Archive for Business

Payroll Changes at the 2015 Trade Deadline

With the trading deadline now one week in the rear-view mirror, it is much too early to truly understand that impact that the players will have on pennant races. The Toronto Blue Jays went from among a crowd of American Wild Card contenders to favorites for the Wild Card with a potential chance to catch the Yankees. Teams like the Houston Astros, New York Mets, and Kansas City Royals all made significant additions to help them in their chase to the playoffs and potential success once October arrives. It is not too early, however, to discuss the impact on payroll that those changes have had on the dealing teams.

The Blue Jays have made the biggest moves of the season, but those moves did not have the biggest impact on payroll. Contenders like the Pittsburgh Pirates, New York Mets, and Houston Astros made multiple moves that had an even greater effect on their payrolls while sellers like the Milwaukee Brewers and Detroit Tigers made moves that cleared significant space on the payroll.

Of the 30 Major League Baseball teams, only the Arizona Diamondbacks refused participate. More than 100 players changed teams at the deadline. Considering only those players making more than close to the major league minimum salary, nearly $100 million in 2015 rest of the season salary was moved at the end of July. The graph below took into account every single move made near the trading deadline where more than a minimum salary was added to the payroll. Focusing first only on additions made to payroll without considering subtractions, the Blue Jays do take the top spot. Data from Cot’s Contracts. Read the rest of this entry »


MLBAM and the Future of MLB’s Revenues

With the announcement of its partnership with the National Hockey League, and rumors that a potential spinoff of it’s streaming technology arm might be worth $5 billion, Major League Baseball Advanced Media (MLBAM) has moved past being the The Biggest Media Company You’ve Never Heard Of. The base of the deal with the NHL, though relatively small compared to many television rights deals at $100 million per year for six years for control of the NHL’s digital media rights, comes after a whirlwind of activity as well as speculation about MLBAM’s present and its future. MLBAM’s increasing diverse clientele and the partnership with NHL signifies MLB’s digital media arm is prepared to be a player outside of baseball. The move represents part of the slowly changing landscape of consumer consumption, although the potential spin-off could have ramifications the new companies devotion to MLB as well on the next collective bargaining agreement as owners attempt to separate baseball revenue from potentially significant non-baseball revenue.

Close to 15 years ago, MLB owners agreed to invest $1 million each per year for four years to create a digital arm to stay on top of technological advances as the internet. In the years since, the business has created incredible growth for MLB. From mlb.com, online ticketing, MLB AtBat mobile app, and mlb.tv to Pitch f/x and the recent unveiling of Statcast, MLBAM has changed the way fans watch, interact, and appreciate the game. Read the rest of this entry »


Cardinals Billion-Dollar TV Deal and In-Market Streaming

As digital technology and internet speeds have improved, there has been an increasing realization that consumers do not — or should not, given the incredibly powerful cable providers — need to subscribe to massive cable bundles with hundreds of channels. Netflix has shown people the amount of programming they could have for under $10 per month, and iTunes and Amazon have allowed people to purchase individual shows while Hulu has provided a combination of both options. HBO Now has lent optimism to the idea that consumers will soon be able to purchase their desired channels a la carte.

For years, MLB.tv has provided both the best and worst aspects of meeting consumer needs, providing an incredible amount of games to fans at a generally acceptable price, but accepting big cash outlays to blackout local games and help keep the current cable bundling model alive. While the St. Louis Cardinals’ new television contract, the latest in a line of local billion-dollar deals, is another example of increasing awareness in Major League Baseball that the current cable model will not last forever. How long it will last is still a matter of great debate.

In many ways, the Cardinals new deal is similar to the deal signed by other teams over the past few years. Despite a market that ranks behind Orlando, Cleveland, and Sacramento, and just ahead of Portland, Charlotte, and Pittsburgh in terms of households, the Cardinals were able to sign a lucrative deal due to incredibly high local ratings and generally high interest in the ballclub. According to Derrick Goold of the St. Louis Post-Dispatch, the deal is set to pay the Cardinals more than a billion dollars over 15 years, an amount that does not include a signing bonus or a 30% stake in FoxSports Midwest, with any revenue received from station ownership not subject MLB’s revenue sharing.

