Major League Baseball's screwball economics

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

Yes, the die-hard Dodger fan will readily fire up his debit card to cover the impending $200 tab. But the team's broadcasts average just 100,000 viewers. That means the remaining 5.6 million L.A. households with cable must be convinced to pay the same to catch such searing drama as Vanderpump Rules and Confessions: Animal Hoarding.

One needn't be an economist to know this won't turn out well.

Baseball Is Introduced to Reality

Baseball may be sick, but the prognosis isn't terminal. Average per-game attendance was 31,000 last year, not far below pre-recession days. Better still, polling shows that Latinos, the country's fastest-growing demographic, are also the game's biggest fans.

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."

Posnanski notes that teams have agreed to share internet revenues, meaning there may come a day when the Pirates and the Royals won't have reserved seats at the kids' table come playoff time.

Yet it's more likely that consumers and the cable industry will force baseball to confront its decaying foundation. And if they're successful, the cost to true fans will rocket.

Companies like Time Warner Cable have begun to use their own market power to fight back, offering cheaper, mostly sports-free deals for those tired of paying for games they don't watch. Time Warner's TV Essentials package comes in at less than $50, says spokeswoman Maureen Huff, and is "designed for people who are just kind of feeling the economy." Most telling: It doesn't include ESPN or other sports channels.

Cablevision is the biggest threat looming off baseball's stern. Earlier this month, the New York provider filed a federal anti-trust suit against Viacom, claiming that in order to carry Comedy Central and VH1, it was forced to buy channels like Logo and Palladia as well. According to the suit, Cablevision could always reject these demands. But Viacom wanted a $1 billion penalty in exchange for any exercise in free will.

If the court rules against Viacom, cable and satellite may finally be able to offer packages to suit any price or taste. Baseball's welfare payments from non-fans will corrode. And with an audience in decline, remaining subscribers will be forced to spend that much more to compensate. Suddenly, that $200 bill could look like a going-out-of-business sale.

A dying game will be introduced to Economics 101. It won't be a pleasant encounter. 

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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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