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Can Marketing Improve the MLB?

After a recent conversation with my teenage son who plays travel baseball, I discovered he loves the game but does not know the game’s best players. With his affection for basketball sneakers for style even though he plays hockey, I think the MLB is missing a key audience to grow the game – America’s youth. Can baseball be preserved?

It began as a simple conversation as my son and I were driving home from a memorial service in North Carolina on our way back to New York. Aside from the obvious topics that could ensue, I had to do a fantasy draft while we traveled and not wanting to get in an accident, my 13-year-old son rode shotgun and fired up the Yahoo Fantasy Sports app. Once it started he figured out how to use the queue and as he told me who was being taken along with giving up trying to cross names out from my spreadsheet of players by positions, occasionally he would ask who a player was or what position they played.

Some of the players I thought would be obvious, but I was wrong. As the introduction hinted at, my son plays baseball competitively and youth hockey which is a part-time job as a parent to organize. During our stay in North Carolina, I purchased a pair of LeBron’s for my son as a reward for improving his grades. Mind you, he knows who that is, along with Neymar, Messi, Kevin Durant and Mike Trout. I was proud when he played a tournament in Cooperstown last summer and selected a Mike Trout jersey in which to purchase as a memory from our time in one of my favorite quaint villages.

SOCCER: FEB 21 La Liga - Malaga at Barcelona

Because of the game’s marketing, my son can more easily recognize soccer stars than those in MLB

But is Mike Trout a household name? I am not sure and I asked my son today if he could watch any five players in person, who would they be: Mike Trout, Bryce Harper, Clayton Kershaw, Carlos Santana, and Gregory Polanco. If you are confused by the fifth player, it is simple; last summer Polanco played in Syracuse versus our Triple-A affiliate prior to his promotion to the Pirates, and I scouted him for an article. Polanco has an easy-going persona and flashes a nice smile while he signed autographs for my son and his friends. That stays with a person, so he gained two fans that night in Syracuse.

But all of this led me to question where baseball is in the sports pecking order, and can it maintain (or improve) its standing? One of the reasons we were at the memorial service is because one of my best friend’s father passed away, and among the things that bound us in friendship was baseball. We played it, followed it, went to games, and made road trips as adults to see different cities and ball parks.

However, I feel like this is not a priority to my son’s generation. They like prominence and action. Video games dominate some of the mainstream and games like the FIFA, NBA 2K, and Madden series’ are miles ahead of the baseball-generated revenue (even as the MLB: The Show series receives universal praise).

Regular season success hasn't translated into World Series rings for Kershaw and the Dodgers.

Sure a guy like Clayton Kershaw is well-known, but is baseball doing its best to market him to the masses?

As I researched the topic of marketing baseball, I started to see what Bud Selig wanted to accomplish with the salary cap and revenue sharing. It is a blueprint of soccer’s Premier League’s success. Basketball seems to dominate the clothing market due to sneakers and apparel; football has the highest television contract due to the shorter season and intense season. Not only that, football has incorporated female support with the Breast Awareness October promotions and educational classes for the game. How can baseball use the best of the leagues above to improve and, more importantly, can they?

Bud Selig’s Competitive Vision

One of the reasons for soccer’s success in Europe is the competition that is generated in its leagues. The Premier League houses seven of Europe’s top performing clubs, which guarantees a minimum of forty-two match-ups that bring not only fans to the stadium, but creates the want for people to buy the viewing packages on television. Soccer’s worldwide popularity is something that the American behemoths baseball and football have longed to imitate. Not only does the Premier League thrive, but so do the leagues in countries like Italy, which has five of the UEFA top-50 teams, team meaning they get twenty premium match-ups as well, with the premise being that more competitive teams make for more revenue. Games will be in demand not only for sports channels, but for advertisers and fans alike.

