Blog Entry 7: Financial Impact of a World Series “sweep”

In class we have been discussing certain sporting events and how their particular outcome affects certain financial goals or projected impacts. Certain sporting events such as the Super Bowl or March Madness tournament can have dramatic impacts on ratings and can affect the amount of revenue that is generated through various mediums like television ratings. One example that I felt was particularly relevant to our discussions was the World Series in baseball that just ended this past Sunday night. The series was between the San Francisco Giants of the National League, and the Detroit Tigers of the American League. The Giants ended up sweeping the Tigers in four straight games, and while this is impressive to some fans, it was also extremely disappointing for television audiences. Many different stakeholder groups were affected including Fox network and both of the teams that played. Generally, the postseason has the potential to be a financial bargain for teams but this is only effective when the series goes for the maximum seven games. In order to truly cash in on their opportunities, the teams need to hope that the series extends longer and doesn’t result in a sweep. Since teams raise their ticket prices during the postseason, they are able to capitalize on the excitement of the playoff atmosphere.  In addition there is also a playoff bonus pool in which 60 % of the ticket revenue goes towards the players, 15 % is given to the commissioner’s office, and the teams receive 25% of the ticket revenue from the first four games of the World Series. For example, this year World Series tickets ranged between $110 to $330 for games 3 and 4 at Comerica Park in Detroit and between $230 to $1,040 for the first 2 games at AT&T Park in San Francisco. In addition to this, Fox recently announced that they extended their deal with Major League Baseball for eight more years through 2021 which would cost the network about $500 million annually (Badenhausen, 2012). Televising the World Series is included in this deal but based on the recent trends regarding ratings it appears quite concerning. The first two 2012 World Series games averaged about a 7.7 rating which is the lowest ever for the first two World Series games. While nothing is finalized yet, it is almost certainly projected that this will result in the lowest rated World Series of all-time. Advertising is another huge aspect that can be positively or negatively affected by the length of the series. The cost for about a thirty second advertising spot on Fox was roughly $425,000 and this equates to about $30 million in advertising revenue (Badenhausen, 2012). The main problem with this is that if there are low audiences than nobody will see the game or the ads and it becomes a waste of money. The low viewing audience is a problem on several levels and has many effects. With that being said, hosting a World Series is also another way that can dramatically boost a city’s economy. Businesses generate more revenue due to all of the fans arriving near the stadium and the city becomes a vibrant place to spend money while exploring restaurants and stores. According to the St. Louis Convention and Visitors Commission, it was estimated that the 2011 World Series brought about $2.6 million in direct spending to each Cardinals home game (Weiderman, 2012). It is an interesting topic considering on the one hand the team wants to play their best baseball and win as quickly as possible but on the other hand if the series is extended than they may generate more revenue. I am sure that most players and coaches would agree that they would prefer to sweep their opponents, but I wonder if any team owners or city officials would think differently. Another possible reason to want the series to be longer is that it gives more time for that city to gain national exposure on a grand scale television audience.

Badenhausen, K. (2012, October 29). World series sweep proves costly for giants, tigers and fox. Retrieved from http://www.forbes.com/sites/kurtbadenhausen/2012/10/29/world-series-sweep-proves-costly-for-giants-tigers-and-fox/

Weiderman, G. (2012). Playoff payoff: World series would bring $6.1 million per game to region. Retrieved from http://www.bizjournals.com/stlouis/news/2012/10/22/world-series-would-bring-61-million.html

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