This week in “Last Week in BizBall”, the White Sox are the most recent franchise to adopt “dynamic pricing”, the ongoing debate over “live in-market” streaming, plus tidbits.
WHITE SOX LATEST CLUB TO ROLL OUT DYNAMIC PRICING
LWIB the Chicago White Sox announced (HT Joel Hammond) that they are the most recent MLB franchise to adopt the practice of “dynamic pricing”. Tickets in certain sections for the last homestand of the White Sox season “..will move upward and downward based on market demand and a variety of other factors.” The White Sox join the Giants (who have been the most aggressive practitioner of dynamic/variable pricing in MLB) and Astros as the three clubs in MLB utilizing this method of pricing ticket inventory. In July, LWIB brought attention to the announcement that Major League Baseball Advanced Media (MLBAM) is partnering with ticketing software provider Qcue to offer dynamic pricing to all franchises. To date, dynamic pricing of ticketing inventory has been mostly utilized in less desirable sections of the ballparks. Variable pricing (tickets priced according to demand) is not being practiced in the truest sense. In order to protect price integrity (and in particular season ticket holders), an artificial price floor is in effect. True dynamic pricing is being practiced in the secondary market, where according to Elizabeth Campbell, Cubs tickets were available for as little as $1.99 ea. earlier this month.
LIVE IN-MARKET STREAMING
In March, LWIB looked at the issue of “live in-market” streaming of games over the internet and how, to date, it has been a bust for MLB. However, “live, out of market” streaming of games has been a huge success for Major League Baseball Advanced Media (MLBAM). LWIB, the Sports Video Group blog provided some recent comments from industry insiders on the subject.
“There is this notion that putting [live video] on a phone will cannibalize TV, but what we should be much more worried about is that people are not going to watch at all,” said Joe Inzerillo, SVP of multimedia and distribution for MLB Advanced Media (MLBAM). “Ultimately, consumers are going to do what they want to do. If we don’t give them flexibility in watching our [content], they’re going to leave their house and do something else altogether.”
While streaming live out-of-market sports is off and running, in-market streaming appears to still be in its infancy. Comcast attempted in-market streaming for Comcast customers for the Chicago Bulls (free) and Philadelphia 76ers (paid) last season and failed to attract even 100 subscribers for each.
In the final months of the 2009 MLB season, YES Network partnered with MLBAM to begin live in-market streaming of Yankees games to Cablevision, Verizon FiOS, and Blue Ridge Communications customers, attracting 6,000 subscribers. Time Warner Cable joined the party for the 2010 season, and YES seems confident that the service will continue to grow.
“The numbers haven’t been huge, but I certainly wouldn’t say that it has not been a success,” says Michael Spirito, VP of business development and digital media for YES Network. “If you look at MLBAM in their first year doing the rest of the country, it was roughly the same as what we did with the Yankees in our first season. Granted, we are six to seven years further along in terms of broadband penetration, but the business model itself is still evolving.”
John Ourand reported Monday that the NHL might be the first of the “Big 4” to break the “live in-market” streaming logjam in any significant way.
The NHL believes it has a game-changer in convincing regional sports networks to embrace in-market streaming of live games — by extending the rights to mobile devices.
NHL Chief Operating Officer John Collins said the league is close to an agreement that would have many of its 24 U.S.-based teams launch in-market streaming of live games on both broadband and wireless platforms, marking a potential sea-change in the way fans can view local game telecasts.
A deal with either RSN heavyweight instantly would make the NHL’s in-market streaming efforts much broader than other leagues’ offerings. MLB, for example, has only two teams operating an in-market service; the NBA has just one team with concrete plans to stream games in its coming season.
SELECT READ MORE TO SEE THIS WEEK'S "TIDBITS"
- LWIB, the Biz of Baseball brought attention to the recent report that Yankees Global Enterprises is carrying almost $2 billion in debt. Evidently this is no cause for alarm, given YGE’s healthy state. The report does reinforce what has been speculated for years, that the Yankees play a relatively minor role in YGE while it is the RSN YES Network that is the key entity. Benjamin Kabak reacted to the report with some astute observations concerning how the structure of YGE might be a contentious issue within MLB in the near future.
What makes this story so interesting isn’t necessarily the high debt total but rather the overall picture we get of the Yankees. This is a company that is financially healthy enough to be carrying $2 billion worth of debt, and the on-field product — the New York Yankees themselves — are responsible for just $100 million. By shifting debt to the other YEG holdings, as Kaplan notes, the Yankees are not subject to MLB’s debt regulations.
It’s worth also keeping an eye on how the team comes under attack when the collective bargaining negotiations begin next year. The original luxury tax/revenue sharing schemes were instituted to reign in the Yanks’ spending, but the team has kept on spending while making use of smart accounting and corporate practices that allow them to shift the revenue and debt to other affiliates. If the owners again go after the Yankees’ millions, I expect the Steinbrenner family to fight hard against it.
- LWIB, Ballpark Digest provided an update on the dispute between Lackawanna County and SWB Yankees (the New York Yankees/Mandalay Baseball partnership which manages the Triple A Scranton/Wilkes-Barre franchise and PNC Field). The baseball stadium needs extensive repairs, the franchise could be sold….quite a mess, read for yourselves.
- Jason Dachman reported for the Sports Video Group blog that last week’s Phillies vs. Braves series set back to back to back ratings records for Phillies games on CSN Philadelphia. In addition, “This season’s 8.2 average rating is 15% higher than last year’s average of 7.14, which was the network’s highest-rated Phillies season in its 13-year history.”
- LWIB, IndependentBaseball.net brought attention to the recent news that one of the independent minor leagues has gone public. The Texas based United League Baseball (aka The United League) is now part of Millennia Inc. Evidently there are plans to sell expansion franchises. If you are interested in buying one, you might want to start by the reading the 8-K filing.
Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.
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