Baseball is Killing It in the Digital Age

  I recently heard a sports talk show host lament about record low television ratings for baseball’s All Star game, throwing out the possibility of perhaps retiring the mid summer classic  
  Recent reports about falling national ratings, attendance numbers trending down and the lack of national stars for the national pastime give the impression that baseball is in trouble.

  May I suggest the opposite.  Baseball is killing it right now.  Consider that the Kansas City Royals, a small market team just went on the market for over $1 Billion dollars. Why so much? I believe that no other sport has positioned itself as well as baseball for the digital age. When in comes to creating content and revenue from digital content, baseball is king.

  Probably the biggest revenue generator is television.  Not so much the national broadcasts of FOX, FS1, TBS and ESPN but the regional networks.  According to Forbes, baseball ranks #1 in primetime cable broadcasts in every major league market except Miami. In all primetime broadcasts, 12 teams broadcasts beat everything on network TV in their market, and another 8 are in the top 3.  In 2018, ratings increased by 2%.  And advertisers covet live sports, where time shifting rarely happens.

   MLB continues to blaze new paths for showcasing their sport. Facebook has been showing games for 2 years and on July 18, 2019, 2 million people watched the very first MLB Game of the Week on You Tube.  To compare, a recent Wednesday night ESPN broadcast of the Mets - Yankees game drew 756,000 viewers.  Ask your college aged kid if he watches more Cable TV, Netflix or YouTube. You may be surprised by their answer. 

  And the MLB Network is in over 69,000,000 homes and was the most successful cable network launch of all times. It’s also now available on SlingTV for those who are cutting their cable cords. 

  But where baseball is really on the forefront is the digital world. Consider that in 2010 when Steve Jobs introduced the very first iPad, he invited Major League Baseball to be part of the presentation to show how the new device could live stream games. The invitation to participate in the historic conference was made to BAM, MLB’s digital arm, aka Baseball Advanced Media. 

   In 2000, White Sox owner Jerry Reinsdorf convinced then Commissioner Bud Selig and the other owners to pool their digital rights. Many compare this to Pete Rozelle’s efforts in the 1960s to get NFL owners to pool their TV rights. Reinsdorf said few realized how historic this was,  “A lot of [MLB] clubs thought, Okay, we’ll go along. We don’t think this will amount to much."

   Each owner agreed to invest $1,000,000 million a year for 4 years in the digital start up. By the second year, they were making profit. By 2010, BAM was generating $620 million a year. As bandwidths increased, baseball was ready with the AtBat app, MLB.TV and  Every game,  highlight and stat is available on your phone, your smart TV, your tablet and your XBox.  Baseball has 162 games with dozens of highlights and videos per game.  No other sport creates as much content for the digital age as baseball.  Football may draw huge national ratings, but they play one game a week. In an era were everything is available on your phone 24 / 7, no other sport creates as much opportunity for digital revenue as baseball. 

   We sometimes forget how streaming games, movies and Game of Thrones on your phone is a relatively new phenomena. And you can thank baseball for that. As bandwidths increased, it was BAM that created the technology to live stream games. Technology that was later licensed to ESPN and HBO for their apps.  Baseball’s streaming technology became so valuable that  MLB owners and BAM spun off a separate company BAMTech which they later sold a 75% share to Disney for $2.6 Billion dollars.  Yes, 2.6 Billion.
   MLB has become so adept at making digital revenue that in 2015, they made the unprecedented move to purchase the NHL’s digital and cable rights for $100 Million a year for 6 years.  The NHL Network is now run by the MLB Network and broadcasts out of their Secaucus, New Jersey studios.  Forbes calls BAM the “"the Biggest Media Company You've Never Heard Of”

“I think (BAM) it’s not only one of the great stories in American sports business, but one of the great stories in American business.”   Bud Selig former Commissioner of Major League Baseball

   How much revenue is baseball generating from their digital platforms?  Baseball doesn’t seem to offer those numbers anymore.  Is the players union even aware of the exact amount of money BAM makes for the owners? Did they see any of the revenue from the $2.6 Billion BAMTech sale?  If one league can buy the digital and cable rights of another sport for $100 million a year, does that suggest that MLB has morphed from baseball’s governing body to a sports content provider? 

   Which takes us back to the All Star game.  When articles are written and sports talk hosts comment on the falling ratings of the mid summer classic, they are thinking old school. The All Star game and its other events generate so much revenue for Major League Baseball, that the prize for this year's Home Run Derby increased from $250,000 to a cool $1 Million, almost double the $555,000 winner Pete Alonso will make for playing a full season with the Mets.  

   Or consider that since 2013, only one team has been up for sale, the Miami Marlins, arguably the lowest revenue team in baseball.  They sold for $1.3 Billion. 

   Is baseball a dying sport with low TV ratings and falling attendance. Or a sport that is killing it in the digital age?