Update: As of 1:30PM (about 3-4 hours after this post went up), the MLB YouTube page has been fixed so that the error does not appear. I do not know if the mistake came from MLBAM or YouTube. In general I hope that MLB continues to use this channel and increases the amount of digital content released outside of MLBAM managed websites.

Normally I don’t like highlighting anything negative on this site. My preference is to share best practices and success stories that others can take and apply to their own organizations. However, I saw something this morning that I need to share.

Most of you probably know about how all of MLB’s digital content is managing through MLBAM, and as such, you won’t find videos involving MLB content on YouTube or other video sharing sites. Whether you agree or disagree with their position on this is a topic for another time. However, one small exception to this is MLB’s official YouTube channel (youtube.com/MLB).  There are only eight videos up there right now, but it’s a start.

Well, this morning I went back to their official YouTube channel and saw this…

If you can’t read the text, it says “This video contains content from MLB Advanced Media, who has blocked it in your country on copyright grounds.” So if I understand this correctly, MLBAM is blocking a U.S. resident from watching MLB video content on the official MLB YouTube channel. I really hope this is just a temporary mistake. Otherwise, is there really a point to having an MLB YouTube page at all?

A few weeks back, I noticed that Kristi Dosh (@SportsBizMiss) was tweeting a bit about what sports leagues are the “healthiest.” This was in response to some comments from others saying that MLB was in trouble, to which she vehemently disagreed. This seemed like a great topic to discuss for all four of the major U.S. sports leagues, and who better to discuss them with than Kristi herself (you can learn more about Kristi at www.KristiDosh.com).

For each league, we’re going to use the following five criteria to determine an overall grade:

• Labor Stability
• Financial Success
• Media Coverage
• Fan Affinity
• Competitive Balance

Russell: First off, I want to thank you for participating and sharing your thoughts on this topic. I really appreciate it.  Let’s start with MLB, which I know you’re particularly passionate about.  I have to say that ever since the 1995 season, I’ve been very impressed with the relationship between the league and the players association, at least when it comes to keeping the product on the field (I’m going to put aside their roles in PED usage for now).  They’ve bested themselves year over year when it comes to total revenue generated, and I believe their attendance numbers have stayed fairly strong in spite of the economy.

To me, the biggest challenge to be in grading MLB comes from the tremendous impact of the local market on media exposure, revenue and team performance.  Revenue sharing has helped, but as we learned earlier this year, some teams don’t apply their share of the pie to improving the team, and that impact on competitive balance hurts the league as a whole.

With all that said, my initial inclination is to give MLB a solid B.

Kristi: I agree with you on the great working relationship we’ve seen between the league and the players association since the strike.  Not only have they reached new collective bargaining agreements without the threat of another work stoppage, they’ve done it without going to the media to make threats and grandiose statements (which is more than I can say for the other three leagues).  For that reason, I recently wrote they are the healthiest of the four major professional sports leagues.  While the other three leagues take to the media to throw around accusations and demands, MLB will quietly come to a new agreement following the 2010 season.

You’re right about the growth of revenue sharing, and I think we’ll see some modifications made to the provisions in this next agreement.  Overall, however, I think the model is working in terms of the amount of money being moved around between teams.  MLB now moves upwards of $400m a year between teams, which is massive compared to the NBA, which barely moves around $50m a year.  I’m not sure any major tweaks need to be made to the formula for revenue sharing, but the leaked financial statements we all saw a few months ago prove that there need to be rules regarding the use of funds, or some sort of consideration given to how teams use funds to improve on the field performance.  It could even be modified to take into account how well the team is run.  For example, the NBA’s formula takes into consideration certain market performance standards, such as the value of the team’s media deal in relation to its market size and the value of sponsorships in relation to the size of the corporate base in the market.  The bottom line is that revenue sharing is going to need a little bit of a face-lift this time around, but there’s no reason to believe that won’t happen since the revenue sharing provisions have been modified with each new collective bargaining agreement.

