The baseball business comes to town
America’s Major League Baseball kicks off its 2014 season with games in Australia next month. It’s part of a push to globalise the business and seek out new talent. But will it work?
When the Los Angeles Dodgers play the Arizona Diamondbacks at the Sydney Cricket Ground next month, Australians will get a glimpse of the multi-billion-dollar business that is Major League Baseball.
The Australian start to the opening series of the 2014 North American baseball season, timed
to celebrate 100 years since baseball was first played at the SCG, is part of a marketing campaign byMLB to broaden its international image.
Several previous seasons have kicked off games in the much larger baseball market of Japan, but the two Australian games are part of a move to boost local enthusiasm for the sport, which is run by Australian Baseball League, a 75 per cent owned subsidiary of MLB, under a deal set up four years ago.
Baseball has never been big in Australia, but in North America, where MLB has 30 teams, including famous names such as the New York Yankees, the Atlanta Braves, the Chicago Cubs, the San Francisco Giants, the New YorkMets, and the Oakland As, Forbes magazine estimates that Major League Baseball will generate total revenue of more than $US8 billion this year, largely thanks to lucrative television revenue deals.
Other revenue is generated from sponsorships,
merchandising and the businesses associated with stadiums and land owned by the individual teams and, in the case of big teams such as the Dodgers, local media deals. “The globalisation of our game continues to be paramount to Major League Baseball, and Australia is an essential part of our long-term efforts to grow the sport,” says MLB commissioner Allan H. (Bud) Selig.
The two Australian games, on March 22 and 23, will bring together the famous Dodgers — which were sold for a record $US2bn two years ago and boast some of the highest-paid players in the country such as Zack Greinke and Adrian Gonzalez— and the lower-rankedDiamondbacks, which were bought by Arizona businessman Ken Kendrick for $US238 million in 2004.
AustralianBaseballLeague chief executivePeter
Wermuth says MLB is forgoing major profits by coming to Australia instead of Tokyo. “The simple explanation is that they foresee market growth for baseball in this country,” says the German-born former player, coach andMLBexecutive.
Wermuth says the SCG built in dugouts in February last year before MLB had committed to coming in a bid to get the games. “They took a punt and sent a very strong message,” Wermuth says.
Next month’s games are timed to mark the 100th anniversary of exhibition games played at the SCG by the ChicagoWhite Sox and the New York Giants in 1914. (The White Sox defeated the Giants, 5-4, before 10,000 fans.)
“Baseball has been played in Australia since 1856; it was played here as almost as early as it ever was in the US,” says Wermuth.
David Smith, from the US Studies Centre at the University of Sydney, explains that baseball’s creation was a response to the slowpace of cricket.
“Baseball was developed partly because five-day cricket was impractical for working-class people in industrial cities. People needed a much shorter and faster game,” he says.
Sydney-based sports scholar Braham Dabscheck, and author of Reading Baseball: Books, Biographies and the Business of the Game, published in 2011, says encouraging the game in Australia could also develop a greater potential pool of new players for MLB in the US. MLB has recruitment academies in Latin America but Australia provides another source of talented new players who would adapt easily to the North American environment, Dabscheck says. “The name of the game is getting top athletes,” he says.
So far 31 Australians have played in MLB with hundreds more Australians playing in Minor League Baseball in the US. TheAustralian
“We have more athletes playing professional baseball than ever before. We are very good at the sport, much better than many sports that get a higher profile in this country
Baseball League website contains a list of Australians playing in MLB under the heading “Aussies Chasing the Dream.”
Sydney-born pitcher Grant Balfour had a twoyear $US8m contract with the Oakland As, which
finished at the end of last year. A two-year deal to play with the Baltimore Orioles for $US15m fell over at the last minute, in December, with the
Orioles concerned about his fitness. He has since signed a two-year deal for $US12mwith the Tampa Bay Rays.
Craig Shipley, who was the second Australianborn player in Major League history, making his debut in 1986 playing for the Los Angeles Dodgers. Also from Sydney, he has had 11 Major League seasons in his career including stints with the Dodgers, theNewYorkMets, the SanDiego Padres, the HoustonAstros and the AnaheimAngels.
