Major League Baseball's screwball economics

As another baseball season begins, MLB faces an unstable future — and you're picking up the tab

Major League Baseball's screwball economics
Tim Teebken

Police in riot gear guard the dugouts, preparing for the worst with German shepherds at heel. This is Philadelphia in 1980, after all.

It's the bottom of the ninth. Two strikes. Two out. Bases loaded.

Human rocket Willie Wilson of the Kansas City Royals hugs the plate, curiously dressed in full powder blue, a color fancied by baseball teams and wedding parties of the era.

Major League Baseball Commissioner Bud Selig
Mookiefl via Flickr
Major League Baseball Commissioner Bud Selig
Webster University  economist Patrick Rishe: "I think baseball is seen as archaic. It moves at a slower pace. Their athleticism doesn't jump off the screen."
Tom Carlson
Webster University economist Patrick Rishe: "I think baseball is seen as archaic. It moves at a slower pace. Their athleticism doesn't jump off the screen."

His nemesis this evening is Phillies closer Tug McGraw, whose fame will later be shadowed by that of his son, country singer Tim McGraw. The screwball artist fires a pitch letter-high, but Wilson can only flail. Kansas City's insurgency is repelled. The Phillies win their first World Series since forming during the Chester A. Arthur presidency.

A record 54 million people tune into the game that night. It will be perhaps the last time baseball can legitimately call itself America's national pastime.

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The Great Leap Downward

Fast-forward to the fall of 2012. Marco Scutaro cracks a 10th-inning single into the wet outfield of Detroit, nudging the San Francisco Giants to a World Series sweep. The Nielsen ratings will soon reveal how far baseball has plunged.

An average of just 12 million people tune into the 2012 Series — a collapse of nearly 80 percent from McGraw's heroics three decades earlier. In head-to-head competition, a regular-season NFL game will lap the Series by 10 million viewers. The geek comedy Big Bang Theory will pummel it by five million.

Even the investigative drama Person of Interest — featuring "a software genius and an ex-CIA operative who work together to prevent violent crimes before they can happen" — will best the Series by two million viewers.

Commissioner Bud Selig has little to say about this spurning of affections. This flight of fans, after all, is very old news.

Last October's contest marked the seventh straight Series to produce record-low ratings. Baseball's defenders have tried to explain the numbers away, citing late East Coast start times, an outbreak of entertainment alternatives, and the favored wail of curmudgeons everywhere: that a younger, lesser generation of men prefer to whack pixelated zombies than witness the splendor of Pablo Sandoval going yard.

Others claim the Tigers and Giants failed to ignite the country's passion. "I am of the belief that the match-up of the World Series is always important," says Professor Wayne McDonnell Jr., known as "Dr. Baseball" for his study of sports at New York University.

But of America's three major sports, only baseball needs excuses.

The NFL's ratings remain on a march to the heavens; 108 million people watched the last Super Bowl. Viewership for the NBA finals — though reduced from the days of Bird, Magic, and Jordan — is once again climbing skyward.

Meanwhile, baseball's ratings continue to plummet, irrespective of month or match-up. Those record-low Series of the last seven years featured the game's biggest attractions, from the moneyed villains of Boston and New York to storied franchises like St. Louis and San Francisco. None stanched the bleeding.

Regular-season games have declined equally. Fox's Saturday audience has gone down an average of 800,000 since 2001. Sunday-night ESPN telecasts have shriveled by a million viewers in just the past six years.

In any other industry, such staggering drops would raise alarms of a rotting ship. One might presume that TV execs are screening Selig's calls. But the exact opposite is happening.

ESPN, Fox, and Turner recently struck deals that double their annual payments to MLB. The Los Angeles Dodgers will soon ink a 25-year pact for local rights that's worth an estimated $7 or $8 billion.

If it all seems incongruent, born of the same economics that brought you bank bailouts and the housing crisis, that's because it is. Baseball, you see, is expecting you to pick up the tab.

In an age of stagnant wages, the average cable or satellite bill is expected to reach $200 by 2020 — even before extra fees for phone and internet knock on the door.

"It's an unsustainable model for sports rights to escalate at a pace that's exponentially higher than wages for families," says Dan York, DirecTV's chief content officer. "It's coming to the breaking point."

Banking on the Slowest Falling Star

Inside broadcasting's executive suites, the Holy Grail has a new name: "appointment TV," considered the last defense against a fierce and fast-encroaching enemy, the DVR.

The problem for networks is that viewers are no longer showing up when they're supposed to. Instead of planning Tuesday nights around, say, Justified, people are recording shows to watch at their convenience. And unless they have a fondness for commercial interruptions, they'll be fast-forwarding through their daily regimen of Geico ads. Which makes Justified less valuable to advertisers.

Human nature, however, isn't partial to watching a baseball game three days after it's played. Viewers still want to see it live, even if it means opening their homes to Flo from Progressive.

"Live sports and a few other events, like the Oscars, are still must-see programming," says Maureen Huff of Time Warner Cable, the company soon to be writing those very large checks to the Dodgers.

Advertisers also see sports as the best weapon for reaching young men, who are known to have a special gift for eluding commercial reach. Never mind that baseball's youthful audience has gone AWOL. More women age 50 and older watched the last World Series than did men under 49. But compared to babe cops and reality fare, the game's ratings practically shine.