The real coup for MLB is MLB Advanced Media.  MLB is head and shoulders above the other leagues when it comes to their media content.  No numbers have been released since 2007, but MLBAM grew from $36m in revenue in 2001 to $450m in revenue in 2007.  MLBAM not only manages MLB.com content, including live game packages, it also manages content for the NCAA and tennis’ French Open.

The last thing I thought about in terms of health of the league as a whole was attendance.  MLB got some negative press for decreased attendance in 2009, but I believe it was deceptive.  Attendance was down 6% in 2009, but it was the fifth highest attendance in MLB history.  When you take into consideration that 2008 was the second highest ever, and the fact that smaller stadiums for the Yankees and Mets opened and accounted for nearly 30% of the decline, MLB had nothing to be ashamed of in terms of attendance.  The season that just ended saw only a 0.42% decline, which isn’t really disappointing considering the economy.

I would give MLB an A-.

Russell: Great thoughts. I think the amount of revenue sharing shows both MLB’s strength and weakness. The teams willingness to agree to this system that supports teams in smaller markets shows a deep commitment to health and sustainability of all teams. However, the size of the revenue number shows how skewed those numbers are across the different markets, much more so then the other three major U.S. leagues. Unless specific structures are put in place to make sure that money goes back into the game, it’s too easy for small market teams to take the profit and run. And with such differences in local media revenue between small and large market teams, I can’t see that revenue sharing number dropping without other significant changes in league structure.

MLBAM is also a very valuable asset, but has its own set of limitations. One of the grading criteria was fan affinity, and some of MLBAM’s control measures when it comes to sharing and distribution of content can be frustrating for fans, and in my opinion, hinders their ability to engage with fans. My hope is that they will eventually find a better balance between ownership of content and shared distribution through non-MLBAM channels to stay better connected with younger audiences.

I completely agree with your take on their attendance numbers. With the current economic landscape, I was actually very impressed with how MLB has maintained their level of attendance the past couple of seasons.

The only other potential “problem” I wanted to bring up was with television ratings, specifically the World Series. This year’s ratings could be a sign of baseball fans being too fragmented across markets. Without the presence of a major market playing for the title, too many sports fans just didn’t tune in. I know that the time adjustment for this year’s games and the conflict between Fox and Cablevision also contributed to the low ratings, but I hope baseball hasn’t become too dependent on the success of major-market teams like the Yankees and Red Sox.

While I see why you’re giving them an A-, I don’t think I can go any higher than a B+ at best.

It was reported earlier this week that Barry Bonds wants to come back as a hitting coach for a MLB team.  Bonds is probably still the most controversial figure when it comes to performance enhancing drugs in the modern baseball era (you can also make an arguments for Roger Clemens).  I’m sure he’s somewhat inspired by Mark McGwire’s recent return to baseball, which has to be viewed as somewhat of a PR and media success.

This story reminded me of one of the earliest posts I wrote for this site, back in August of 2008 when Bonds was still looking to sign with a pro team (To Bonds, Or Not To Bonds). Several friends of mine in Arizona were arguing back and forth over why a team like the Diamondbacks should or shouldn’t sign him. Ultimately, it came down to some short-term positives (on-field performance, and revenue associated with improved results) vs. the long-term team culture, PR and fan relationship negatives.

Fast forward two years, and the same arguments exist today. Why would a team risk long-term brand damage by associating themselves with Bonds? Even the San Francisco Giants’ recent decision to have Bonds throw out a first pitch was seen by some as controversial, and that is about as inconsequential a role that someone can have with a team. You also have to wonder a bit about the timing of his comments. The Giants are back in the World Series, which is wonderful for the city of San Francisco. Why not let the current team get the headlines and wait until after the Series to try and grab the attention?

Another way to look at this is to see what has changed in the three years since Bonds left baseball. I think the simple answer is, almost nothing. He expressed interest in playing in 2008, and even in 2009 I believe, without any teams showing an actual interest in signing him, clearly not a good sign. There is still the pending perjury trial, which will only bring back negative attention. During this time, he could have attempted to generate some positive PR through social media and community outreach, but for all intent purposes, he’s mostly just stayed out of sight.

