• Why Baseball's Fiscal Cliff Is Silly

    It's a spring-time tradition. When Spring Break arrives, I say goodbye to my students, make a few Arrested Development jokes with my colleagues, and pick up as much as I can find on the impending baseball season

    This year, in addition to the standard season preview issues of Sports Illustrated and ESPN, I also picked up the City Pages, on the basis of it's ominous headline "Baseball's Fiscal Cliff: As another season begins, MLB faces an unsustainable future--and you're picking up the tab".
    (Certainly a title capable of grabbing attention, and the whole article is available here)

    ~~~Like everything else I write: this is also available at our original site:~~~
    ~~~Peanuts from Heaven~~~




    Credit: City Pages


    The fiscal cliff referred to by author--Pete Kotz--is based on 4 clear points (with the emphasis and dire headline being based most clearly on the 4th point)



    1. Baseball is beset with competitive imbalance

    To Kotz's mind the more popular NFL and NBA help their sports thrive by helping teams thrive in middle-markets like Green Bay and San Antonio, while the grand ol' game is trapped in a recurring cycle where "the big crush the small with painful regularity".

    2. Baseball is losing its fan base (particularly among young men)

    You can see the diminishing fan base in the graph above. The audience for a typical World Series game has shrunk by 29.6 million eyes from 1980 to today. It also includes the surprising stat that "More women age 50 and older watched the world series did men under 49".

    3. The largest financial gain for baseball is its lucrative tv contracts which will soon come under threat from increased demand for better product

    It's no surprise that sports are lucrative for broadcast networks to air (no one lines up to watch March Madness stunners on hulu the day after). So there are multiple millions if not billions in the offing when teams agree to broadcasting contracts.

    However the companies that own your local teams' broadcaster (Time Warner/Disney/Viacom/News Corps) are able to recoup the oodles they pay for baseball by making satellite and cable companies sell lower rated channels like Disney XD along with ESPN or FUEL Tv alongside Fox Sports North. Of course, the satellite and cable companies pass that cost on to consumers.


    But with the rise of on-line watching, Kotz argues, all viewers are increasingly likely to switch off the tv unless things change, and bills (which may soon top $200/month) drop. (Perhaps through an anti-trust suit from Viacom which seeks to eliminate the channel-bundling and sell channels to consumers individually.)


    4. If the cable contracts change, the tv contract bubble will burst, competitive imbalance will become entrenched and the few remaining fans will have to pay exorbitant prices in order to ever see a winner again.

    This is the core of Kotz's case. If you can buy individual channels, those who want family fare (like Disney Channel) but not sports will spurn the extra cost on their cable bill and, as he sees it: "[b]aseball's welfare payments from non-fans will corrode. And with an audience in decline, remaining subscribers will be forced to spend that much more to compensate." Thereby leaving poor teams like the Twins charging fans more both at the turnstiles and on the cable bill to make money, hire players and win games.

    This is an argument. But as I see it, it has a couple of clear flaws too.



    1. Baseball is rife with parity

    This would be Jayson Stark's turf, so I won't really get into this too much, I'll just to trot out perhaps the best stat of all: 12/32 NFL teams have won a Super Bowl in the last 25 years, by contrast 16/30 MLB teams have won a World Series over the same time span...yup, you've got no chance if you aren't the Yankees



    2. Baseball's fan base cannot be judged by World Series ratings
    True, but irrelevant. Credit: CityPages

    To be sure, baseball's World Series' ratings are embarrassing. But they are less embarrassing when you consider how baseball does in other venues.

    News reports point out that daily viewership of local teams is fairly constant within most media markets. Take the Tigers: they get about 168,000 people tuning in to tv each day, plus 199,700 people tuning into the radio, that'll be 367,7000 people tuning in each week...just within Detroit. (The Lions draw from a national audience to try to match that in one day).

