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SBJ/Nov. 1, 2010/This Week's Issue
At Series, competitive balance is the winner
Published November 1, 2010
MLB Commissioner Bud Selig looked out at the field from his suite at AT&T Park during Game 1 of the World Series on Wednesday night and was blunt about what he saw.
“The Texas Rangers against the San Francisco Giants? This was simply not possible in the late ’90s,” he said.
The matchup of two less-heralded teams, each from baseball’s so-called middle class, was far from the dream matchup for Fox Sports and sports marketers, amplified by a TV rating for Game 1 that was down 25 percent from 2009’s New York-Philadelphia opener. But Selig said such shorter-term worries were easily trumped by a larger, more powerful statement on baseball’s competitive balance that the Rangers-Giants matchup provides.
The Rangers began the season with the league’s fourth-lowest payroll, at $55.3 million; the Giants were ninth-highest on Opening Day, at $98.6 million.
The San Francisco-Texas pairing, marking the Rangers’ first World Series appearance and just the Giants’ fourth since moving from New York after the 1957 season, guarantees MLB’s ninth different champion since 2001. More recently, the last 12 World Series berths have been earned by 11 different teams. Both marks surpass those for the NFL, NBA and NHL.
“We’ve never had competitive balance this good,” Selig said. “I’ve said so often, of course, that you have to give every club and their fans hope and faith. That clearly is happening now, more so than ever. It’s my job to be impartial, but it’s fair to say I’m enjoying this immensely.”
Rangers owner Chuck Greenberg, for his part, doesn’t believe his club is really part of baseball’s middle or lower class. “We’ve been misrepresented both internally and externally,” he said. “The old Rangers are gone.” But beyond his stated intent to boost payroll, making a meaningful run this winter at retaining star free agent pitcher Cliff Lee and investing heavily in upgrading Rangers Ballpark, Greenberg echoed Selig’s sentiment on the industry’s current, more egalitarian landscape.
“You absolutely have to be smart, thorough and agile about how you go about your business,” Greenberg said. “But we’re definitely seeing more and more success stories around the league. There’s clearly now more of a premium on how you execute on your decisions.”
The Rangers-Giants matchup additionally will likely have positive ramifications on next year’s labor negotiations between the league and the MLB Players Association. While no one expects nearly the kind of collective-bargaining rancor now developing within the NFL and NBA, the current World Series helps amplify the notion that baseball’s current economic system is far from broken and that radical surgery is not needed. Rather, more sweeping changes will likely come from other areas, such as the First-Year Player Draft.
“I really don’t want to talk about next year, but it’s clear our system has produced what we set out to produce,” Selig said. “You look out on this field, and it’s proof of that. We said in 2000 [with the Commissioner’s Blue Ribbon Panel on Baseball Economics] that we needed to change our economic structure. That was the objective, and we have done that.”
Michael Weiner, MLBPA executive director, concurred. “There are a number of different ways you can define competitive balance,” Weiner said, “but overall, there’s no question the current state is strong. There is definitely a sense of satisfaction on the players’ front with regard to competitive balance.”
StubHub milestone: The Giants’ presence in the World Series served as another major boon for StubHub, which has its headquarters just a few blocks away from AT&T Park. The last Giants appearance in the World Series, in 2002, marked a key early milestone for the then-fledgling company, as online ticket reselling was just beginning to reach mainstream critical acceptance at that point.
Fast forward to the present, and StubHub, recently celebrating its 10th anniversary, is now owned by eBay and stands as a bona fide part of the industry establishment and a key partner of MLB Advanced Media, as the league’s official fan-to-fan ticket marketplace. Combine those realities with fervent, pent-up demand for Giants’ World Series tickets, and company officials were eyeing a potential revenue record from this year’s Fall Classic.
The average secondary price was hovering around $800 per ticket in San Francisco, with similarly high sales volume and pricing being seen for Games 3-5 of the series in Arlington, Texas.
“Before knowing the length of the series, it’s probably too early to make a historic comparison. That being said, we’ve seen more volume and page views thus far than any other previous World Series,” said Ray Elias, StubHub senior director of marketing and a company veteran.
StubHub’s presence at the initial San Francisco games included a sign on the outfield wall at AT&T Park and representatives working in the Giants box office to help with order fulfillment.
Dynamic opportunity: Russ Stanley, Giants managing vice president, noted the demand for tickets on secondary markets for the San Francisco games and considered how dynamic pricing could play into that demand. The Giants, Stanley said, had a 7 percent increase in ticket revenue this year helped by dynamic pricing, which the team tested during the 2009 season before expanding throughout AT&T Park this year. The system allows single-game prices to float freely based on a wide range of supply and demand factors.
Stanley is quick to admit that dynamic pricing comes with a variety of emotional and public relations hurdles beyond the raw mechanics of operating the program. Those issues are even harder to handle on a national basis, given that MLB controls ticketing policies for World Series games. Still, a thought for how the system could work for the World Series existed.
“There is such a huge middle ground between face value [peaking at $300] and what the market is actually bearing on StubHub. It’s ridiculous,” Stanley said, referring in part to a pair of prime Dugout Club seats for Game 1 that sold for $6,112 each. “Our dynamic pricing, of course, works on a much slower sales cycle than the frenzy around the Series, and obviously more on lower-end tickets, but I’m interested in how, at some point, you can capture more of what’s happening in the market.”