Let’s compare this to the time between Mark McGwire’s retirement and his return as a coach.  First off, there were more seasons in-between, which can only help – there is a reason why “time heals all wounds” is a cliche.  Also, McGwire became eligible for the Hall of Fame, but received less than 25% of the vote each of the four years he was eligible. In an odd way, this can actually create some sympathy for him, since he may well never reach the Hall in spite of his tremendous statistics. Finally, the biggest difference is that McGwire admitted his steroid usage. From what we’ve seen, fans seem quite willing to forgive those that have made mistakes, but continue to harbor resentment towards those athletes that appear to have used PEDs but still publicly deny it.

I’d like to say that if Bonds came clean about PED usage, then a major league team would be willing to take a chance on him as a coach, the way the Cardinals took a chance bringing back McGwire. But in his case, with the cloud of  criminal charges and a history of insistent denial, it may be too much for him to overcome. Bonds needs to start from the ground up in rebuilding his image and reputation, and maybe a position with a minor league or independent league team could be the right path for him. A smaller team may be willing to take on that risk.

Major League Baseball’s 2010 Fall Classic starts on Wednesday night, when the San Francisco Giants host the Texas Rangers. You can catch all of the games on Fox…unless, of course, you are a Cablevision subscriber. In that case, you’ll have to find a friend or local bar with an alternative TV package (DirecTV, Verizon FiOS, etc.)…or pick up a pair of rabbit ears.

The standoff between Cablevision and News Corp has been going for more than a week now, and it does not appear that there’s a quick end in sight. In total, Cablevision has just over 3 million subscribers throughout the NY, NJ, PA and CT areas, making them the top television service provider in that region. So it’s pretty significant when an audience of that size ends up having the World Series essentially “blacked out.” I can’t imagine any of the parties involved (Fox, Cablevision and even MLB) are particularly happy about this result.

However, how much bigger would this story be if either the Philadelphia Phillies or the New York Yankees had made it to the World Series? Now instead of worrying about the casual sports fans getting tuned out, you’d be looking at a large part of the team’s home market being denied the chance to watch the games. What impact would that have had on the negotiation between News Corp and Cablevision? I asked that question on Twitter, and Michele Steele from Bloomberg Television replied back: “3 sep analysts say yanks in the WS wouldn’t have mattered; blacking out the national pastime is a big deal irrespective of teams.”

While I do agree that losing access to the World Series is quite important even with the Rangers and Giants involved, I have to believe that the negotiations would have taking a more aggressive path if the Yankees were playing. The impact on ratings and revenue that comes with a NY market team’s presence would be significant, not to mention the long-term, negative impact it would have on local sports fans, which are a very passionate, loyal audience. In fact, if the Yankees were playing and the standoff did not end, the biggest winners in this situation would probably have been DirecTV and Verizon FiOS, as it could have led to a large spike in new subscribers desperate to watch the games.

What effect do you think the lack of local market teams making the World Series had on these negotiations? What do you think would have happened if the Yankees or Phillies were still playing?

The Tampa Bay Rays have been in the news for two reasons this week: for clinching a playoff spot and for players complaining about low attendance. Specifically, Evan Longoria and David Price commented on how “disheartening” it is to play in front of such a small crowd when they are playing for a playoff spot.  Longoria said “…for us to play good baseball for three years now, and for us to be in a spot to clinch again and go to the playoffs, we’re all confused as to why it’s only 15,000 to 20,000 in the building.”

Rays management decided to respond to the players’ concerns by giving away 20,000 tickets for Wednesday’s (tonight’s) game, with the hope of creating a great atmosphere in the stadium before the playoff begin.  You can read the details on this promotion on tampabay.com.  I have a few thoughts on both halves to this story.

