone else who is familiar with the situation, that the owners and players will come to an agreement before the current collective bargaining agreement expires in December 2011.  Both sides have indicated that discussions will begin following the 2010 season, and neither side has announced any extreme or unreasonable demands.  Meanwhile, the NFL and NFL Players Association are airing their arguments over competing websites and appear to be making no discernable progress towards a new agreement to replace their current agreement expiring in March 2011.  The NBA isn’t fairing much better, and the NHL Players Association still hasn’t appointed an executive director, although they have extended their current collective bargaining agreement through the 2011-2012 season.

2. Baseball doesn’t need a salary cap for greater parity amongst teams.  The only league without a salary cap, Major League Baseball has as much balance as any of the other leagues.  Although direct comparisons are a little tough because the playoff formats differ, I’ve put together a handy chart to demonstrate how the leagues compare from 2000-2009:

  Percentage of Teams Participating in Playoffs Number of Different Participants Number of Different Champions
MLB 27% (8 of 30 teams) 23 of 30 8
NFL 38% (12 of 32 teams) 29 of 32 7
NBA 53% (16 of 30 teams) 29 of 30 5
NHL 53% (16 of 30 teams) 30 of 30 7

Each time the owners and players prepare to negotiate a new agreement, we all wonder if baseball will finally get a salary cap like the other professional sports leagues.  I, for one, am relieved to hear there will be no push for a salary cap this time.  (If you’re interested in my case against a salary cap in baseball, see here.)  In an interview with Sarah Spain back in October, Bud Selig indicated that there is no need for a salary cap in MLB, because the league already has more parity than ever before.  He went on to point out that he’ll be looking to tweak the revenue sharing system with the new agreement in 2011, but I don’t think that will come as a surprise to the Players Association or anyone else.

3. MLB survived the economic issues of 2009 with very little impact on attendance.  MLB attendance suffered a 6% decline in 2009, but that number is a bit deceiving.  The two new ballparks in New York, each of which is smaller than its predecessor, have been estimated to account for approximately 30% of the decline last season.  Even at a 6% decline, the 2009 attendance was the fifth highest in MLB history, following seasons that saw the first (2007) and second (2008) highest attendance marks.  When put into perspective, MLB weathered the economic downturn of 2009 with very little impact to the overall league picture.

4. MLB had record revenue in 2009Piggy-backing on the last point, MLB had record revenue in 2009 of $6.6 billion.  Meanwhile, the NFL came in at $6.5 billion, the NBA at $3.2 billion and the NHL at $2.4 billion.  In one of the worst economies of baseball’s history, it produced record revenue. 

5. MLB Advanced Media is a cash cow.  I’ve wanted to write something nice and long about this for awhile, but I’ll have to settle for this brief blurb for now.  MLBAM is the reason baseball is pulling away from the other leagues in terms of revenue.  The numbers are few and far between, and the most recent ones I have are from 2007, but I’m confident that MLBAM is what has, and what will continue to, set baseball apart from the other leagues.  Under the MLBAM umbrella is MLB.com, MLB Extra Innings, MLB’s deal with XM Radio, and MLB Network. 

As of 2007, MLB.com saw 8-10 million unique visitors every single day.  It provided games to over 500,000 live package subscribers and approximately 27 million of 80 million tickets were purchased online.  In addition, MLB struck a 5-year deal with Stub Hub to be the official reselling outlet, which allows MLB to essentially profit twice from the same ticket.  Revenue has grown from $36 million in 2001 to $450 million in 2007, and is projected to increase by 30% each year.  MLBAM doesn’t just control content for MLB, it also provides live feed for other sporting events like the NCAA basketball tournament and the French Open in tennis.  MLBAM streams more than 12,000 live events per year, more than any other web producer in the world. 

XM Radio will bring in $650 million over its eleven-year contract with MLB.  DirecTV very nearly reached a $700 million, seven-year exclusive contract with MLB for Extra Innings (which offers live, out-of-market games to subscribers for a yearly access fee), but eventually settled for a non-exclusive contract and a shared 1/3 interest in MLB Network with Comcast, Time Warner and Cox Communications.  MLB Network was expected to generate $201 million in 2009, including $151 million in subscriber fees and $50 million in advertising revenue.  It’s projected to be worth over $1 billion by 2015. 

An interesting note is that MLB Network is in approximately 50 million homes, earning around $0.24 per subscriber per month.  By comparison, ESPN is in hundreds of millions of homes worldwide earning approximately $3.65 per subscriber in the US.  Bottom-line: MLB Network has plenty of room for growth and every reason to believe it will continue to grow.


Books on Baseball is very fortunate to have an expert to help us decipher all the nuances of the business of baseball.  Kristi Dosh (see full bio) an attorney and expert on all matters related to the business of sports, has written extensively on the topic.

Kristi has a website (www.itsaswingandamiss.com) writes regularly for SportsMoney on Forbes.com and appears on the TV show SportsNite on the Comcast Sports Southest where she also has a blog called Miss SportsBiz.

In her spare (?) time, Kristi is also a fiction writer.  Check out her work in process.

Comments

2 Responses to “Five Reasons Baseball is the Healthiest Sports League”
  1. Cliff says:

    Interesting piece on baseball’s health, although I’d disagree with you in two major areas. They are baseball’s current seasonal structure and the affect that this has on baseball’s network media package.

    Yes, I know that MLB is experiencing record revenues, but this is because they are experiencing growth in areas that didn’t exist 5, 10, 25 years ago. What happens when these revenue sources are no longer new? Are they going to experience necessary growth to keep these revenues growing?

    This said, I think baseball in it’s attempt to squeeze every dollar out of its current operations is presenting an inferior product (wild cards, three divisions, and three rounds of playoffs) that weakens baseball’s tradiional characteristics; season long pennant races and the World Series. As a result baseball’s media package has deteriorated over time.

    By accepting short-term financial gain over long-term growth, baseball went from a sport that had its entire post-season on broadcast TV to one that has a large chunk on cable. They also accepted one less World Series weekend, and still do not provide day-time World Series to attract their next generation of fans.

    I think that this indicates a sport that is living high off the hog, while neglecting its long-term health.

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  1. […] Books on Baseball:  Mark Ahrens posted a very well written article about why MLB is the healthiest of the major sports leagues. Although the NFL is making more money, I’m inclined to agree with a lot of the points he […]



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