The Cardinals, in the last three seasons of their current deal, are receiving between $25 million and $35 million with the new deal starting close to $55 million in 2018 when the new contract begins. Over the life of the contract, the yearly payout will increase to around $85 million, according to Forbes, who estimated that the new deal increased the value of the Cardinals’ franchise to $1.6 billion, a $200 million increase over their estimate at the start of the season. Read the rest of this entry »


Baseball’s Antitrust Exemption: Its Uncertain Scope

This is the second installment in an occasional series examining baseball’s antitrust exemption. The first piece in the series looked at the historical evolution of the exemption, and in particular the U.S. Supreme Court’s evolving justification for baseball’s antitrust immunity. A future, final post will consider the practical impact that the exemption has had on Major League Baseball’s operations.

While many fans are aware that baseball is generally exempt from antitrust law, fewer realize that courts have adopted widely divergent views regarding the extent to which MLB’s operations are actually shielded from the law. For instance, just because MLB is generally immune from antitrust law does not mean that a court would necessarily give the league free reign to engage in anti-competitive practices in areas completely unrelated to professional baseball (such as if, for example, MLB Advanced Media — the league’s digital content distribution company — were to enter into a price-fixing scheme with other non-sports-related, Internet-streaming-video service providers).

Courts have traditionally disagreed regarding where to draw the line between MLB’s exempt and non-exempt conduct, and thus are deeply divided over the extent to which they will allow antitrust lawsuits to proceed against MLB. As a practical matter, then, anyone wishing to sue MLB under antitrust law may be able to do so – despite the league’s antitrust exemption – so long as they file their case in the right court.

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Mets Continue to Act Like Small-Market Team

The New York Mets have been one of the more active teams leading up to the trade deadline, trading for Juan Uribe, Kelly Johnson, and Tyler Clippard, but the Troy TulowitzkiJose Reyes/Jeff Hoffman trade between the Toronto Blue Jays and Colorado Rockies has raised questions about the moves New York hasn’t made. The Mets are in contention and are making moves in attempt to better their team. That’s true. But when a player (in Tulowitzki) after whom the Mets, or at least their fans, have been pining for is moved for a decent, but not colossal package, and the other big-name player in the trade (in Reyes) was once a fan favorite and requires only a two-year commitment after 2015 — and would immediately be one of the best position players on the Mets if added to the team — a question is asked.

The question: where were the Mets?

The snarky answer: counting their money.

The more technically accurate answer: paying down owners’ debts.

The Tulowitzki trade might not be the best example of lost opportunities for the Mets, as the Rockies were at least paying lip-service to Tulowitzki’s request not to be traded to New York. Unfortunately for Mets fans, however, their other transactions indicate that the snark-filled answer is not that far from the truth. In both Mets trades, the club negotiated for a portion of the remaining salaries to be paid by the Atlanta Braves and even the perpetually cash-strapped Oakland Athletics.

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New Numbers Suggest Cord-Cutting Revolution Not Imminent

Ratings news were a mixed bag for Major League Baseball over the past few weeks. The Home Run Derby was the number-one rated cable show of the week and saw a significant increase from the previous year with more than seven million viewers. The All-Star Game itself was a disappointment in the ratings, as the broadcast was at its lowest-viewed level of all-time — although it did have more viewers than any other program that week, and the ratings were in line with the past few years. The best news MLB received in the ratings department came in the form of local broadcasts, which are once again dominant. The most troubling item over the last month was the news that ESPN had lost more than seven million subscribers in the past four years, perhaps a sign of the crumbling cable model.

Breaking each one down:

All-Star Game and Home Run Derby

The Home Run Derby was a clear success for MLB after a disappointing rain-delayed derby last year. The derby did a 4.9 rating, a big increase over the 3.9 from 2014 and aided by the excitement of a new timed format that kept the event lively. The show averaged another 75,000 viewers digitally over the WatchESPN app, per Forbes, with more than 250,000 unique viewers. The derby’s viewership nearly doubled the second-highest rated cable show of the week (TNT’s Major Crimes) and was the seventh-most watched show of the week when including broadcast network shows.

