MLBAM to go public?
Makes sense from a pure bottom line standpoint ….
"With that said, the big question that baseball fans are asking is
why would MLB move Extra Innings from cable, where it has the ability
to reach 65.5 million homes, to DirecTV, where it could reach just 16
While "greed" is an easy answer, I think it’s
more complicated than that ($100 million split among 30 teams gets each
a utility infielder or serviceable middle reliever every season). I
think the answer can be found in two places: online and on Wall Street.
League Baseball Advanced Media ("MLBAM"), the online arm of MLB, has
been wildly successful. The unit has built the most compelling online
offering of any professional sports league; integrating video, audio,
blogs, real-time scores, stats, and reams of other content. MLB.TV,
which offers a more robust package of games than Extra Innings, is a
hit (1.3 million subscribers in 2005, according to New York Magazine),
and last year, over 20 million tickets to baseball games were sold via
MLB.com and team websites. It’s not just baseball that MLBAM is
MLBAM’s back- and front-end technology helps
powers websites and streaming technology for organizations ranging from
Major League Soccer and CBS Sportsline, to the City of New York and
rock band Guns N’ Roses. MLB can’t guarantee a steroid-free game, by
they’ll keep your streaming video up and running!
If MLB has done
nothing else right in the past 50 years – and let’s be honest, the only
other thing they’ve done right in the past 60 years was integrating the
game – they’ve done the Web right.
Late in 2005, MLB scrapped the
idea of taking Major League Baseball Advanced Media public. The reason,
according to published reports, was that team owners did not want
chests full of cash on their doorsteps as they were in the midst of
negotiating a new labor contract. That excuse is no longer valid
because MLB and the Major League Baseball Players Association reached a
new five-year agreement last October.
With the labor contract
out of the way, MLB can now focus on taking Major League Baseball
Advanced Media public. One of the key assets of the company is, of
course, its MLB.TV product. See where I’m going?
By shifting the
Extra Innings package to DirecTV, MLB has now vastly expanded the
market for its own offering. Fans like myself who have cable and no
interest in switching to satellite television, are left with only one
alternative to watch out-of-market games: MLB.TV.
contracting the market for Extra Innings, MLB would be expanding the
market for its MLB.TV. It’s addition by subtraction.
It should be
noted that MLB only has about 300,000 Extra Innings subscribers who get
the service through cable or Dish Network, compared to about 270,000
already on DirecTV. If MLB can win these customers back, they’ll do so
at a higher margin (one reason Extra Innings costs more than MLB.TV is
that the cable companies had to pay rights, something MLB obviously
doesn’t have to worry about).
To MLB’s credit as a business
organization, they know that fans like myself are *******. I complain
to no end about how MLB treats its customers, but every year I’m buying
the Extra Innings package, going to games at two or three stadiums,
buying merchandise, and renewing my subscription to XM Satellite Radio (Nasdaq: XMSR – News), the exclusive carrier of every MLB game. I’m a baseball fan, what else can I do?"
Food for thought …. its all about the Benjamins …