When we set out to determine which MLB organization was the best, we knew that in order to do it, we had to look through multiple prisms. Sports, as a business, is ultimately about winning, but now, more than ever, it is about running an organization from top to bottom.
Business catchphrases abound in sports business… sustainability… risk aversion… short-range, mid-range, and long-term goals… invest in the future, without risking the present… How can we be better? All, while keeping an eye on the books, to allow flexibility.
As we set out to determine who the Business of Sports Network MLB Organization for 2007 would be, we looked at everything from how efficiently and effectively clubs spent their player payrolls, to their ability to develop prospects. We looked at how clubs are using or developing their ballpark facilities. We examined how clubs approached growing brand, how nimble they have been at working with both strong and weaker revenue streams, whether they have been innovative, and finally, have they been good community partners.
The staff at the Business of Sports Network poured over the data, and filed who they thought was the best organization, followed by a runner-up, and two honorable mentions. In the end, it was a very close race, with a juggernaut, and a mid-market club that has been able to redevelop themselves vying for the winner.Select Read More to see the Business of Sports Network Organization of the Year, runner-up, and honorable mentions
The Business of Sports Network 2007 MLB Organization of the Year: Boston Red Sox.
It would have been one thing to say that the Red Sox winning the World Series in 2004 broke some long standing “curse”, only to fade back into painful bridesmaid, where futility would continue for 80+ more years. It’s quite another to win two World Series championships in four years. The method by which Theo Epstein has assembled talent has not been a case of doing no more than throwing money at the free agency pool. Rather, the Red Sox have picked key free agent pieces and augmented with prospects such as Jacoby Ellsbury and Dustin Pedroia, while seeing the emergence of players such as Jonathan Papelbon. Not content with that, they have the top pitching prospect for the coming season in RHP Clay Buchholz.
Beyond the field of play, Janet Marie Smith and the Red Sox have been working to redevelop historic Fenway Park in an effort to maximize the facility to the fullest. For 2008, the club has added 800 new seats, along with more standing room only areas, which will push the already straining Fenway to close to 37,000 seats.
New stairways, elevators and the addition of a restaurant that will be open year-round named the "Bleacher Bar and Grill" with views inside the park will adorn centerfield.
Supply and demand, along with the small seating capacity, creates the lone negative we could see with the organization as it related to the cost of attending a game. Based on the Team Marketing Report’s Fan Cost Index, the Red Sox charge vastly more than their nearest competitor, the Yankees ($222.53), for what a family of four spends for a day at Fenway, at $313.83 in 2007*
But, as mentioned, this is a matter of supply and demand. Fans seem undeterred in their zest to land Red Sox tickets before one game of the 2008 season has been played. By the end of January, the Red Sox sold nearly 2.4 million tickets for the upcoming season, up 2.9 percent increase through the same date in 2007.
Even with the increases in baseball related revenues, it is the creation and expansion of Fenway Sports Group which has proved that the Red Sox are doing more to expand the view of what a large revenue making club can do. FSG has pushed forward into other business endeavors such as NASCAR, Pro Beach Volleyball, while this year purchasing the Salem Avalanche, a minor league baseball franchise that is part of the Class-A Advanced Carolina League. The continued aggressive acquisitions by FSG show that reinvestment in new avenues creates business opportunities, while avoiding large outlays into MLB’s revenue-sharing system.
The Red Sox brand, already the second most recognizable brand in MLB behind the Yankees, has continued to push outward. Whether it is the March exhibition game with the Dodgers at the LA Coliseum, their season opener with the Athletics in Japan, or their trips to China to explore business relationships, John Henry, Larry Lucchino, and Tom Werner are redefining what MLB can, or could do given the revenues and opportunities, while staffing the organization with a solid player development program, and a savvy general manager in Theo Epstein that has already set the table for a competitive team for 2008.
Runner-Up: The Cleveland Indians
The Indians were barely beat out by the Red Sox as our organization of the year. Mark Shapiro was the most effective and efficient in spending player payroll (spending $1,292,136 per Marginal Win) in all of the American League last year (2nd in MLB behind only the Rockies), and rightfully garnered The Sporting News MLB Executive of Year of Award. The Indians won the AL Central, beat the much vaunted Yankees 3-1 in Division play, and pushed the Red Sox to a Game 7 in the AL Championship Series before their impressive playoff run ended.
