Analysis: No perfect game but MLB to post record revenue

By Ben Klayman

DETROIT (BestGrowthStock) – It may not be the business equivalent of pitching a perfect game for Major League Baseball since total attendance dipped, but the U.S. sports league still posted a win this year by bringing in record revenue.

Like many sports leagues, baseball has been hit by the economic slowdown over the past few years, including lower national television ratings and the defection of sponsors. The post-season ouster of the New York Yankees and Philadelphia Phillies from the World Series picture was not welcome news either for broadcast partner News Corp’s (NWSA.O: ) Fox.

(For a graphic on World Series ratings from 1970 to 2009, see: )

However, Commissioner Bud Selig sees this season as proof of the sport’s enduring popularity.

“There’s no question, this is the golden era for the sport and given the (weak) economy this may be the most remarkable year we ever had,” he said in a telephone interview. “Every economic option in our business is up this year. We’re at numbers nobody ever thought possible.”

While average per-game attendance slipped 0.6 percent during the regular season, that is a step up from the 6.6 percent decline last year when the recession led consumers and companies to curtail spending.

Meanwhile, TV ratings for regular-season baseball games on Fox were flat after falling almost 22 percent from 2007 to 2009, according to Nielsen Co. Ratings on Walt Disney Co’s (DIS.N: ) ESPN have fallen 40 percent since 2007, and were flat on Time Warner Inc’s (TWX.N: ) TBS this year after a 33 percent decline in 2009.

Spending by advertisers on cable and network TV baseball broadcasts was off 7.3 percent through the first six months of 2010, although most spending typically occurs in the second half of the year, according to Kantar Media. Spending rose 12 percent to $644 million last year.

“I wouldn’t necessarily go around saying the sky is falling,” said Brad Adgate, senior vice president of research at ad buyer Horizon Media. “It’s pretty much a slight correction.”


Most other financial metrics broke in baseball’s favor, as overall revenue will rise 4.5 percent to a record $7 billion this year.

Baseball officials said new sponsors such as ScottsMiracle-Gro Co (SMG.N: ) and Firestone (5108.T: ) pushed spending by North American companies on MLB up in the low double digits percentage-wise this year. That figure fell almost 5 percent to $514 million last year, according to IEG, a unit of advertising agency WPP Plc (WPP.L: ) that tracks sponsorship spending.

Selig also said the value of teams is strong, pointing to last year’s league-record $845 million sale of the Chicago Cubs and this year’s $593 million sale out of bankruptcy of the Texas Rangers, who will play the San Francisco Giants for the World Series title starting Wednesday. Forbes magazine estimated the average team value rose 2 percent to $491 million, making owners happy.

“It’s just not an upward curve, straight up, forever. We understand that,” said Bill DeWitt III, president of the St. Louis Cardinals. “There are certain revenue categories that the economy has really hit hard, but we’ve been very resilient.”

Baseball’s national broadcast partners, who pay the league a combined $900 million annually, are also pleased.

Fox, which will broadcast its 11th straight World Series, has sold all the ad spots for the Series’ first five games at rates said to be running at $450,000 per 30 seconds.

With a typical World Series game having 70-some spots, that can mean $31.5 million or more per game. Those kind of numbers are appealing to Fox, which has the rights to broadcast MLB games through 2013.

“We’re very happy with where baseball is today,” Fox Sports President Eric Shanks said. “If the deal was up this year, I think you would see Fox definitely at the table for renewal.”

Turner Sports President David Levy said the sports ad marketplace is “on fire,” and TBS, which telecast the American League Championship Series (ALCS), saw TV ratings rise.

“Automotives are back in a big, big way, financials are back in a big way, insurance companies are back, so we’re seeing double-digit growth in our advertising marketplace right now for baseball,” he said.

Nevertheless, the exit of the well-known, defending champion Yankees was not welcome for Fox as San Francisco and Texas lack a similar national following. Last year’s World Series was the highest-rated since 2004.

“Fox is going to be challenged,” said sports TV consultant Mike Trager, a former NBC Sports vice president. “They better hope that (series) goes six or seven games.”

Selig is not bothered that last week’s National Football League Monday night game pulled in higher ratings than that evening’s ALCS playoff game. “We’re different. You can’t compare us, I know people want to compare us to football,” he said.

Selig touted double-digit percentage increases in local TV ratings for almost half the league’s 30 teams this season, as well as strong advertiser demand on MLB Network, which was the biggest-ever cable TV network launch last year.

“Of course I’d like them to be higher,” he said of the sport’s national TV ratings, “but … the idea that people don’t watch baseball on television? Wrong.”

(Reporting by Ben Klayman in Detroit, editing by Matthew Lewis)

Analysis: No perfect game but MLB to post record revenue