Let’s start with the players’ statements regarding the low attendance. My former classmate Eric pointed out that this is a potentially risky position for the players to take in “calling out” the team’s fans.  On the most basic level, the attendance for a baseball game is based on supply and demand, and over the past years, I think we’ve seen that the demand for regular season baseball games in this market isn’t there, at least not on a level that would fill Tropicana Field.  Outside of the physical venue itself (which I understand that people are not very fond of), the team has done pretty much all they can to increase demand. They clearly have a great on-field product, they offer tickets at all different price levels for a wide range of buyers, and they actively promote the team in the marketplace (marketing, PR, media, etc.).  With their current situation in that stadium and with all the alternatives that their have when it comes to time and money, the team may simply have reached their economic equilibrium.

With that in mind, the players’ decision to comment on the low attendance has little chance of actually increasing ticket sales. In fact, there’s a chance that their comments could actually hurt fans that do choose to watch on television but for some reason choice not to purchase tickets. These fans are still very important and should not be discouraged.

As for the team’s ticket giveaway, there are definite good and bad points about it.  On the positive side, it shows that the team cares about the players’ opinion and are willing to take action.  The giveaway has the chance of getting some fans in the building that typically choose not to buy tickets, and if they have a good experience, it could lead to future sales and increased attendance.  It can also be a positive PR move in the Tampa community.

On the negative side, openly giving away large numbers of tickets devalues the product that other customers have paid for, especially your season ticket holders.  The team is trying to account for this the best they can, by only giving tickets in certain sections and allowing paying customers to upgrade their seats at no cost, but you still create a divide between those that had to pay and those that didn’t. In addition, the team decided to hand out the tickets at the stadium starting at 4:45PM instead of allowing for an online redemption process.  There is a big trade-off here. With this method, their redemption rate will by close to 100% for however many tickets are distributed. However, in trying to distribute 20,000 tickets in roughly 2 hours, I can’t imagine that they’ll be able to collect contact information on these fans, which can be a lost opportunity for future sales and marketing efforts.

It will be interesting to see how many tickets they end up giving away tonight.  I wish the team a lot of luck with their offer and their future ticket sales!

A constant challenge that faces teams and venue owners is how to generate revenue from your building once your season has passed. The company has this valuable entertainment asset, but without events to host, it can sit dormant for weeks or even months at a time (outside of the occasional stadium tours, which can provide a small incremental revenue bump).  This isn’t as much of a problem for indoor arenas and weather-independent (i.e. domed) buildings, where you can always bring in concerts, family shows and other traveling entertainment groups. But what about a baseball stadium in the middle of winter? What can you do with that?

Well, the Indians have decided to take a very creative approach to this dilemma with their “Indians Snow Days” program. They are literally turning Progressive Field into a winter theme park. According to today’s news release, they will have a snow-tubing hill, a quarter-mile ice skating track, a kids’ skating rink, a snow play area, and a fire-pit area featuring seasonal food and drink options – a veritable winter wonderland on a baseball field. Their “snowpening day” is November 26, and it will be open through at least January 2.

From Bob DiBiasio, the Indians’ VP of Public Relations:

“No question, this whole thing is based on how can we make ultimate use of this facility for 12 months, not just six months. We’ve done that indoors. Now, we’re taking one more major step outdoors.”

Now this particular strategy won’t work for all teams and venues, but this is still a great example of an organization coming up with creative ways to make their facility a year-round, revenue-generating, fan-friendly destination.

The leaking of multiple MLB team financial documents to Deadspin this week has been a big story in the industry. In case you haven’t seen it yet, here are some quick links to catch up to speed:

• Deadspin Part 1 – Financial statements from the Pittsburgh Pirates, Tampa Bay Rays, Florida Marlins and Los Angeles Angels
• Deadspin Part 2 – Financial statements from the Seattle Mariners
• Deadspin Part 3 – Financial statements from the Texas Rangers
• Darren Rovell’s post – “Why MLB Financial Leak Matters”
• Analysis from Maury Brown at BizOfBaseball.com

I wish I had time right now to dig into the details of the statements (brush off those MBA accounting and finance brain cells), but Maury Brown is doing an excellent job of that over on BizOfBaseball.com. I highly suggest reading up on the multiple posts he’s written (and is continuing to write) over there.

