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Pete Toms Article Archive
Written by Pete Toms   
Monday, 09 May 2011 22:15

Last Week in Bizball by Pete Toms

This week in “Last Week in BizBall, some good news on attendance, are the Blue Jays benefiting from convergence? plus tidbits.

ATTENDANCE UPDATE, HOW BOUT SOME GOOD NEWS?

So far this season, the popular on field storylines have been The Year of the Pitcher, the Red Sox struggles and the, so far, surprisingly competitive performances of small payroll/revenue franchises in Cleveland, KC, Pittsburgh, Florida and TB. Off the field, Frank McCourt vs. Bud Selig has replaced the Mets ownership saga as the principle storyline. LWIB saw the baseball punditry continuing their examination of probably the second most popular off the field storyline this season; the drop in league wide attendance. I looked at the chatter around this subject last week and found that columnists were attributing the April attendance decline to one, some, or all of a number of factors. 1. Terrible weather (IMO the most obvious and best explanation) 2. Disgruntled fan bases in some of MLB’s biggest markets (Cubs, Mets and Dodgers) 3. The economy 4. Secondary ticketing hurting “walk-up” sales 5. The diminished novelty of Americana ballparks. Much was written about early season attendance again LWIB, surprisingly, much of it even positive.

First up was Ken Belson, who reported in the New York Times that, “Over all, baseball attendance is 1.3 percent lower than at the same period last season, according to Baseball-Reference.com, and 20 of the sport’s 30 teams have drawn fewer fans.” Ken paid particular attention to Cleveland, where despite their smoking hot start, they are at the bottom of MLB in attendance. Ken notes that the Indians’ gate has been affected by their smallest season-ticket base since they moved to Jacobs/Progressive Field in 94, bad weather and a weak local economy. But, there was also good news around Indians attendance. Joel Hammond of Crain’s Cleveland Business noted that on April 30 (the day following Carlos Santana‘s walk-off grand slam), the Indians had a walk-up gate of 8,059, the third-largest in Progressive/Jacobs Field history. Joel added that, “They sold 11,500 tickets that day alone. For the weekend, as FoxSports.com's Ken Rosenthal notes, they sold 30,000 tickets all told this weekend, including for future games.” Back to Ken Belson, he also noted that despite the unexpectedly strong on field start in KC, they ranked second last in MLB attendance. He also noted the steep attendance drops experienced so far by the Dodgers (14.5%) and Mets (15%). Jerry Beach reported for TicketNews.com that, “At their current rate, the Dodgers would not only finish lower than second in the NL in attendance for the first time since 2002 but would be in danger of drawing fewer than 3 million fans for the first time since 2000 (they are on pace to draw slightly more than 3.04 million people).” But despite all the gloomy media reports around April attendance, some franchises have seen sizable gains. Again from Ken Belson:

Still, several teams have had significant increases in attendance to offset some of the gloomier news elsewhere. Not surprisingly, the San Francisco Giants and the Texas Rangers, who faced off in the World Series in 2010, have had double-digit increases in ticket sales. And the Colorado Rockies, who are in first place, have sold 19.8 percent more tickets so far.

Doing even better are the Cincinnati Reds, who made it back to the postseason last year for the first time in 15 years. They have had a 21.3 percent increase in ticket sales and a 55 percent jump in ratings for its games televised on Fox Sports Ohio.

Tom Groeschen reported on the big boost in Reds attendance for the Cincinnati Enquirer. Tom notes that the Reds April gate was up despite it being the second-wettest month ever recorded in the region. Tom also tells us that the Reds playoff appearance last season has resulted in an increase in the season-ticket base to approx. 11,000 over approx. 8,500 last season. Reds VP of ticket sales, John Davis, tells Tom that they hope for attendance of 2.2 - 2.3 million this season, up from 2.06 million last year. And while I have speculated here that gas prices will negatively impact attendance this summer, maybe I’m wrong. Could teams benefit this summer from staycations? Karen Forgus, Reds senior VP of business operations, tells Tom that, “The gas prices actually bode well for us,…For families that aren’t going away, we’re right here close to home.”