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13 comments
Quaker2001
Quaker2001

Yet another person who looks at World Series ratings and thinks the game is dying.  Take a look at local TV ratings and the new TV contracts you're talking about and then tell me the game is dying.  And if baseball is really dying, apparently the execs at ESPN and Fox didn't get the memo where they DOUBLED their rights payments to MLB.

You may be right that the balloon will burst when it comes to cable/satellite programming costs, but baseball won't take the brunt of it.  The sport is doing just fine and is in no way dying

vespa50sp
vespa50sp

Whatever. I'm not a major league baseball fan and don't have cable, so I'm not chipping in on the cable bill anyhow. I have netflix and pay per show/movie on Amazon for what I really want to see. I wish government would stop buying into subsidies for these teams however.

Dapper
Dapper

Terrible article. MLB actually has more parody in the playoffs and World Series in the past 10+ years than the NFL or NBA in their respective playoffs and championship games. The writer neglected to even google the past participants of the championship games for these major sports leagues to see that difference in parody. Terribly written, terribly researched. The article stereotypes young American men and baseball fans. The only real insight comes when he considers the growing Hispanic demographic of baseball fans. One only needs to the slightest bit observant during a summer in the Twin Cities to see the local interest in baseball.

Chubby
Chubby

Seriously? Please find someone who understands a tiny bit of the game to write about it. Also, if you want to talk about welfare and subsidies, lets talk about the NFL and NBA as well. How much in taxes will the citizens of Mn pay for the Vikings as opposed to the Twins? I can't even elaborate on the statement about baseball not changing since the introduction of the DH. It's just too stupid. This article is so contrived and ridiculous and lacking basic sense or journalistic integrity.

Chubby
Chubby

A dying game? Seriously? Oh my god, this is the dumbest article by CP yet. You need to do a little more research into the dirty NBA and equally disgusting NFL. Do you know why Baseball hasn't changed the game since the Designated Hitter, which is still disputed by fans? Because it doesn't have to!!! Morons!

cjlund
cjlund

Man alive, where do I begin on this? Advertisers pay a premium for live events, and will continue to. You can't just bring up the rising cost of TV as a way to overcome that, because the ad revenue will always be there. A TV spot for the world series will get significantly more than one for an episode of The Big Bang Theory because people will just DVR the show, a thing that you actively mention. You also didn't research Major League Baseball all that well, or you'd know that there is revenue sharing, just not for TV rights. If you knew this and chose not to mention it while explicitly discussing revenue sharing, you are A Bad Journalist.

Steinhausenn
Steinhausenn

"You can't blame baseball for cashing in on this backhanded blessing. After all, when your customers willingly pay $8 for a lukewarm Budweiser, it's safe to assume they'll buy anything at any price."

Wrong.

What is safe to assume is that the writer finds it convenient to generalize and stereotype the fan base.

Quaker2001
Quaker2001

One more note to the author.. if you're going to blame baseball's economics for what's happened in Kansas City, who should we blame for the success with small market teams like Oakland and Tampa Bay?  Not like they have a lot of money to spend or big time TV contracts, yet they seem to be doing just fine.

MNjoe
MNjoe topcommenter

@Dapper I think it's a very good article - and you should look up parody and parity before you accuse someone of terrible writing.

KoWT
KoWT

@Dapper Did you just use "parody" when you meant "parity"?  I'm gonna go ahead and call a Freudian Slip on that one.

MattyK
MattyK

 Agreed. Despite the rhetoric, for the last 8 years Tampa Bay has been perennially squeezing the big spenders in NYY and BOS out of their playoff spots. See also Baltimore, Oakland, and San Diego making playoffs the last few years. St. Louis has won more titles in the last ten years than the Yankees. Its a golden age of parity right now. The reason Kansas City hasn't been in the playoffs in decades is because they suck at building a good team. Not a year goes by that a small market team doesn't make a good run at the playoffs or in them.

Ticket sales remain strong, people still love the experience of going to the ball game. Minor league revenues have increased as well. The NFL is desperately trying to force an international audience, the MLB has had one banging on the doors for decades.

It is true that the TV contracts may someday bust soon, but even if the popularity of the sport has waned among a traditional young white male demographic, the fan base continues to be solid. The TV contracts and ratings are going to become problems in the future, but baseball is a game enjoyed best live, and of all the major sports its the best to listen to on the radio. I think MLB is uniquely poised to do well with its internet content; the hardcore fandom is already very engaged with MLB through blogs and social media, and the MLB streaming options blow the other major sports out of the water. The future of baseball is safe even if/when the TV contract boom goes bust.

MNjoe
MNjoe topcommenter

@Chubby And where in the article does it say "dying game?'  I thought it a very well-writen article that brings up some interesting points about declining viewership and the TV/radio deals affecting what a team can afford to do. The Cubs deal with WGN finally comes to an end after 2014 and there's a lot of speculation on what will happen. Try to contribute something positive to the conversation rather than calling people morons.

cjlund
cjlund

This also neglects that it's becoming far more common for baseball teams to own their own TV networks, like the Yankees do with YES, making subscription fees less of a concern as teams feast ont he advertising revenue of a captive audience.

 
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