Business of Baseball Reportby Brian Borawski
September 22, 2005
ESPN and MLB Agree to Cable Deal
Major League Baseball and ESPN agreed on a huge six-year $2.369 billion-package that includes an extension of ESPN’s Wednesday night baseball, greater flexibility to move games to Sunday night and a new series of Monday night baseball games. In all, ESPN will cover 80 different baseball games every season through 2013.
MLB and ESPN are also currently in talks about ESPN covering the World Baseball Classic. The 16-country tournament was not part of the deal that was just signed.
IRS Crackdown Dampens Ticket Giveaways
In the past, baseball players were given an almost unlimited amount of tickets to give away to friends and family. Now if they give away complimentary tickets provided by the team, they take a tax hit because the Internal Revenue Service determined that these freebies should be considered as compensation to the player and summarily taxed. The end result is that teams have seen a steep decline in the number of tickets that have been requested by players.
In addition, when players do request tickets, more are actually being used. Tickets that were reserved but not picked up were tracked, and this number is down substantially.
The process of ticket requests has also been streamlined. In the past, the traveling secretary would hand out a sign-up sheet to determine the number of tickets the team would need to deliver to the ticket office. Now every clubhouse has a network in which players request tickets on their laptops, allowing teams to track every transaction in order to keep the IRS satisfied that they’re complying with the rules.
Royals are Losers on the Field, but Winners on the Tube
The Kansas City Royals are en route to their second consecutive 100-loss season and their third in the last four years. Whether it’s morbid fascination or extremely loyal fans, the Royals’ television ratings are actually better then they were at this same point a year ago. From July through September, the Royals have a cable rating of 2.2 this season, compared to a 1.7 rating last year. Their local over-the-air rating is up to 3.9 from 3.6. One rating point equals approximately 8,900 television homes in the greater Kansas City metro area.
Braves Finally See Attendance Uptick
After seven straight years of attendance declines, the Braves have gone into their final home stand of the year expecting to end the streak. Their average attendance is up 6.5% this season as the Braves are getting closer and closer to an unprecedented 14th consecutive division title.
Equally impressive is that they’ve done all this despite reducing payroll this year. The team management claims losses of $44 million in 2003 and 2004, but this year they feel they should break even depending on how far the team makes it in the playoffs. The attendance increase will be the first time since 1997, when the team opened Turner Field.
Brewers Give Away Tickets to Final Home Game
Last Thursday, the Milwaukee Brewers announced that they’d be giving away 25,000 free tickets to their final home game on September 29 against the Cincinnati Reds. It sounds like a great deal to me, and it also must have sounded like a good deal to Milwaukee baseball fans because in less than 24 hours, all of the tickets were distributed to fans.
Brewers fans also get to give to a good cause. The Brewers are encouraging attendees to make a donation to the American Red Cross Hurricane Relief Effort Fund. The “All Fans Free” promotion is the first time in team history that the Brewers offered free tickets to all of the fans for a regular home game.
Japanese Players Agree to Play in World Baseball Classic
After months of negotiations and meetings between MLB, the players association, Nippon Professional Baseball (NPB) and the Japanese players’ union, Japan has agreed to participate in next year’s inaugural World Baseball Classic. This removes a major hurdle that could have prevented the tournament from happening. Japan will now host the Asian Qualifying Round at the Tokyo Dome, with the three other opening round series happening in Phoenix, Ariz., Florida and Puerto Rico.
Japanese players initially voted to pass on the tournament. They didn’t like the dates scheduled for the event nor did they feel they were given representation in the decision-making process, at least compared to the weight wielded by MLB. As part of the agreement, the NBP union will be more involved in the decision-making process when the tournament is played again in 2009.
Purchase Agreements for Nationals Distributed to Eight Bidding Groups
MLB distributed detailed purchase agreements last week to the eight prospective bidding groups for the Washington Nationals. These agreements are binding documents, and if the agreement is returned signed, the bidding group has officially put its price on the table for the team.
Once all of the agreements are returned, MLB will then decide on the buyer. The number that’s floating around is $450 million, which leads me to believe the ultimate sales price might be even higher. MLB might be publicizing that number as a way to set a ceiling, so it will be interesting to see how this all unwinds. The one wild card is that the team and the District still haven’t come to a lease agreement on the publicly financed stadium that's being built for the team. MLB has stated that an owner won't be selected until this lease is in place.
Brian Borawski is a member of SABR's Business of Baseball Committee and writes about the Detroit Tigers at his own website, TigerBlog. He welcomes comments, questions and suggestions via e-mail.