Previously on First Pitch…
What is Major League Baseball?
Is it a business, to be evaluated only by the money it makes?
Is it a sport, a form of entertainment where only the quality of competition matters?
Perhaps a bit of both?
If both, how much does one impact the other, and vice-versa?
Major League Baseball is a business, selling a sport that you can watch every single night for eight months of the year, spanning from Spring Training through the World Series.
Ultimately, MLB is a business, with 30 franchises around the country that each operate as individual businesses with individual owners.
Imagine, a trendy themed fast food chain.
We’ll call it MLBurgers.
If you go to New York or Los Angeles, you’ll find a MLBurgers in each city. They’ve got the best ingredients. They’ve got the best way to combine those ingredients to give you the MLBurger you were looking for when you decided to spend your money at their establishment.
You will leave these MLBurgers wanting to come back and eat there again. Everything about the experience was enjoyable.
Unfortunately, that’s not the case in every city that has an MLBurgers franchise.
About one-in-three MLBurgers franchises don’t pay their employees a fair wage. All of the best employees in the overall company eventually end up with the New York, Los Angeles, Boston, or Chicago markets.
Those MLBurgers franchises who don’t pay their employees see constant turnover in staff, and need to rely on exceptional training skills to maintain a quality restaurant.
Some of those franchises rarely put forward a good meal. You could go 20 times in a row and get food poisoning 20 straight times in certain locations. On average, you might receive a quality meal worth paying for in three out of ten visits.
If this was a real restaurant chain, there’s no way it would survive. In most cities, consumers would turn to a Five Guys franchise, or In-n-Out on the West Coast, due to the lack of quality at MLBurgers.
Except this restaurant is designed to survive in 30 markets, even if no one goes to a third of them.
The franchises in New York and Los Angeles make more money than they wish to spend on top employees, and end up sharing a lot of their revenues to keep the weaker restaurants in the company afloat.
It doesn’t matter if no one chooses to work in these locations. It doesn’t matter that the product is often poor, leading to very few customers. What matters is the presence. MLBurgers works best with 30 locations — although one could argue that 32 locations would be better in many ways.
This offseason, the MLB owners will collectively bargain with the MLB Players Association, coming up with a revenue split going forward for the league.
That revenue split will ultimately shape the game going forward. It might not be a large restructuring, but expect some sort of change. Within that change is the potential to fix the competitive side of the game.
I wrote in a previous article in this series about how MLB: The Business has done extremely well at maximizing their revenues. They’re looking at almost $2 billion per year in national TV deals. Their local TV deals have exploded over the last decade.
Their streaming service is thriving, and there are talks that the league could expand the service to allow fans to watch their hometown teams, without cable, for $10-20 per month. So if MLB isn’t getting your eyes on one of the cable networks or the regional networks that are giving them millions per year, then they will get your money each month.
Or, you could go the old fashioned way and watch a game in the stadiums, which is now priced at a luxury rate, driving more fans to the TV side.
With the revenue that is coming into the game from these TV deals, and the revenue sharing that keeps each team afloat, don’t expect any massive overhauls to the system.
Although, this would be the perfect time.
MLB has their cable deals locked down through 2028, and most of their local deals extended beyond that point.
As we’ve seen in every small market around the game, MLB can get away with putting forward a bad product when they don’t have to worry about money.
On the TV side, a bad product is typically a game that would equate to lower ratings. Typically, that’s a game featuring small market teams.
But low ratings don’t matter when the deals are already signed.
MLB is in a rare period where they can afford to restructure the league and tip the competitive balance back toward small market teams in some way, allowing for a more balanced competitive league.
They can market their stars better, and give fans a reason to want to go and see the games live.
They can expand the league to 32 teams, and expand the playoff picture in the process, engaging more fan bases each year, while bringing in fans from two additional markets.
The way I see it, MLB has over half a decade to experiment with the sport for the better, trying to drive up fan interest along the way. Their biggest potential gains at this point are with the small markets.
I mean, how many additional New York or Los Angeles citizens are going to start eating at MLBurgers?
The overall customer base would go up if people in places like Pittsburgh and Kansas City didn’t have to fear a lower quality product so frequently.
MLB’s main approach so far has been an attempt to shorten the games. A large issue there is the amount of commercial breaks taken.
There’s a reason cable networks are paying MLB a collective $2 billion per year, while the local networks are bringing in another estimated $2 billion. Live sports are one of the best ways to sell advertisements.
The more a network pays, the more ads they need to sell to recoup the costs and make a profit. So when MLB complains about the time of the game, and installs gimmicks to shorten the play, all they are doing is trying to make up for the expansion in advertisements that their massive contracts created.
Eventually, that will catch up to them in a negative way.
MLB isn’t dead.
It’s not even really dying.
But, it is declining.
This is the time to fix the sport for the future.
It’s not the time to scoff and say that the sport doesn’t need fixing because the business is doing so well in the present.
The business is based on the quality of the product.
The product is a competitive sport across 30 franchises.
MLB is not putting out a good product.
How long until that starts to impact the business?