Selig Exits Baseball With Labor Peace Fueling Television Revenue

Photographer: Jeffrey Ufberg/WireImage

Major League Baseball Commissioner Bud Selig will officially step down on Jan. 24, 2015, when his contract expires, MLB said in a news release. Close

Major League Baseball Commissioner Bud Selig will officially step down on Jan. 24,... Read More

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Photographer: Jeffrey Ufberg/WireImage

Major League Baseball Commissioner Bud Selig will officially step down on Jan. 24, 2015, when his contract expires, MLB said in a news release.

Bud Selig is giving his successor as Major League Baseball commissioner a sport with more than double the revenue of 11 years ago, a two-decade run of labor peace and television contracts in place through 2021.

MLB executives Rob Manfred and Tim Brosnan have been selected as finalists to succeed the retiring Selig, 80, along with Boston Red Sox Chairman Tom Werner, a person familiar with the process said on Aug. 5, adding that baseball owners will vote on the new commissioner next week in Baltimore,

Selig said he will step down when his term ends Jan. 24, 2015, ending a 22-year run that’s the second longest behind the sport’s first commissioner, Kenesaw Mountain Landis.

“The sport is awfully well positioned,” said Leo Hindery, the managing partner of InterMedia Partners LP who was chief executive officer of the Yankees Entertainment & Sports Network from 2001 to 2004. “It’s got regional sports networks in place in all of its markets. It’s done an exceptional job putting together MLB.com in a way that’s financially complementary. The key now is to just run it well.”

Major League Baseball, which has $8 billion in revenue, has television contracts with Fox Entertainment Group Inc. and Turner Sports Inc. that pay a total of about $800 million annually through the 2021 season.

“Television contracts locked up to the tune of about $12.4 billion, that’s a huge positive that the new commissioner is going to be dealing with,” said Wayne McDonnell, the academic chairman of sports management at New York University.

Competition Parity

The sport’s labor contract runs through 2016 and parity on the field has helped heighten interest. This year’s All-Star Game was the most watched since 2010, drawing 12.1 million viewers, and about half the league’s 30 teams are within six games of first place in their divisions.

Last year’s postseason viewership was up 20 percent and leaguewide attendance this season averages about 30,000 a game, on par with what it’s been the past several years.

There are exceptions: The Houston Astros, with the third-worst record in the majors, last week had a midday game that drew a 0.0 television rating on Comcast SportsNet Houston.

“The competition is better than it’s been in a long time, top to bottom,” said Hindery, who was part of a group that unsuccessfully bid for the Los Angeles Dodgers. “There are still a handful of teams that suck, but just a handful. That used to be half the teams, and now it’s about five or six.”

The last decade had all 10 of the most-attended seasons in MLB history and 26 of the league’s 30 teams have made the playoffs in that span.

Advanced Media

Franchise values are up -- the Dodgers in 2012 sold for a record $2.15 billion -- and MLB Advanced Media has helped keep the sport ahead of the curve in revenue generation as both a content rights-holder and technology provider. MLBAM not only operates MLB.TV and official websites for the league and its teams, it runs websites outside baseball, is involved in app development and will power more than 400,000 hours of live online video this year for ESPN, CBS Sports and Turner.

MLBAM, with revenue projected to grow to $800 million this year, also provides wireless access and phone connectivity at ballparks and owns tickets.com, the primary ticketing provider for roughly half the league’s teams.

“If you look at significant top-five moments in the history of sports business, right up there would be baseball quietly clawing back rights from the teams and putting them under that umbrella,” said Andy Dolich, a consultant who’s worked in operations for all four major U.S. professional sports leagues and is now a partner in the executive search firm Odgers Berndtson. “New wasn’t a word that you always attributed to baseball, but wow, they’re the model.”

MLB has had 11 straight years of record revenue, climbing to $8 billion last year from $3.9 billion in 2003.

Future Challenges

The next commissioner still has plenty of challenges, from continuing to grow the sport globally to how technological advances are incorporated for the fans at home and in the ballparks. Baseball also needs to find other ways to re-engage with a younger audience, McDonnell said, and probably will look to collaborate with its players’ union to make one of the most comprehensive drug policies in sports even stricter.

“Those are just a few things of big interest,” said McDonnell, who pegs Manfred as the favorite to succeed Selig.

Manfred, an MLB employee since 1998, now oversees the day-to-day management of the commissioner’s office in New York. The 55-year-old Manfred, who led negotiations with the players’ union that led to new collective bargaining agreements in 2002, 2006 and 2011, last year was promoted to chief operating officer less than a week after Selig said he’d retire.

Commissioner Candidates

Brosnan, 56, is MLB’s executive vice president of business and is responsible for all domestic and international business functions including licensing, sponsorship and broadcasting.

Werner, 64, a former executive producer of television programs such as “The Cosby Show” and “Roseanne,” has been with the Red Sox since 2002 and serves as chairman of Liverpool Football Club of the English Premier League.

Approval from 23 of baseball’s 30 owners is needed to elect a new commissioner.

“The commissioners that are leaving their respective positions want to leave the sport in trustworthy hands -- we saw it in the NFL, we saw it in the NBA,” McDonnell said. “I think we’re going to see that in Major League Baseball. Manfred has put out a lot of significant fires in the game.”

To contact the reporter on this story: Erik Matuszewski in New York at matuszewski@bloomberg.net

To contact the editors responsible for this story: Michael Sillup at msillup@bloomberg.net Rob Gloster

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