Issue 14.07 - July 2006
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Joy in Mudville.com 

How the Web can help even the poorest team win a pennant.
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The baseball fan’s annual end-of-season lament is supposed to be, “Wait till next year.” But most fans have no realistic hope that their boys of summer will ever win a pennant. Major-market titans like the New York Yankees and the Boston Red Sox dominate the sport, slugging out win after win while once-mighty franchises like the Kansas City Royals (who, not so long ago – OK, more than two decades ago – went to the playoffs six times in 10 years) remain perennial cellar dwellers. The culprit is competitive imbalance, Major League Baseball’s euphemism for an economic structure that gives teams in big media markets access to more money and, therefore, more resources to build a strong team. But that’s about to change, thanks to Internet video and the YouTube generation.

Most fans don’t realize that team inequality is essentially a consequence of technology. The rise of cable TV allowed the Yankees and Red Sox to reap huge amounts of revenue from local broadcasting rights and eventually to go into the TV business themselves, creating their own networks to generate even more cash. Cable networks and traditional media companies even bought their own teams to televise on their airwaves. Thanks to its acquisition of media mogul Ted Turner’s empire in 1996, Time Warner owns the Atlanta Braves. Baseball is ruled by a TV-powered oligarchy.

But the sport also has Major League Baseball Advanced Media, by far the most sophisticated Web operation of any pro athletic organization. The company runs MLB.com and splits the revenue from the site equally with all 30 teams. In fact, the league divvies up all new media revenue – from satellite radio and streaming video to online ticket sales and licensing for fantasy leagues – just as equitably. When the owners decided to play the game that way in 2000, commissioner Bud Selig compared the move to the NFL’s historic 1961 pact to distribute national TV revenue equally among all teams. That policy allowed the Green Bay Packers, with its tiny media market, to stay in existence.

MLB.com could do the same – even for sad sacks like the Tampa Bay Devil Rays. Last year, the site’s subscription-only audio and video packages ($15 and $80 a season, respectively) generated $60 million. And as more fans follow the action via the Internet, teams like the Devil Rays and the Royals will enjoy just as much of the bigger pie as the Time Warner Braves of the world.

What’s astonishing is that as late as 2000, when you typed “www.mlb.com” into your browser, you got a Philadelphia law firm. But just half a decade later, MLB.com is so good at what it does that it has expanded beyond baseball. When the NCAA streamed its wildly popular men’s basketball tournament over the Net a few months ago, MLB.com’s pipes handled the traffic. MLB Advanced Media also manages Web sites for Major League Soccer and the World Track & Field Championships, and it recently signed an agreement to host online operations for a licensing and merchandising company that handles pop stars such as Madonna and Tom Petty. At this rate, it’s not far-fetched to believe that MLB Advanced Media could someday rival ESPN – and end competitive imbalance.

Sure, the number of people watching – much less willing to pay for – online video isn’t high enough yet to change the eco-nomics of the sport. Just wait till next year.

- Chris Suellentrop

Chris Suellentrop wrote about gaming censorship and economics in issue 14.04.

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