My quick focus in this post is on the choice to run a successful business vs. running a successful team. One of the biggest takeaways from these leaks is demonstrating how a small market team that is not very competitive (yes, I’m talking about the Pirates) can be very successful financially without creating a quality product because of the revenue sharing money provided by teams that are spending money and resources to provide a top-tier baseball team. From a purely business perspective, there isn’t anything actually wrong with this. The team owners have a business to run and are entitled to generate a profit for their work. They have identified a system that works for them and does not violate any agreements that the team has with Major League Baseball. Any customers/fans that have a problem with this approach can demonstrate their displeasure by simply ending their relationship with the team (stop buying tickets or merchandise, stop watching games on TV, etc.). However, if this doesn’t significantly alter the team’s current revenue streams (the majority of which are league-generated), it might not change anything.

The biggest problem with this approach is that there are making their business overdependent on a source of revenue that could change. One of the red flags I was taught to look for when analyzing a company’s financial well-being was generating revenue from a single item or service. If anything in the business environment changes that impacts the company’s ability to show a profit via that single item or service, their entire business model can collapse.  While the Pirates do generate revenue via multiple channels, you can argue that their profitability is very dependent on the current revenue sharing model. In light of these leaks, if MLB changes the “business environment” surrounding revenue sharing in a future CBA, the Pirates and other small-market teams that aren’t successful “on-the-field” could easily be in trouble.

The question now is, will anything change because of these leaks? Will MLB want to add a salary floor (a minimum amount of money a team has to spend on player salaries)? Will higher-revenue teams make a push to adjust the revenue sharing system, knowing that their funds could be going into other owners’ pockets instead of supporting the best interests of the game itself? Will fans stop supporting a team that they know isn’t spending money to create a successful on-field product? These documents definitely open up a lot of possibilities.

Today’s post is courtesy of Brian Gainor, Founding Editor of PartnershipActivation.com. This article was featured in the July 2010 Partnership Activation monthly newsletter. I highly encourage everyone to sign up for it – always a great source of sponsorship news and marketing best practices.

Are You Providing Truly Exclusive Experiences for Fans?

Miller Lite and the Tampa Bay Rays recently teamed up to execute a “Ray for a Day” promotion that truly offered one (1) lucky winner the ultimate Rays game day experience. Miller Lite called on agent Drew Rosenhaus to host the winner, Andrew Marante, and represent him in negotiations with Rays SVP Mark Fernandez, President Matt Silverman, and GM Andrew Friedman that officially made him a “Ray for a Day”.

Following the negotiations and official press conference, Marante was presented with a collection of prizes, which included a one-year supply of Miller Lite, a one-day rookie salary, an authentic, customized Rays jersey and hat, (4) pre-game field passes to watch batting practice, (4) game tickets in Row 1 – directly behind the Rays dugout, an on-field meet & greet with Rays Manager Joe Maddon, a box of authentic Miller Lite-branded Rawlings baseballs, a Miller Lite/Rays neon sign, a Miller Lite beer fridge, a commemorative press release issued by the Rays, and the opportunity to throw out the first pitch prior to the game.

The promotion, managed by GMR Marketing from ideation to execution, was picked up by a host of media outlets and the Rays organization featured a (1) minute clip of the press conference on the jumbotron during pre-game warm-ups and at the bottom of the 4th inning.

Miller Lite leveraged relationships with several retail partners (Publix, Total Wine and More, Buffalo Wild Wings, Winn-Dixie, ABC Liquor, Hess, and Beef O’Brady’s) to execute the Ray for a Day sweepstakes, which tasked consumers ages 21+ with filling out entry forms between May 1– June 6 for a chance to win.

Editor’s Note: This type of ultimate fan experience provides the best level of exposure and activation for a team sponsor. This particular program was able to combine point-of-sale messaging, customer data collection, prime in-venue activation and media exposure, not to mention providing this lucky Rays fan the experience of his life. Great job between the team, agency and sponsor in executing all of the elements involved in this promotion.  ~RS

In light of the “Non-Perfect Game” controversy from last night’s Detroit Tigers game (game recap here), I went back to the vault for this post on technology and instant replay that I wrote last November. I felt strongly about increasing the use of replay then, and it will be interesting to see if the fans’ reaction to last night’s events leads to any new action by MLB. I know that fans will continue to disagree about whether replay is “good for the game”, but how do you think those 17,000+ fans feel about being denied their chance to witness history? How does this impact their decision to attend future games? What about the fans that watched on television? Is their fan experience “good for the game?”

