Major League Baseball's Screwball Economics

As another season begins, MLB faces an unsustainable future -- and you’re picking up the tab.

"There are no new pro or college games being created," says DirecTV's Dan York. "But what used to be delivered via two regional sports networks now seeks to be re-sliced into [multiple channels and] more costs for consumers. That's not a sustainable model."

Yes, the diehard 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.


Tug McGraw in the 1980 World Series.
Manny Millan/Icon SMI
Tug McGraw in the 1980 World Series.
MLB Commissioner Bud Selig and his wife, Sue, at Game 2 of the 2008 World Series.
Flickr
MLB Commissioner Bud Selig and his wife, Sue, at Game 2 of the 2008 World Series.

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.

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

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5 comments
primi_timpano
primi_timpano topcommenter

It seems that baseball is doing just fine. Your article seems to concern the broadcasters more than the teams.

JustSaying
JustSaying

I would like to see a graph on the interest in baseball superimposed over a graph of the percentage of fatherless homes in that same time frame. Baseball, more than any other sport, is one that is passed down from generation to generation. It almost always starts with 2 baseball gloves and a game of catch with your dad.

Dallasalli
Dallasalli

Rangers increased ticket prices overall and made some sections (third level behind home plate) into more expensive options.  Hard to believe they did that since they've lost so many veteran/fan favorite players this past summer.  I'm guessing fans will find everything more expensive, beer, sodas, food, etc.

fergusontx
fergusontx

Very interesting with quite a few points I wasn't aware of.  As a baseball fan, the one thing I did know was that the added financial burden would fall to me ... whether through cost of beer, pretzels, tickets or cable.

mcdallas
mcdallas

@JustSaying That is one of the best points I've seen in D.O. commenting in months.  Thanks!


...and...I totally agree.

 
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