    On top of that, you should consider the fact that baseball's long season enables a near constant conversation about the games on social media and the internet. "Detroit Tigers Blogs" kick out 40 million hits on google, "Detroit Lions Blogs" kick out about 24 million hits. (Heck the Twins even crush the Vikings (about 22 million to 19 million...AND THE TWINS STUNK WHILE THE VIKINGS MADE THE PLAYOFFS).

    The truth is that, while national ratings are down, local interest is up. Would it be nice to see the World Series return to its bygone glory? Yes it would. But do woeful World Series ratings mean baseball is doomed? Absolutely not.

    3. Lucrative tv contracts are undoubtedly valuable, but are not the only factor in making a team competitive

    Naturally local markets can pay more if they have more subscribers (Angels and Yankees broadcasting contracts are going to pour more money into the teams they're paying than local broadcasters in say, Oakland and Tampa Bay).
    Nevertheless, as the last decade worth of parity (see point 1) has made clear, you don't have to be swimming in tv contract cash in order to make your team competitive (witness the success of the A's and the Angels, or the Rays and Yankees). Teams have found ways to succeed without money before, and they'll seek ways to succeed without them now.

    4. Who says that this is what will happen if the cable contracts change?

    Here's the biggest problem I have with Kotz's article and the City Pages' fear mongering. They've given into what I tell my students is an "if...then fallacy". If one thing happens, then another will inevitably follow. You see it in presidential campaign ads (like...this one).


    Credit: City Pages

    But there's a problem with assuming that one action will invariably lead to atom bombs or war with moon nazis: there's no way to know whether or not this will really happen. Let's say Kotz is right and cable companies start offering the chance to buy channels individually rather than as a set. Why does that mean that customers will abandon sports channels rather than turning to them in greater numbers? (Personal example: the only non-network channels I watch are FSN, ESPN and Comedy Central anyway...so I'm in regardless; my younger brother can't afford cable, but if he could get the sports channels he wanted without paying hundreds of bucks for sports AND SoapNet/E!, he'd do it in a heart beat).

    Or, if you prefer, if cable contracts change AND sports channels are abandoned, why does that mean that teams will be forced to charge regular fans more? Why won't it lead to a greater degree of fiscal restraint? The fall out from A-Rod's mammoth contract (and subsequent crapitude) has already largely flattened player's prices. Moreover, with 15 years of solid labor agreements behind them, the union has a good sense of what they can/should expect from management. If they know finances are getting crunched, they'll have to accept that and the lower salaries that come along with it.

    However you slice it, there's just no guarantee that the so-called "Fiscal Cliff" is nearly as dire as Kotz and the City Pages make it seem.


    There are problems with baseball. It's naive to argue otherwise. But should we really be bracing ourselves for a financial disaster that will doom us to decades of overpaying for the foreseeable future? Probably not.

    I can see why the City Pages published the article ('tis the season, after all), but there's just no need to make a 125 year old institution that has weathered recessions, depressions and wars that minimized their workforce seem like it's going to be doomed because of a cable company's law suit? That's just silly.
    This article was originally published in blog: Why the City Pages are Silly started by PeanutsFromHeaven
    Comments 9 Comments
    1. mike wants wins's Avatar
      mike wants wins -
      Competitiveness is not about who wins the championship.....it is about hope during the season. Stark and others do not seem to get this point. The rest, who knows......
    1. Willihammer's Avatar
      Willihammer -
      (Personal example: the only non-network channels I watch are FSN, ESPN and Comedy Central anyway...so I'm in regardless; my younger brother can't afford cable, but if he could get the sports channels he wanted without paying hundreds of bucks for sports AND SoapNet/E!, he'd do it in a heart beat)
      Personal example. I don't own a t.v. The price of cable prohibits me getting one, if not the fact that I would also just be watching FSN and Comedy Central 90% of the time and don't like sitting through commercial breaks. But I can get comedy central online for free, without commecial breaks, and mlb.tv, as lousy a product as it is, is still cheap (and no ads obviously - although conceivably that could change). That is to say, I think a lot of the consumers you describe would not buy an individual channel package if its more expensive than mlb.tv. And if cable did somehow make a compelling sales pitch, a lot of those new subscribers will be dropping their mlb.tv subscriptions.
    1. kab21's Avatar
      kab21 -
      The problem with buying sports as individual channels is that they are the most expensive channels. The prices on the linked chart would be significantly higher if they weren't bundled. I think they say as high as $20 for just ESPN. ESPN, Sports and Your Cable Bill - Peter Kafka - Media - AllThingsD

      Regarding pt 2 - It's like he went looking for numbers that supported his argument. I think the WS viewership chart is misleading in showing the reduced interest in baseball. In the same period MLB attendance has doubled despite ticket prices that are borderline ridiculous.