While the performances last season of the Reds, Rangers and Giants are the obvious reason why attendance is up in those markets, seemingly oddly, the franchise experiencing the largest increase in attendance to date this season is the Blue Jays. Jeff Blair noted today (scroll down) that through 14 dates this season Blue Jays attendance is averaging 23,165, up from 16,418 over the same number of dates last season. This despite a sub .500 record and yet another non-playoff (though better than expected) season last year. Evidently the bigger numbers at the gate are a result of more aggressive marketing by the Blue Jays owner Rogers Communications Inc.

Select READ MORE to see details on attendance plus more on the Blue Jays, RCI and convergence, plus tidbits

Tom Verducci argued in SI that those in the baseball media interpreting the early season drop in attendance as evidence of the sport’s declining popularity have it wrong. Tom cites the same reasons that others have for the league wide results so far, the weather, the economy, problems in some big markets, etc. At the end of his piece, Tom provides a broader perspective on MLB attendance:

…Baseball is consumed in so many different ways that hardly existed, if at all, in its pre-strike popularity: fantasy leagues, web apps, satellite radio, web sites and a plethora of television viewing options on fantastic-looking displays. Attendance remains a vital revenue stream and measure of interest, but now it is part of a much more diverse picture of how baseball is consumed.

AND

Still, in a world where people increasingly are entertained virtually through connectivity, baseball must rethink the ballpark experience -- to make sure it carries a premium value above consuming baseball in your living room. It's an issue that says more about technology and delivery than it does the product, so hold off on the wailing about baseball being too slow, too expensive, etc.

Last month I noted that Buster Olney had also mused that if MLB didn’t adapt the ballpark experience to the 2.0 reality their gate would suffer. I wrote:

Competing with HD broadcasts, the second and third screens and potentially 3D broadcasts (I’m sceptical) to lure fans out of our homes is a real challenge for all the “big 4”. Major League Baseball Advanced Media, which controls the digital rights for all MLB clubs, will determine if fans eventually see live streaming, alternate camera angles, replays, statistics, etc. delivered to their mobile devices when in the ballpark. In the immediate, I’m not so certain that baseball 2.0 is crucial to attendance. The MLB fan base skews older and less technologically reliant. Also, the fan dynamic is different than in the other “big 4”. MLB attracts a far greater number of more casually interested fans who attend games primarily to socialize with friends, family and co workers. For these fans, the game is secondary to the elixir of vacation, relaxation, conversation, sun, beer and eating.

The generations of baseball fans younger than I no doubt assume that MLB will adapt the ballpark experience to the fundamental role of the digital world to their socializing, communication and commerce. MLB is way too smart to ignore that. But as far as attendance this season? It’s the weather, stupid.

ARE THE BLUE JAYS BENEFITTING FROM CONVERGENCE?

In December 08 I brought attention to the widespread reports in the Toronto sports media that, subsequent to the passing of Toronto native and Rogers Communications Inc. (RCI) President & CEO Ted Rogers, the Blue Jays would soon be on the market. In February 09 I speculated that RCI might join Disney, Time Warner, News Corp. and Tribune Co. as media conglomerates that had abandoned ownership of MLB franchises. LWIB, Robert MacLeod reported for the Globe and Mail that the Jays lead MLB this season in increased attendance because RCI has discovered the value of “convergence”. “Blue Jays executives are crediting the surge to a renewed marketing effort on behalf of Rogers Communications Inc., the club owner and Canadian communications giant which, for the first time, has been aggressively promoting the team over its wide range of media platforms.” According to Robert, RCI’s more aggressive marketing of the Blue Jays has also boosted their TV audience numbers on RCI’s Canada-wide group of RSNs to an average so far this year of 541,000, up from 437.000 last season. If you believe in the much ballyhooed concept of convergence, you might see evidence of it in the Blue Jays marketing efforts this season. Some media watchers believe that one of the factors contributing to growing TV numbers for live sports is the “watercooler effect” of social media, aka the “second screen“. Evidently somebody at RCI, also Canada’s largest wireless provider, believes in it’s existence as this season the Blue Jays have rolled out Tweeting Tuesdays. According to MacLeod, “The Jays said they have been “shocked” by the program’s growth with as many as 36,000 people tweeting for an average home game.”

