BASEBALL TRENDS – CHANGING REVENUE RESOURCES

By:  Holly Horning

Before I leave God’s earth and head up to his green grass diamond in the sky (box seats behind home plate and sitting with Ernie Harwell), I intend on fulfilling at least one goal via this blog. To make readers appreciate – maybe even like – the importance of the money game in baseball. No, I’m not talking contracts – I’m talking about the essential oil that lubricates each team and the industry.

Make no mistake, baseball is big business and is being run more and more like one. We love to watch the games but we also need to watch what our team is doing on the business end because there is a direct tie to who we see on the field, on the bench, and in the bullpen.

Not to be confused with “profit” or “team value”, revenue is solely the income that comes into a team’s coffers from sales – tickets, concessions, parking, merchandise, media rights, etc. But how teams, as well as MLB, address revenue has changed, especially in the past couple years. Let’s take a look at the biggest and most important income streams, shall we?

Attendance – Not the behemoth it used to be but even 3 years ago, attendance was king. It is still critical to a certain extent, but more so for the smaller teams who don’t have other large streams of revenue. Don’t get me wrong, teams still want to put lots of fannies in the seats, but they now have other ways in which to get your hard-earned money. Such as…

The Bigger Picture – A number of teams’ owners bought baseball teams because of their Wall Street backgrounds and connections. Over half of them, including Mike Ilitch, came from companies who supply products and entertainment that segues nicely into the baseball fan profile. They’ve taken the baseball family outing and moved it beyond the outfield walls by building a mini-town (“downtown revitalization”) full of restaurants, new real estate communities, malls, theaters, hotels, casinos and even other sports teams. Best of all, they don’t have to depend upon a home game or even baseball season in order to sell you something. In this case, Mr. I does it better than most.

Branding – Simply, branding is the most important vision (actually, it’s a detailed philosophy) any individual or company can do to establish their identity, worth, image, profile and increase their sales potential. Marketing, sales, media and public relations are all subsets of branding. Teams address their branding strategy by consistently put top performers on the field, promoting their stars, enhancing their logos, stadiums and illustrious history (to name a few) while also raising their profile locally and nationally. Sadly, the Tigers do not have a branding department and it is this branding consultant’s opinion they are significantly inactive on a number of fronts. Of course, the Yankees and Cardinals have superior branding philosophies. We’re also now seeing the Dodgers becoming proactive now that they have new owners. Unfortunately, I have to give the Tigers a C-/D+ in their branding efforts. Mr. I – call me please, I have a slew of terrific ideas….

Local TV Rights – Broadcast rights are now the cash cow for the majority of MLB teams and it’s not unusual for contracts to be in the billions. This is why teams are watching viewership numbers with eagle eyes in anticipation of the next contract. Gone are the rules about waiting to bring on star players until the team is considered a contender. Players with high profiles are now brought on 1 – 2 years before new tv rights are negotiated in order to drive up viewership numbers. And this is also why the Yankees won’t get rid of Alex Rodriguez – because controversy sells. Is it no wonder that the Tigers and FSD retooled their tv broadcaster booth two years before the media rights are to be re-negotiated?

Yet, while baseball is making money hand over fist, there looms a dark cloud on the horizon. Baseball’s popularity on a national level continues to drop and it is America’s top sport with the most rapidly ageing fan base. The average fan in baseball is 54 years old and climbing every year. MLB’s Commissioner, Rob Manfred, has made this one of his top five priorities to be addressed in the coming year. He’s looking to attract a younger fan base which will help increase the sport’s popularity and ensure that the healthy flow of revenue continues.

7 thoughts on “BASEBALL TRENDS – CHANGING REVENUE RESOURCES

  1. Just kinda curious as to where that average age of 54 came from. How do they define fans? Those who attend games? Those who watch on TV? Seems dubious to me. And are they so determined to attract new fans that they alienate the old? I guess I wouldn’t doubt it.

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    • Hi, Randall – Sports Media Watch is a well-known group who did the study for all sports. It is a proper survey (unlike those who toss out something just for headlines) and thus has a complex, but detailed definition of how they put the stats together.

      Attracting younger fans to join the older ones is not mutually-exclusive. There are the obvious problems an ageing fan base has – retirement, limited income and of course, passing way. Only 6% of baseball fans are 18 and under which is a serious problem. There are lots of things MLB can do to attract younger fans without compromising the game.

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      • Holly, I’d love to know at least one of your ideas to attract younger fans. I volunteer as a reading tutor at a local grade school and very few of the kids even know who is on the team. It makes me want to cry.
        .
        Also, the expense of attending a game is out of reach for many.

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      • Hi, Kathy – I have tons of ideas re branding, but few on attracting younger fans. What does make sense is to get kids involved when they are very young. MLB should design a program where the sport can be played at most schools and subsidized by baseball. I’d also give families with young kids special discounts to make it more affordable and easier to attend. And why not put whatever tickets aren’t sold for that day’s game at deep discount and available to kids? But a team also has to promote their offers.

        And then there’s “Single and Ready to Mingle” special event nights for the 20-somethings…. 😉

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  2. Hi Holly. Once again — a well researched and powerfully written piece. I do have a question re: branding. You mentioned that one thing clubs can do to promote their team is to “consistently put top performers on the field”. Odd? Do you find that a MLB club does not always put the best product on the field? Thank you…

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    • Hi, Eddie – In review, I now see how my comment could be confusing. What I mean is that teams now know it is important to have a “name” or two playing for them – someone with a higher profile who brings a little media excitement with them. In the past, there were some teams who only went after these players if the price was right or if they were in contention mode. Now, every team realizes that they need them now for viewer ratings – and are more likely to open the purse strings than they were in the past.

      Thanks for reading!

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