Record MLB revenues prove sport isn’t dying, it’s thriving

MLB: San Francisco Giants at Los Angeles Dodgers

Turn on sports talk radio and at some point a conversation will begin about baseball’s decline in popularity. Whether it’s lower national television ratings, fewer African-Americans in the sport, or how kids aren’t participating like they once did, baseball is painted in drab gray. “Baseball is dying,” is often the refrain.

Yet the truth is, in many ways baseball is growing at a faster pace than ever before.

Last year, Major League Baseball saw gross revenues hit $9 billion, a staggering sum for any business, and hardly the numbers of an industry “dying.” And that figure was a 13 percent increase from 2013 when revenues hit $8 billion.

Don’t expect it to slow down.

In fact, it’s very possible that around Christmas when MLB reports figures, that “dying” sport could boast revenues of $10 billion for 2015. For those keeping track, that’s a “1” with 10 zeros after it.

As to how the lofty numbers have been achieved, point to the thing that those sports talk radio hosts wrongly say is responsible for a decline: television.

In our ever time-shifted world where the DVR rules supreme, sports is the last bastion of programming that viewers want to see as it happens. It is the unpredictability and drama of sports that has us rearranging our schedules to watch rather than hitting the record button.

Because baseball offers 162 games per team each season, plus playoffs, it is an advertiser’s bonanza. In terms of pure inventory, no other sports content comes close to getting such large blocks of viewers over the summer.

All that has created a boon not only in regional sports networks for each team, but more games. Most regional networks show an average of 150 games, with that vast majority in prime time where viewership is maximized and advertisers willing to pay a premium. Is it any wonder that MLB programming dominates the ratings at the local level, especially in prime time during the summer?

That has created massive media rights deals. The Cardinals recently inked a $1 billion television deal, which is actually a bit of normalization. The Philadelphia Phillies reached a 25-year, $5 billion deal that includes a 25 percent ownership equity component. The Padres reached a $1.2 billion deal that runs from 2012 to 2031 and includes a 20 percent minority ownership. And the Arizona Diamondbacks have a $1.5 billion deal with partial ownership. This on the heels of the Dodgers’ $8.35 billion deal. What baseball may be lacking in national interest in the postseason is balanced by an ever-growing regional interest.

Beyond regional sports network deals, national networks ESPN, Fox and TBS bring in an additional $788.3 million a year to the league’s coffers over the prior deals (MLB Network revenues haven’t been reported). And there are other revenue sources.

MLB Advanced Media pulls in over $500 million annually, and that will surely be higher this year after providing streaming video services to the NHL and others outside of baseball. If you use the WatchESPN app, that’s MLB Advanced Media. Use HBO Now, the over-the-top streaming service, that’s MLBAM. Baseball has gotten so good at streaming video that by next year,  it will spin off a new media company that won’t have anything to do with baseball content.

None of this includes new revenue sources such as making DraftKings the Official Daily Fantasy Game of Major League Baseball, or Esurance as the presenting sponsor of the MLB All-Star Game Ballot. And those are just examples at the league level. Clubs are enjoying growth in sponsorships as well since the economy has broken out of its freeze.

Baseball is not dying. You can quibble that it doesn’t hold national interest when fans don’t have their team in the postseason, attendance is trending at close to 2 percent higher than last year (73-74 million), local ratings are high, and certainly, so league’s coffers are full. Baseball is thriving.

Follow Maury Brown on Twitter @BizballMaury


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