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The Use and Frequency of Emoji in MLB Twitter Engagement

As I have done a few times before, I’m going to present Twitter analytics for Major League Baseball team twitter accounts concerning fan engagement. In the initial off-season analysis, the Mariners had the most fan engagement over the off-season. In May, the Cubs blew all the other teams away by responding to fans, and the Yankees scored at the bottom both times.

This post will expand upon the original engagement metrics (retweets, replies, media and favorites) and add emoji metrics. I’ve addressed emojis before, albeit briefly in regard to which emojis different fanbases used, but this analysis will look specifically at team’s social media accounts.

The interaction metrics, replies, retweets and favorites, measure how often the team interacts with fans. A reply requires the most time and retweets are a form of endorsement. These both create more engagement than a favorite. The inclusion of media and emoji does not denote a personal interaction, but they communicate in a different way than text does. Images and video can show behind-the-scenes actions, lineup cards, or highlights. Emoji, while sometimes criticized for being silly, are continually changing digital media, facilitating the communication of emotion. The fire emoji in particular is use to denote “hot” players, strikeouts or outstanding plays.

The tweets used in this analysis were collected from June 15, 2015 to the All-Star break (July 16, 2015). I detailed the original collections methods the first post. I added to these methods by counting the number of tweets that contain emojis and denoted if there was a fire emoji used. I omitted any retweets from both the emojis metrics in order to capture the emoji use of each specific team. The general emoji metric is a count of tweets with any emojis in it, and the fire emoji metric is the count of tweets with a fire emoji present.

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FanGraphs Chicago Meetup July 16th

It’s that time of year again. Time to gather around adult beverages ($4 pints!) and appetizers (free thanks to FanGraphs and BeerGraphs!) and talk baseball with some of your favorite writers. Thursday, July 16th, at the Rocking Horse in Chicago, FanGraphs has invited the writers below to come and be merry with you. This is a 21-and-over event — the BeerGraphers would have rioted if the beer selection wasn’t top notch — but if we keep packing these things, we’ll do more of these in different venues and styles.

See you soon.

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New MLB Fan Safety Class Action Lawsuit Unlikely to Succeed

Following last month’s horrific incident at Fenway Park – when a woman suffered life-threatening injuries after being struck in the head by a fragment of a broken bat – it was probably only a matter of time until someone challenged Major League Baseball’s fan safety rules in court. A new class action lawsuit filed in California federal court on Monday does just that, accusing MLB of failing to take sufficient precautions to protect its fans from foul balls and broken bats.

The suit – filed on behalf of Gail Payne, an Oakland A’s season ticket holder – focuses in particular on fans sitting in unprotected seats along the first and third baselines, an area the complaint dubs the “Danger Zone.” According to the lawsuit, although MLB has known for years that fans seated in these sections face a heightened risk of serious injury, the league has failed to take any steps to protect them. The new suit hopes to force MLB to act, asking the court to order the league to mandate that all 30 teams install foul-pole-to-foul-pole netting by the start of next season.

Ultimately, however, Monday’s lawsuit appears unlikely to achieve its ambitious goal, as the case faces several legal hurdles that may prove quite difficult to overcome.

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MLB All-Star Game TV Ratings Hold Steady

Television ratings for the Major League Baseball All-Star Game, like most sporting events and television shows generally, have seen a viewership decline over the last few decades. This decline is not new. After an embarrassing All-Star Game in 2002 that saw Bud Selig call the game a tie, the powers that be wanted to help prevent a further decline in ratings and interest so they came up with a plan to make the game matter. Beginning in 2003, the league that won the All-Star Game would receive home field advantage in the World Series. The move has done little to prevent ratings from a slow decline over the next few years, but over the past five seasons, the ratings have remained steady despite an increasingly fractured television landscape.

Thirty years ago, the All-Star Game was the crown jewel of MLB’s regular season. Only around 50 baseball games were broadcast nationally, ESPN had not begun to broadcast games, and the All-Star Game was a rare opportunity to see the game’s best players. That rarity, combined with limited options for television viewing in general, came through in the ratings. The graph below shows the ratings for the MLB All-Star Game from 1967 through last season.

MLB ALL-STAR RATINGS 1967-2014

Source: Baseball Almanac and LA Times

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