A Game of Numbers
September 5, 2014 by Corrie Trouw • Print Story •
Baseball is dying. Haven't you heard?
At least that's the popular narrative. Our nation's past time is going the way of boxing and horse racing, watching its customer base age into the afterlife, a place beyond Nielsen boxes and season tickets.
And yet, while baseball hemorrhages in traditional market indicators, it sits on the sharpest part of the bleeding edge in two distinctly modern measures: revenue and operational analysis. MLB headquarters might as well be on Wall Street.
Local television rights fees for baseball are exploding, and it doesn't take an i7 processor to count the billions teams are pocketing. Whether through team-owned networks or regional channels of major networks, baseball teams negotiate staggering contracts of their own for a simple reason: they can fill a lot of airtime.
As cable and satellite packages number into the thousands of channels and audiences continue to splinter, exclusive broadcast rights to a local team provide 162 fourish-hour blocks of (DVR-proof) live content that can be replayed in off hours in addition to studio shows, weekly magazine shows, and other valuable content. Marketing may become more sophisticated, but content will always be king.
Furthermore, baseball leads the sports universe in the progress and impact of its statistical analysis. Heck, it got Brad Pitt an Emmy nomination.
Because the sport's action is uniquely individual (pitcher-hitter-fielder), it is best suited to marginal value analysis of any major sport. Advances in technology allow teams to analyze how players move in the field and how pitches move through the strike zone. Almost everything a human does on a major league baseball field ends up in a spreadsheet.
As a result, nobody is surprised today when an MBA-wielding 30-something ascends to the pine tar and tobacco-covered throne atop one of MLB's organizations. Owners, many of whom got rich riding the waves generated by Quants, willingly turn over their operations to general managers who rely more on the skills they built in the classroom than the weight room.
Clearly, the baseball industry is getting smarter and richer. So why do we maintain its illness?
Baseball's prognosis is terminal, but it should carry that death-sentence for many more rewarding years. MLB fans have easily the highest median age of the four major sports at older than 55. On its face, this sounds terrible. As the population continues to skew older, so will MLB's fan base.
But how big of a problem is this really? Yes, advertisers yearn for young male audiences, a resource baseball is severely limited in. But if that were such an issue, the regional cable networks would be far less generous at the negotiating table. If you can reach audiences 162 nights a year, who cares if those eyeballs have thick lenses in front of them?
Instead of thinking of baseball as an old and ailing business, what if we compared it to a post-industrial economy. We've already established the increase in knowledge work. At some point countries like many in Western Europe reach a standard of living and education where population growth stagnates. Could this be where baseball is?
To further the analogy, consider NFL football. Unlike MLB, the NFL is a violent growth economy going through an industrial boom. While football analytics have improved greatly, they are too context-driven to compare in sophistication with their baseball cousins. And unlike baseball, which has a stable if unspectacular market position, the NFL will be defending its booming perch from the barbarians of player safety issues and unwise franchise and schedule growth in the coming decade. To a significantly greater degree than baseball, we should have very little confidence in predicting what the NFL of 2024 will look like.
(You may notice I haven't mentioned performance enhancing drugs. Sure, I've seen the survey data and heard anecdotes from dozens of people who swear they were baseball fans until Barry Bonds/Alex Rodriguez/Ryan Braun ruined it for them. I'm usually skeptical of these claims because, a) It's just about impossible to prove a person's fandom before or after some fixed point, and b) holding this opinion gives a nice kickback of moral superiority. For me, PEDs are sports' greatest red herring.)
So where does a once-proud sport go from here? Well, first it needs to decide whether it needs to "go" anywhere.
Sports in the era of social media is an incredibly complicated business. Fans demand increasingly augmented experiences beyond sitting in a bleacher seat with a hot dog and a couple of beers. While baseball certainly hasn't solved this puzzle, it's difficult to say any of its peers have passed with flying colors.
Television ratings are down, especially for FOX's playoff coverage, but that's true of the increasingly fragmented television landscape across the board. Those shrinking audiences have much more to do with macro trends than any baseball death spiral.
Instead, baseball will hang on for a long time with decreasing viewership, much like a star venting its plasma over millennia. It simply provides too much content that, for at least the near future, is too valuable to significant parts of the television universe for the sport to implode violently in a supernova. Like a reliable innings-eating, 4.00 ERA veteran starter, there is something to be said for baseball's consistency in filling the doggiest days of summer with compelling competition.