That RCI has rethought the value of owning an MLB franchise shouldn’t be surprising. RCI is the dominant cable TV provider in Canada’s most populous (southern Ontario) market. RCI is also a programmer. Amongst RCI‘s dozens of TV channels are their aforementioned stable of RSNs. RCI is also Canada’s largest wireless provider. Just as in the US, see Cablevision vs. Fox over retransmission fees or TWC’s investment in the Lakers or Verizon’s 4 year/$720 million deal with the NFL or the TWC/ESPN “TV Everywhere” initiative or the great gobs of cash RSNs are awarding for local MLB TV rights, Canadian media companies see live sports programming as key to the survival of their offerings. RCI believes that if you are one of their cable subscribers, and a Blue Jays fan, you will not “cut the cord” in favour of so called over-the-top TV or IPTV options. As a programmer, their exclusive rights to live Blue Jays games provides more leverage in carriage negotiations with other cable TV providers as live sports programming is increasingly “must have“ for cable operators. (One of the reasons behind the launch last year of RCI’s newest RSN, Sportsnet One. Not coincidentally, 38 Blue Jays games this season are available exclusively on this new channel) Canada’s other telecommunications conglomerates enact the same strategy. BCE Inc., RCI’s principal competitor, has invested heavily in the NHL to provide content for their wireless network, all sports cable TV channels and sat TV service. Quebecor, Quebec’s telecommunications conglomerate, was a serious bidder for the Montreal Canadiens, sale concluded in 09. They have more recently committed to investing in the construction of a new arena in Quebec City with the intent that it will house a Quebecor owned NHL franchise. In both instances, their motive in owning an NHL franchise is not selling hockey tickets and beer but in providing content for their wireless network, TV channels (both cable and over-the-air) and cable TV system.

So why have the Blue Jays become a darling of RCI when a mere two years ago RCI were planting stories with every Jays beat writer that they would soon attempt to sell the team? None of the negatives associated with corporate ownership of a pro sports franchise have changed; team performance (ie gate receipts) is too unpredictable, red balance sheets irritate shareholders, bad teams attract negative publicity to the corporate brand, buying the programming is a lot less headache than operating the franchise. What has changed is the big media companies such as RCI see their cable TV subscribers “cutting the cord”, audience fragmentation and DVR diminishing the number of viewers for their TV channels and scant differences in theirs and their competitors wireless offerings. But RCI is betting, along with many others who have signed deals cumulatively worth tens of billions of dollars, that the Blue Jays, and live sports programming in general, will prop up their balky business model. During the 90’s big media concluded that it was better to own the programming than buy it. In fact, many feared that the Disney’s and Time Warners, with their bottomless resources and “synergies” (ugh) would dominate MLB, on and off the field. Last decade, these same companies concluded the opposite, better to buy the programming than own it. Today, we’ve come full circle. In 04, News Corp/Fox, was so desperate to unload the Dodgers that they loaned the McCourts most of the purchase price. Today, after losing the local TV rights for the Lakers to TWC for $3 BILLION, Fox has reportedly offered the Dodgers anywhere from $1.6 to $3 billion to retain their local rights. Last year Fox committed a reported $1.6 billion for Rangers TV rights and is reportedly close to finalizing a $1.4 billion deal for Padres TV rights. Today content is king and sustaining operating losses owning a franchise to control it is likely a whole lot better deal than buying it.

TIDBITS

  • I don’t follow the debate around what Commissioner Selig should, or shouldn’t, do about MLB players charged with DUI. If you do, I suspect you will be well served by reading Michael McCann’s blog entry on the subject.
  • Unless, like me, you are a Canadian, you probably don’t visit canadianbaseballnetwork.com. But baseball fans of any nationality can appreciate this article by Allan Simpson (founder of Baseball America) on the history of MLB’s amateur draft
  • Michael S. Schmidt reported in the New York Times that MLB, along with the MLBPA, had released a report on their out-of-season drug testing. If they are truly serious (and I’ve never believed they are) about eliminating the use of PEDs amongst players, their testing program would be much more thorough. “The report, the first time the exact numbers of off-season tests had been released, said that slightly more than 10 percent of baseball players had been tested for drugs in the 2010 off-season.”
  • According to David Zurawik, O’s ratings on MASN are booming, particularly with the younger folks. (so much for my opinion that baseball is only popular with us old folks) John McGuinness, MASN senior vice president, is quoted as saying that their social media initiatives are helping boost the TV audience numbers.


Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.

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