Putting aside the fan elements, my post below primarily focuses on how the business of sports really needs to be the influencing factor in how leagues increase their use of replay and technology in general.

—————

Normally, I don’t like talking about events that take place on the field, but today I’m going to make an exception. On Wednesday night, a World Cup qualifying soccer match was decided by one person who made a mistake that was easily identifiable by a simple video replay. However, because the sport was dependent on an archaic system of in-game governance that was developed decades if not centuries ago, the result of the game and any number of future events has been permanently altered.

This same situation has happened in multiple major sporting events over the past few months, including several prominent errors in the MLB playoffs, but for the most part, the governing bodies for these organizations prefer to stand by and depend on their “traditional” means for making all in-game decisions. This system may have made sense was professional sports was more of a casual pastime, but now it is a multi-billion dollar global industry, and each one of these incorrect decisions can have serious repercussions. A team that misses the next round of playoffs because of a bad call loses out on millions in ticket revenue. A player that is invalidly judged by an official’s decision can lose the chance at significant endorsement money. An entire league can suffer (or benefit) because of an officiating decision that impacts what teams are playing and the television ratings that come with those teams.

Meanwhile, sports organizations have embraced technology in almost every other form, from evaluating the players statistically to refining their business processes. Clearly everyone recognizes the importance of technology as sports have evolved, but yet for some reason, they refuse to let the technology onto the field in the form of instant replay. Would any other industry operate in this manner? Can you imagine if Walmart decided that they needed to use a more “traditional” way to run their checkout lines and made the staff type in each number, because “that’s how they’ve always done it.” The errors that would occur would ultimately have a significant impact on their business, ruining their other technological advantages that they’ve developed in their inventory management processes.

I understand that trying to add instant replay into sports is a complicated process with many potential pitfalls. This is why I give a lot of credit to the NFL for their work in this area. They acknowledged the problem, created a replay system, and constantly work to refine it based on the needs of the sport. I would hope that more sports, like soccer and baseball for example, eventually decide to follow the NFL’s lead and develop their own comparable systems. Putting aside the game for a moment, there is simply too much money riding on what happens on the field for everyone to overlook these issues.

After reading about Dallas Braden’s perfect game, which was also the 2nd no-hitter in Major League Baseball this year, I realized that this type of accomplishment could easily be associated with a sponsor in a positive way for the sponsor, the sport and the player involved. Think about it for a moment – we already have presenting/naming sponsors for several major awards (NBA MVP presented by Kia, the Rolaids Relief Man of the Year, etc.), but there are so many great individual accomplishments beyond awards that brands would benefit from associating with. Here are a few quick examples that I thought of:

• Baseball:  N0-hitters, hitting for the cycle, triple plays
• Basketball:  Triple-doubles, 40/50 point games
• Hockey:  Hat tricks
• Football:  Kickoff return TDs, 200 yards rushing/receiving, perfect passer rating

I think my baseball examples probably work the best for this idea. I know some people may feel that this tarnishes the purity of the game, but sponsors have been such a present part of the game for so long now, I believe that argument has lost it’s merit. Take Braden’s performance yesterday – how damaging would it be for the media broadcast to congratulate Braden on behalf of a premium brand like Lexus. Then in his next game, Lexus could present him with a brand new car to congratulate him for his “perfection”, an idea that Lexus would happily associate with their brand. Or at the end of the season, there could be a special event or ceremony hosted by Lexus to recognize all players that achieved the accomplishment. The sponsorship would be at a league level, and trickle down to all the teams. Since these events are rare, I’m sure other elements could be incorporated to provide more value in both directions.

So what do you think of my idea?