      I'm not sure how the fall out from ARod's contract has affected FA's. The only reason that there weren't any huge contract this offseason was that Greinke was the well above average player in FA and he managed to get 160+M. The M's just signed Felix to the biggest pitching contract ever. The offseason before Pujols and fielder received huge contracts while Votto got a massive extension. There is huge money being spent by clubs and I expect salaries to jump significantly in the next 3-4 years.
    1. The Wise One's Avatar
      The Wise One -
      Do you teach yor students to cherrypick facts and compare apples to oranges?. Comparing blog hits between different sports as way to measure popularity. Never mind that one of the teams has performed well over the last decade while the other has given new meaning to the word futile.
      There is no guarentee of a fiscal cliff, there is no guarantee there will not be. When how we view entertainment programs continues to change we shall see what the price will be. To think that cable will go on forever is shortsighted.
    1. Paul Pleiss's Avatar
      Paul Pleiss -
      I have a TV w/ digital bunny ears, local channels in crystal clear HD for free. I don't get ESPN or other cable channels, but I've got MLB.tv, NHL gamecenter and if there's a game on ESPN or another channel I don't get that gives me a great excuse to head down to the local watering hole to watch the game and have some brews. Cable, good riddence. Baseball willl ride out whatever wave follows the crash of cable companies, but that being said, i don't see the fall of cable happening anytime soon.
    1. Oldgoat_MN's Avatar
      Oldgoat_MN -
      As far as viewership, I am always amazed that these very wealthy team owners do so little to protect their investment.
      From a marketing standpoint, almost all Saturday games should be afternoon games. Far more likely to get children out to the park. How many of us fondly remember being at the ballpark with Dad as an early childhood highlight?
      And, of course, Friday's game and Saturday's game are always at the same park. Players would get used to it.
      Back to the subject, baseball is far from dying. It is, after all, the finest game on earth.

      edit: MY memories are sitting in the stands with my Dad. For others it might be both parents or Mom. Don't rip me for being sexist. The most fun women I know are baseball fans
    1. PeanutsFromHeaven's Avatar
      PeanutsFromHeaven -
      Quote Originally Posted by Willihammer View Post
      Personal example. I don't own a t.v. The price of cable prohibits me getting one, if not the fact that I would also just be watching FSN and Comedy Central 90% of the time and don't like sitting through commercial breaks. But I can get comedy central online for free, without commecial breaks, and mlb.tv, as lousy a product as it is, is still cheap (and no ads obviously - although conceivably that could change). That is to say, I think a lot of the consumers you describe would not buy an individual channel package if its more expensive than mlb.tv. And if cable did somehow make a compelling sales pitch, a lot of those new subscribers will be dropping their mlb.tv subscriptions.
      Doesn't mlb.tv black out games that are being broadcast within a certain local radius? So if you're in MN and you want to watch the Twins, you still need cable.
    1. snepp's Avatar
      snepp -
      Quote Originally Posted by PeanutsFromHeaven View Post
      Doesn't mlb.tv black out games that are being broadcast within a certain local radius? So if you're in MN and you want to watch the Twins, you still need cable.
      There are ways around it, but yes, there are obnoxiously archaic blackout restrictions.
    1. old nurse's Avatar
      old nurse -
      The "if fallacy" mentioned is not an if when the number of cable subscribers are dropping. The reasons for dropping are varied. The world changes. You and the people around you might not change, but the rest of the world does.
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