[h=2]2014 NL Central Preview[/h] Joe Peta
When I first became aware of baseball as a kid, a lot Major League teams were essentially owned and operated as family trusts. Names like Wrigley, Yawkey, O’Malley, Carpenter, and Busch were synonymous with the teams they owned but these days ownership groups are comprised of many different shareholders and unlike the collective buffoonery periodically exhibited by the owners 40 years ago (as entertainingly recounted in Lords of the Realm) today’s owners are, first and foremost, savvy businessmen.
Shortly after my book came out, one of those owners contacted me and we began an extended string of communications. We hit it off on a number of topics ranging beyond baseball, and a couple of months later he invited me to spend a few days golfing at a private club on the other side of the country – even going so far as to arrange transportation for me. During my three days there we were joined by nearly a dozen of his friends, including another Major League owner. Sitting on an oversized veranda overlooking water, and sharing gin and tonics late into the night while listening to a couple of MLB owners discuss business and rib each other was priceless, of course, and there were certainly some quotes that were not meant to leave the table. But there was one discussion that hit so perfectly on the intersection of the topics I’ve been writing about for nearly three years, that I think you’ll enjoy a recounting of it here.
“Joe,” one of the owners said to me when the topic of my book came up, “MLB has a problem but it’s masked by some good fortune. However, it’s non-recurring good fortune and it’s going to come back to hurt us some day, sooner than you’d think.”
There was some back and forth, but at this point, I’m just going to relay his side of the conversation as if he were giving a lecture.
“Specifically, we have a demographic problem and it became apparent a few years ago. You see, when the Expos moved to Washington there was a period of time during which they shared RFK Stadium with the D.C. United (of the MLS). It turns out that both the Nationals and the United drew roughly the same amount of fans, something in the mid-20,000s a game. However, the makeup of the fan base was completely different. The median age of a Nationals fan was in the upper 30s but in the low 20s for the United.”
“There’s not a business in the world that would rather have the Nationals customer base than the United’s. And that’s the demographic problem we face as an industry.”
He then went on to cite a statistic, along with the time series trend, of the number of kids playing youth soccer in America compared to Little League baseball. (Depressingly, for those of us whose childhood springs/summers revolved around Little League, the soccer lead is more easily expressed as a factor, rather than a percentage.)
“This looming demographic problem,” he continued, “is masked by the massive amount of television revenue, especially at the regional level, that is giving our industry fantastic top-line growth. The problem is, it’s not a sustainable growth rate; it’s a one-time reset that’s going to plateau. The industry of baseball is a most fortunate beneficiary of the invention of the DVR, because we provide cable networks with 162 days of 4-hour long, DVR-proof programming. There’s not another product that can provide that type of content and we’re being rewarded with huge bumps in our local renewal contracts. The problem is that some within the game think this is a growth rate in revenue that can be modeled going forward. What they can’t see is that it’s a one-time bump that’s going to plateau over time.”
He summed it up in one sentence that would be used as the signature quote in a Harvard Business School case study. “We’re like a country club that doesn’t have enough new candidates to take the place of the original members when they all get old at once.”
With the problem stated, he then advanced his solution – and you won’t believe it. I’m not going to comment at the end of his quote, as I think it’s simply worth considering the thoughts of a man who is so clearly a thoughtful, intelligent business man with a string of successful ventures in his past. Remember, however, that this is an owner of an MLB franchise who sits in meetings with Bud Selig.
“We’re not going to change this demographic problem by trying to get kids to play baseball. That boat’s sailed. Instead of trying to change their behavior, we need to adjust to it. Look at what kids love these days: video games, analytics, poker playing, fantasy sports, etc. Competitive, short-duration activities that revolve around using your mind and provide instant gratification.”
Having laid all this out, he continued as if the following were the most natural conclusion in the world: “If baseball wants to attract young people to the game, it needs to embrace sports betting.”