Baseball can be a lucrative career with top players earningmore than $US20ma year. Dodgers players Zack Greinke, Adrian Gonzalez, Matt Kemp and Carl Crawford all fall into this category, according to the website Cot’s Baseball Contracts.
In contrast, the top players with the Diamondbacks, such as Aaron Hill, Martin Prado, Brandon McCarthy and Miguel Montero, are earning just over $US10m a year, according to Cot’s.
The game’s top-paid player until last month was Yankees third baseman Alex Rodriguez, better known as A-Rod, who earned almost $US30m last year. But A-Rod, who is still under contract to the Yankees to the end of the 2017 season, is sitting out the 2014 season following a penalty for taking performance-enhancing drugs.
More than 74million people attendMLB games in America each year. MLB’s income has been
significantly boosted by a deal with ESPN, Fox Sports and TBS that will pay a total of $US12.4bn to MLB for the television rights from this year to 2021, almost double the amount paid for the last deal, which covered 2006 to 2013. The money from the national TV deals goes into the MLB’s Central
Fund which is distributed equally to all 30 teams.
But teams, particularly top teams in big cities such as LosAngeles, have other potential sources of income. Last year the Dodgers reached a deal with
TimeWarner Cable to create a newregional sports
network called SportsNet LA, a deal estimated to beworth more than $US7bn over 25 years.
In Australia, the MLB is working hard to develop the game with the eight Australian Baseball League clubs, spending a record $US3m on signing bonuses for 16- and 17-year-olds.
“We have more athletes from Australia playing professional baseball internationally than ever before,” saysWermuth. “We are very good at the sport, much better than many sports that get
a higher profile in this country, for some reason.”
The Australian Baseball League and its current teams were set up in 2010 by MLB in a deal to revive the sport in Australia. It contrasts with the private team owner model that operated from the ABL’s foundation in 1989 until 1999. Under that model, Wermurth says, the teams competed with each other for players, with overbidding driving clubs and franchises out of business. He argues that the new model, under the umbrella of the MLB, is more sustainable.
“We wanted stability for our partners, for government, for our fans. Since we have the backing of MLB, we were in a position to support the weaker franchises over the last three seasons,” Wermuth says. He adds theABL has not yet reached
profitability, but the goal is tantalisingly close.
“We are very close to break even, and I will say this: as an entire league we have lost less in the past year than the average soccer club does. We have been asked about league expansionmany times and we are open to it, but we are going to do it when it’s right — we are in no rush.”
Wermuth says Australian baseball is hoping that next month’s Opening Season games in Sydney will help boost local infrastructure for the game. He points out that Italy has 10 times the
stock of quality baseball venues that Australia has.
“This is our Achilles heel — our facilities
are shockingly inadequate,” he says. “When we
started the league, in three out of the six states we
didn’t play in baseball-specific facilities. When we do have them, they are locations like Sydney’s Blacktown International Sportspark, which are a challenge for our fans to get to.”
Wermuth says hosting the games at the SCG has been a huge logistical challenge, including modifications to the change rooms, levelling the field and major adjustments to seating at a reported cost of about $1m. “Baseball players are among the highest-paid athletes in the world and they don’t
want to risk their pay cheques by spraining an ankle or running into an unpadded wall,” he says.
David Smith argues that baseball has no chance of becoming a major sport in Australia.
“In nearly every country, the major sports that people play and watch regularly onTVare ones that were there when industrialisation, urbanisation and mass media created a national mass culture in the late-19th and early-20th centuries,” Smith says. “There simply isn’t enough room in people’s minds and lives for new sports, especially given how strong cricket is in Australia.”
But MLB is prepared to take a longer-term view. Wermuth says the decade-long hiatus before the ABL was resurrected in 2010 has led to a lost generation of young fans and players. “Creating the intergenerational connections to baseball in this country is one of the things we thought long and hard about,” he says. “We want the fathers taking their sons, and grandpas taking their
granddaughters to their first games. But there is no
easy way and no shortcuts to be had.”
Hanley Ramirez of the Los Angeles Dodgers takes a swing during a game against the Atlanta Braves last October at Turner Field in Atlanta
Australian Baseball League chief executive Peter Wermuth
at Willoughby in Sydney