Written by: Dan Gladman

Follow: @dgontheroad

World Series a breakthrough for teams’ local business

It feels like just yesterday when Joe Carter hit a home run in the bottom of the 9th inning to give the Toronto Blue Jays their second straight World Series championship, doesn’t it?

Well, maybe not, but the 30-year anniversary of Canada’s most dramatic sports moment sheds light on the monumental growth of the sports industry in Canada, North America and the world.

But matchups in baseball’s championship event drive TV ratings. Sports Business Journal reported that Game 1 between the Arizona Diamondbacks and Texas Rangers “had the lowest viewership on record for a Fall Classic opener.”

Despite a World Series clash that might only appeal predominantly to local fan bases, the value of the event itself continues to boast an impressive yield from advertisers.

According to Wallethub.com the total ad revenue generated by the 2021 World Series was $235 million USD. The Super Bowl that same year generated $481 million, but once you get past that enormous disparity, it’s apparent that the business of baseball and its grand event is creating profit and opportunity for Major League Baseball’s teams.

Let’s start with the teams themselves. According to Forbes’ 2022 rankings, the Texas Rangers are valued at $2.25 billion USD with $366 million revenue annually. That ranks them 12th overall in Major League Baseball. Their opponent, the Arizona Diamondback rank 23rd of the 30 teams, with a $1.38 billion dollar valuation with $276 million revenue.

On the surface, a matchup of the 12th and 23rd most valuable teams in baseball might not seem like a sexy matchup, certainly not for Fox, which is broadcasting the World Series, and is completing year six of a 10-year broadcast deal worth $5.1B.

But while TV ratings for this matchup have unsurprisingly dipped, a different tale is emerging about America’s national pastime. Multiple teams have a chance at winning, and not necessarily the teams with the highest payroll or the most revenue. While this might not produce huge national TV ratings, it speaks volumes for teams’ in-house businesses: ticket sales, merchandise sales and food and beverage.

The New York Yankees are the highest valued team at $7.1 billion, but haven’t won or played in the World Series since 2009. That was their only World Series appearance in the past 23 years.

The Blue Jays rank 14th in MLB, with a value of $2.1 billion and revenue of $294 million in 2022.

Fifteen teams have won the World Series since the turn of the millennium and that may be key to baseball’s business. Dynasties and big city matchups can and usually provide bigger TV audiences, but most World Series advertisements are sold beforehand.

Each MLB city’s belief that its team can make it to the World Series stimulates growth in the local markets. The Diamondbacks attendance increased to 1,961,182 in 2023, a jump of 356,000 bums in seats in just one year. This comes in an era where attendance has dropped overall, but revenue has grown.

According to globalsportmatters.com, “teams haven’t reacted to consistently low attendance numbers by attempting to woo back those lost fans at the gates. Instead, they’re lowering capacity at newly constructed stadiums and renovating existing ballparks. Through this approach, many teams have been able to balance out and even increase gate revenue by investing in additional premium seating spaces throughout their ballparks.

“Experts believe that these premium spaces will work to boost MLB’s live-game appeal and target a demographic that baseball has long been looking to recapture: young people.”

So even where we are seeing drops in attendance, gate receipts are increasing, and the in-game experience is becoming more luxurious. Importantly, non-traditionally winning teams are competing more and more for the World Series, thanks in part to an expanded Wild Card system that allows more teams to qualify for the post season. In baseball, perhaps more than in any other sport, the team that gets hot at the right time, wins.

Which brings us back to this World Series, the 119th edition of baseball’s championship round. Just two seasons ago, each team lost over 100 games and finished last in their divisions. Now they are competing for glory. TV ratings for playoff games this year averaged nearly 9 million American viewers. The Philadelphia Phillies might have been the preferred National League World Series representative from a marketer’s perspective, but now with Arizona players like Corbin Carroll and Ketel Marte becoming household names, MLB has a new roster of stars to market, locally and nationally. More importantly, it can sell the hope that literally any team can compete to be World Series champions. This bodes well for emerging fans in markets that aren’t New York and Los Angeles. The younger demographic can support the growth of Major League Baseball in smaller numbers in return for a more luxurious experience. It takes baseball back to its beginning – a live and local event.

Over the next 30 years, many different teams will compete in the World Series. This might not reflect growth in traditional national TV ratings, but that business model is set to change regardless. But by going back to its start, and serving the fan in the stadium, baseball’s local appeal ultimately will be good for business.