While the Red Sox raised prices by 9 percent last season, the Indians lowered the average price for a ticket by 1 percent in 2007. Their $ 21.32 average ticket price** was below the league average ($22.69).
While purists will scoff, and many fans will never remember the facility as any other name, the Indians sold the naming rights of Jacobs Field to Progressive Insurance this past off-season, which will rename it Progressive Field. The deal will be worth $3.6 million annually over 16 years. The total value over the life of the agreement comes to approx. $57.6 million; a valuable revenue stream should the team wish to compete.
Riding the wave that was 2007, the Indians raised prices for the upcoming season, while introducing variable pricing to 38 percent of their home games including Opening Day, the Red Sox, NY Yankees and weekends beginning June 13.
The increased revenue streams will be needed, if the Indians wish to continue what was an extremely successful 2007.
The concern for the Indians is in keeping this level of play throughout the coming season. Based on Baseball Prospectus’ Top 100 Prospects by Kevin Goldstein, the Indians only see two players in the top 100: RHP Adam Miller at #52, and 3B Wes Hodges at #78. With C.C. Sabathia foregoing contract talks this year, it will remain to be seen if the Indians will be able to re-sign Sabathia, and carry the momentum forged in 2007 throughout 2008. Still, with an already talented, and for the most part, youthful core, the Indians should be in a position to remain competitive in the regular season if Shapiro continues to work his magic with the new revenues being pulled in by the naming rights deal and increases in ticket prices.
Milwaukee Brewers: Mark Attanasio continues to rebuild relations with the community after acquiring the franchise from the Seligs. General manager Doug Melvin and field manager Ned Yost continue to make the team competitive. The Brewers had the NL Central wrapped up for most of last season before waning near the end. The Brewers were the second most efficient and effective at spending player payroll in the National League last season behind the Rockies, posting $1,808,515 per Marginal Win while going 83-79. The Brewers will have 150 games broadcast this season, the most in team history. FSN Wisconsin will air 135, while Independent Station WMLW will show 15. On the community building aspect. The Brewers sold approx. 9,000 nine-game ticket packages by the beginning of February, which included a free home-opener ticket. The Brewers have pulled that offer off the table due to incredible demand, but instead, offered a free ticket to any other of the club’s regular season home games.
Los Angeles Angels: Arte Moreno and Co. won the AL West last year, but fell short in the playoffs. What did Moreno do in the off-season? Give new GM Tony Reagins the ability to snag the most coveted centerfielder in this year’s free agent pool, Torii Hunter. Putting Hunter in the lineup next to Vladimir Guerrero gives Guerrero and creates a formidable line-up to possibly repeat as AL West champions.
Los Angeles Dodgers: The on-the-field moves have been minimal, but off the field, the Dodgers have been going at it hand over fist. First, they landed Joe Torre as their dugout manager, and since then have been engaged in a massive PR push to celebrate the 50th anniversary of the Dodgers arriving in Los Angeles. Whether it was a float in the Rose Parade, or selling out all 90,505 tickets for their exhibition game on March 29th against the Red Sox at the LA Colisium, Frank and Jamie McCourt have been creative in leveraging the 50th anniversary milestone.
* Team Marketing Report’s Fan Cost Index™ comprises the prices of two (2) adult average-price tickets, two (2) child average-price tickets, two (2) small draft beers, four (4) small soft drinks, four (4) regular-size hot dogs, parking for one (1) car, two (2) game programs and two (2) least expensive, adult-size adjustable caps. Costs were determined by telephone calls with representatives of the teams, venues and concessionaires. Identical questions were asked in all interviews. Superscript numbers next to Beer and Soft Drink prices denote smallest available size in ounces.
** Team Marketing Report’s average ticket price represents a weighted average of season ticket prices for general seating categories, determined by factoring the tickets in each price range as a percentage of the total number of seats in each venue. Premium seating (tickets that come with at least one added amenity) are not included in the survey to calculate average ticket price. Luxury suites are also excluded from the survey. Season ticket pricing is used for any team that offers some or all tickets at lower prices for customers who buy season seats.
Prospects based upon Baseball Prospectus’ Top 100 Prospects by Kevin Goldstein
Marginal Wins/Marginal Payroll data derived by Maury Brown: By the Numbers: 2007 Player Payroll for the 30 MLB Clubs
Ticket information derived from various sources.
Television information derived from various sources.