Change is Coming to Baseball

October 27, 2010 | John West

Baseball is historically very slow to change. Bud Selig has been the Commissioner for about 20 years and it doesn’t feel like much has changed at all. There have been some changes, like PED testing, divisions round to the playoffs and limited replay. These are nice steps, but when directly compared to the NFL, MLB comes up lacking. Add to this the expectation that glacially slow Andy McPhail may be the next Commissioner in baseball, and I don’t think it looks very good.

However, it looks like the owners and the players are open to reducing the games down from 162 to 154, and add an entire extra round to the playoff system. They are in agreement for one reason only and it’s a great reason…

Earlier this year, the Pirates had an internal document leak into public domain. It showed many things, but the one that jumped out to me was the revenue generated from the actual games. When you factor in the cost to have a baseball game, and balance that to the revenue generated from having the game, it’s pretty much even or maybe even a money loser. As Orioles fans, your eyes tell you the same story. With the exception to the Red Sox and Yankees games (and even those were down last year), it doesn’t look like incurring the cost to opening the gate is covered by the revenue that generates.

I say this to back up my point that I don’t think the owners will really care if they lose 4 home games. In fact, it’s a money winner for most of them. MASN pays the Orioles every month, whether they have a game or not. 4 less home games doesn’t affect the MASN revenue one bit. So, you have 4 less games to break even or lose money, and no drop off in local TV market revenue from MASN. Then, you have the extra revenue from the Major Networks that will pay to cover the extra rounds of playoffs. That revenue is shared equally among all MLB teams.

There are 3 things to factor with respect to revenue:
1. Extra revenue from major networks for covering the extra rounds of playoff games
2. The same revenue from MASN
3. Reduced cost of having 4 less games where you break even, AT BEST.

You currently have 8 teams make the playoffs each year. Now that’s not all the teams that benefit from the playoffs. Each year there are several teams that are close to making the playoffs, and don’t quit get in. Under a new format, that number would grow. This would increase baseball interests in more cities and more cities have a chance to get into the playoffs. That extra interest would increase revenue to those teams.

How is this not going to happen? Typically, the players union disagrees, on principle, with the owners. However, I don’t think that’s the case with this issue. Recently Michael Weiner, the head of the baseball players union, was quoted as saying “There is sentiment among a substantial segment of the players to consider expanding the playoffs”

I don’t know if this will happen. Because it makes sense and both sides seem agreeable, I have a high level of anxiety. I just don’t come from a place with any experience of the players union and the baseball owners seeming to agree with anything without a prolonged fight.

As I attempt to close this blog, I can’t help but feel I can sum this up a little better

Proposal – Reduce the number of regular season games from 162 to 154
– Add an extra round to the playoff system

The Players Union – Less work (154 games rather than 162)
– Increased revenue, more money ( Players get a piece of the shared TV revenue from playoff games, and there would be more playoff games)

The Owners – Less games means 4 fewer home games. Home games are a break even or possibly a money loser to the owners, in some to many cities.
– Increased revenue from shared TV contract (playoff games)
Local TV revenue remains the same regardless of whether there are 162 or 154 games to air.