NL Central Preview
Given that a lot of readers of these pieces aren’t just baseball fans, but are also fond of sports betting, as the 2014 preview series comes to a close, this is the perfect venue to tell you a story about the intersection of those two topics. As a result of writing my book, I met a lot of people I would have never met otherwise; here is a recounting of one of those experiences. It’s a column that you’ll never read about on mlb.com, but probably should.When I first became aware of baseball as a kid, a lot Major League teams were essentially owned and operated as family trusts. Names like Wrigley, Yawkey, O’Malley, Carpenter, and Busch were synonymous with the teams they owned but these days ownership groups are comprised of many different shareholders and unlike the collective buffoonery periodically exhibited by the owners 40 years ago (as entertainingly recounted in Lords of the Realm) today’s owners are, first and foremost, savvy businessmen.
Shortly after my book came out, one of those owners contacted me and we began an extended string of communications. We hit it off on a number of topics ranging beyond baseball, and a couple of months later he invited me to spend a few days golfing at a private club on the other side of the country – even going so far as to arrange transportation for me. During my three days there we were joined by nearly a dozen of his friends, including another Major League owner. Sitting on an oversized veranda overlooking water, and sharing gin and tonics late into the night while listening to a couple of MLB owners discuss business and rib each other was priceless, of course, and there were certainly some quotes that were not meant to leave the table. But there was one discussion that hit so perfectly on the intersection of the topics I’ve been writing about for nearly three years, that I think you’ll enjoy a recounting of it here.
“Joe,” one of the owners said to me when the topic of my book came up, “MLB has a problem but it’s masked by some good fortune. However, it’s non-recurring good fortune and it’s going to come back to hurt us some day, sooner than you’d think.”
There was some back and forth, but at this point, I’m just going to relay his side of the conversation as if he were giving a lecture.
“Specifically, we have a demographic problem and it became apparent a few years ago. You see, when the Expos moved to Washington there was a period of time during which they shared RFK Stadium with the D.C. United (of the MLS). It turns out that both the Nationals and the United drew roughly the same amount of fans, something in the mid-20,000s a game. However, the makeup of the fan base was completely different. The median age of a Nationals fan was in the upper 30s but in the low 20s for the United.”
“There’s not a business in the world that would rather have the Nationals customer base than the United’s. And that’s the demographic problem we face as an industry.”
He then went on to cite a statistic, along with the time series trend, of the number of kids playing youth soccer in America compared to Little League baseball. (Depressingly, for those of us whose childhood springs/summers revolved around Little League, the soccer lead is more easily expressed as a factor, rather than a percentage.)
“This looming demographic problem,” he continued, “is masked by the massive amount of television revenue, especially at the regional level, that is giving our industry fantastic top-line growth. The problem is, it’s not a sustainable growth rate; it’s a one-time reset that’s going to plateau. The industry of baseball is a most fortunate beneficiary of the invention of the DVR, because we provide cable networks with 162 days of 4-hour long, DVR-proof programming. There’s not another product that can provide that type of content and we’re being rewarded with huge bumps in our local renewal contracts. The problem is that some within the game think this is a growth rate in revenue that can be modeled going forward. What they can’t see is that it’s a one-time bump that’s going to plateau over time.”
He summed it up in one sentence that would be used as the signature quote in a Harvard Business School case study. “We’re like a country club that doesn’t have enough new candidates to take the place of the original members when they all get old at once.”
With the problem stated, he then advanced his solution – and you won’t believe it. I’m not going to comment at the end of his quote, as I think it’s simply worth considering the thoughts of a man who is so clearly a thoughtful, intelligent business man with a string of successful ventures in his past. Remember, however, that this is an owner of an MLB franchise who sits in meetings with Bud Selig.
“We’re not going to change this demographic problem by trying to get kids to play baseball. That boat’s sailed. Instead of trying to change their behavior, we need to adjust to it. Look at what kids love these days: video games, analytics, poker playing, fantasy sports, etc. Competitive, short-duration activities that revolve around using your mind and provide instant gratification.”
Having laid all this out, he continued as if the following were the most natural conclusion in the world: “If baseball wants to attract young people to the game, it needs to embrace sports betting.”