Here is where I made the connection to what Bud Selig was intending when he created the revenue sharing and salary cap with the luxury cap penalties, but he forgot one part. In the crux of punishing the teams that spend, Selig never made the teams at the bottom have a soft cap of money that they had to reach. Whether it is a ball park that does not generate income or a lax fan base, there are teams every year that do not spend but turn a profit. If competition is the focal point of the vision, then all the teams need to be invested. Here is a chart to illustrate the team revenues by league including soccer (courtesy BusinessInsider.com):

Team Revenues in Sports Leagues

Baseball is third on the list and is not far behind football in terms of profit. I thought there would be a greater divide in this chart but was pleasantly surprised. For an American specific chart, here is one courtesy of Statistica.com:

Avg Franchise Value by League

This chart illustrates the greater divide that I feared. While all the sports have seen an increase in their team values, football is far and away ahead in regards to value. In spite of being in the summer and with more games played, baseball franchises are not worth as much as their football counterparts. The National Football League has a very friendly tax exemption which is nice considering it generates a $10 billion per year profit. During football telecasts, there are commercials featuring Peyton Manning for Nationwide and Papa John’s along with Drew Brees for Nyquil, but where are the same in baseball games? Can baseball carve out a niche?

Endorsement Deals

One of the great divides in this look at the sports is in the endorsement money generated. In fact, I hope that some of the reports in here surprise you as much as they did myself. I had an idea the National Basketball Association (NBA) did a great job of marketing its stars, but not to this level. Starting with the research of the fifty most marketable athletes in the world (Sportspromedia.com), only the NBA had five people on this list. Baseball and the NFL only had two and hockey only one. Here are the players by sport in 2014:

NBA – Blake Griffin (9), Stephen Curry (26), Anthony Davis (29), James Harden (37), Carmelo Anthony (46)

European Premier League – Ronaldo (4), Neymar (7), Lionel Messi (11), Julian Green (44)

NFL – Robert Griffin III (3), Johnny Manziel (33)

MLB – Mike Trout (17), Masahiro Tanaka (45)

NHL – Steven Stamkos (32)

Whether I am showing my age or just being uninformed, I was shocked not to see Peyton Manning, LeBron James, or Sidney Crosby on this list. In an effort to dig a bit deeper, I then turned to sporteology.com for their top-100 paid athlete list, which included a column with each players endorsement money. Here is the breakdown with each sports’ top five:

Endorsements by sport money

Look at the disparity of soccer and basketball in comparison to baseball and football. Once again, being able to sell sneakers for basketball and cleats for soccer has to be a part of this. Soccer fans wear jerseys much more often than other sports but I found this incredulous. It seems like Peyton Manning is on every commercial break during football season but he sits at just $12 million in endorsements, which is more than triple the active leader for baseball but pales in comparison to Lionel Messi or LeBron James. Is the root of this problem for baseball in the fact that teams pay exorbitant guaranteed contracts, thus making endorsements secondary for their athletes? It is possible, but I want to go a bit deeper in regards to baseball now.

Baseball Spending

One of my favorite charts to look at is how much it cost a major league team to win a game last season. The following two charts will list the teams who spent the most per win and show how much each one cost in regards to salary paid to attain (courtesy sportingcharts.com):

Price per win 1_15

Cost Per Win 16_30

It is worth noting that only five of the ten playoff teams were among the top half in regards of spending per win. So there is hope for the teams that do not spend excessively like Baltimore (22nd), Kansas City (24th), Oakland (27th) and Pittsburgh (28th) that played in October. But one of the reasons that every week, games in the NFL are so competitive is there is not such a divide in spending habits. All the teams have the same cap in which to operate under, and if baseball wants to improve its product and overall success, it needs to implement one.

Not only that, there has to be a rule involving fair contracts to the Cuban infusion of talent with teams taking advantage of the bidding process. There is a flaw in a system that has Hector Olivera making more this year than defending National League MVP Andrew McCutchen. Not only that, Alex Cobb of the Tampa Bay Rays voiced his displeasure about kids from the United States not being able to garner such contracts as free agents as well. If this is not addressed by the new commissioner, it will create a further divide between the teams that will spend because of generous television contracts and stadium revenue.

MLB: MAR 13 Spring Training - Yoan Moncada Boston Red Sox Work Out & Press Conference

Boston’s Yoan Moncada was guaranteed more than the top-five picks in the 2014 draft combined

According to ESPN’s Darren Rovell, the NFL divided its six billion dollar revenue to all thirty-two teams, with each receiving $187.7 million which represents 3.1 percent of the share, or 1/32nd. Baseball does not have a format like this with each team receiving individual television rights. Things will not even out above without a total restructuring. This also applies to the marketing question and how to develop a healthy environment.

Baseball’s Next Step

In order to develop a system of marketability, I found a couple of charts that express this much more eloquently than I could with words. First, here is an ecosystem courtesy of ATKearney.com:

Sports Ecosystem of $ Flow

According to reports about MLB.com, they are doing a nice job of meeting the needs of the chart above in most areas. The website has the opportunity to subscribe to games so if you are out of market you can watch your favorite team on the computer or wifi-driven device. Advertisements are included on the site and you can shop for team apparel, buy tickets, and even bid in auctions for game-worn items.

I think the problem goes back to my conversation with my son, who had a hard time naming five players he would like to see in person and used one he already has. At a time when there is a bounty of young talent ready to take baseball forward, will the sport utilize them? Since I write and play fantasy sports at an obsessive rate, I can reel off talent I would like to see in person but there is a short list:

Mike Trout, Giancarlo Stanton, Clayton Kershaw, Andrew McCutchen, Bryce Harper, and Paul Goldschmidt

MLB: JUL 20 Mariners at Angels

Mike Trout should be on every billboard, commercial, and poster MLB produces

This is similar to a list of top picks in a draft but, baseball has youth to build around. Not only that, Kris Bryant is on the way along with an influx of talent to teams like the the Chicago Cubs and Houston Astros. It is the perfect time to step up the policies of the game I love and to make it an equitable one. But even if they stay with the soccer blueprint, with contracts that create divides, make it a bit more level playing field with an international draft by placing players in academies and drafting once per year as well. If you are going to create a max competitive product, this should happen. Here is another chart I loved, once again from ATKearney.com:

Winning Cycle Chart

Winning is indeed a virtuous cycle. The academy piece there is a key in my estimation. If MLB would make more commercials highlighting its up-and-coming stars, this could generate more money for the sport and level some of the monetary divides. I am encouraged by the new campaign by Adidas Baseball on Twitter and picked a couple for highlights, starting with Kris Bryant of course:

While this is not an MLB promotion campaign, it is a start and something they should be doing. I should not only see Mike Trout in a Subway commercial but in promotions for the sport or other products. Move the players to the forefront and make them household names. This will help kids like my son want to go to the ballpark. That is a key to survival.

At a time when there is a new commissioner in Rob Manfred, he will have challenges ahead. Bud Selig was able to keep the owners together as he represented a smaller market and helped to spur competition across all of the revenue types in baseball. I have a couple of proposals for his replacement:

Shortening the season to 144 games is the first one. Fewer games makes each one more worthwhile and keeps the games in better weather. Add another round to the playoffs, one game play-ins are nice but you can shorten the first series to three or five games and then make it best of seven going forward. The NHL and NBA employ the eight-team-per-conference playoff module, while the NFL uses six. So why not baseball, which only recently increased from four to five? People want games that count the most, so more playoff games means more television revenue, and you can finish at the same time. This would also shorten the fantasy baseball season, which could bring about more participation.

There was a great article by Adam Kilgore of The Washington Post about how Draft Kings is transforming the fantasy industry. This spilled over to marketing baseball as well, since one of the most popular channels during football season is the Red Zone, which shows teams inside the twenty. How about a baseball channel that goes to games with runners in scoring position or breaks to home runs or big fantasy moments? This would be a huge introduction on an Opening Day to generate a buzz and try it out. A shorter season would make this easier to keep alive.

Last, there needs to be a new policy in regards to the draft and international talent to make it a level playing field between all teams. Whether it is making a revenue sharing policy in all contracts or a minimum spending expenditure for each team so they are staying competitive and not just about making a profit. Baseball is at a time that it could explode and make itself available to my son’s generation, or it will continue to pass away like a dinosaur. Here is a chart to show that baseball’s teams values are at an all time high, so why not cash in on that and make a better product:

MLB Avg Franchise Value

I, for one, hope that baseball will take advantage of this perfect storm and not only improve the game going forward with some positive endeavors, but to get my son more interested in the game that I love. If it takes moving the Oakland A’s or Tampa Bay Rays to a new home, there are five markets waiting but I think that Sacramento for Oakland and Charlotte for Tampa Bay make great sense. They are baseball cities and all they would need is a stadium to make it work. Expansion is not the answer except in regards to the playoffs; fewer regular season games and better marketability of the game and its young stars will define the new regime of Rob Manfred. I look forward to seeing how the game can grow. It is far from broken, but there is room to improve.

Article Credits:

www.statistica.com, www.sporteology.com, www.atkearney.com, www.businessinsider.com, www.sportspromedia.com, www.websitemarketingplan.com, thestreet.com, www.sportingcharts.com

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