Critical Analysis Showing the State of Play for Major League Baseball - Case Study Example

Running Header: CEO Role-Play Scenario: A Critical Analysis Showing the ‘State of Play’ for Major League Baseball Student’s Name Course Title Lecturer Date Introduction Sport management is a unique discipline which differs from normal for-profit organization and non-profit organization management. It falls in commercialized but non-profit division that include other arts such as music, painting and curving among others. This makes is a bit complex to manage as marketing focuses on increasing the number of fans to attract more sponsors and to sell more tickets. This subjects sports management to a number of unique challenges that sports managers need to overcome (Smith & Sterwart, 2010, p. 2). This paper focuses on evaluating the management of Major League baseball organization, an American organization that comprises of 30 clubs. The paper reviews the organization history, strategic objectives, special features, organization lifecycle, and other contextual factors. The History of Baseball and Major Baseball League Baseball originated in America and it has been played all through centuries. Although it is hard to track the exact origins of baseball modern game, the game linage can be generally traced back to the integration of rounders and cricket games that were introduced to America by European settlers. The modern baseball game is believed to have been created or invented by Civil War Union soldier by the name Abner Doubleday, though there is not proof for this allegation. The formal baseball rules can be traced back to 1838, with the first formal game under these rules being played in 1846. Since then, the game has been growing and developing creating many other rules that defines the modern baseball game. The initial reference baseball game was played in 1856. Baseball experienced considerable growth after Civil War where middle-class merchants started dominating in the game. The initial baseball team by the name ‘all-professional’ was formed in 1869. The players in the team were generously paid for their participation in the game. This contributed greatly to the development of Baseball in America. More teams were formed, and the game management became the key thing. The players also started forming their own association; National Association of Professional Ball Players to safeguard their rights (Thepeoplehistory, 2004). In 1876 National League was formed by the combination of the best players from different teams as a result of William A. Hulbert’s effort. This was after the National Association inability to handle some of the challenges it was facing then. The league was dominated by dictatorial form of leadership, where players were fired or even blacklisted for any salary related complains. The modern baseball game was experienced after the death of Hulbert. This was ushered by Spalding who took over the National League management. He insisted that players should be compensated as entertainers. He also generated Spalding sporting goods where sporting gloves, uniforms, caps, and balls were manufactured. National League dominated the baseball field keeping the game as a monopoly. Although they were two other leagues that included Player’s League and American association, they were completely unable to challenge the National League. As a result Byron Johnson developed the American League in 1900 by selecting unemployed ballplayers from four different teams. He raided the National League list as one strategy to hit back on the club. More and more talented players moved to the American League and the National League managers were forced to give in. A national agreement was created in 1903 where a National Baseball Commission was developed. The commission was to govern the baseball game. The Commission was comprised of a permanent chairman and the president from every league. This resulted to the development of the World Series and the birth of Major Leagues. The Major Baseball League was established as a combination of the National and the American Leagues. The rest were integrated to form Minor Leagues (Zimbalist, 2003). The new commission under the Major League Agreement was extensively empowered to carry out investigation either upon own initiative or based on a complaint on a practice, transaction, or act that is suspected, alleged, or charged to be unfavorable to the national baseball game best interest, and to take or determine any punitive, preventive, or remedial action that they consider suitable. The agreement provided great power to the decision of commissioners such that, the decision could not be challenged in the court of law by the player or the club. This agreement was later modified in 1944 limiting the commissioners’ power by providing clubs with the right to contest the decision of commissioners in the court of law (Kutcher, 2014, p.235). More changes took place from 1944 to 1951 where race barrier were broken in the Major League and a pension plan initiated for all players in the League. The League was still growing based on the number of involved clubs (Breckenridge, 2009, p. 303). In 1968, the League contained 20 clubs but by end of 1983, the league had attracted 6 more clubs. The league also had expanded its number of audience in 1968, the league had about 23 million audiences but by 1983 they had increased to 45 million. By 1998, the league had managed to attain 30 clubs as members. Baseball also experienced a number of changes that included introduction of interleague play, realignment, National and American Leagues three division formats, revenue sharing among clubs, and consolidation of the National and American Leagues administrative functions into the office of commissioner. Under 9th commissioner leadership, there was opening of a number of new stadiums. The concept of revenue sharing was also expanded. The Major League agreement was recently changed; 2011, demanding all players must take part in drug test prior to taking part in any game. This has resulted to the birth of the Joint Drug Agreement. The Major League organization has continuously experienced positive changes since its creation and it is currently regarded as the best professional sports leagues in the country (MLB.com, 2016). Major League Baseball Strategic Objectives The Organization Objectives, Mission and Vision The MLM mission is create diverse business partners that promote profitability and efficiency for the MLB as well as its clubs, while expanding the ability of baseball to contribute to the wellbeing, strength and economic growth of diverse communities. This is to be attained through proactive leadership, accountability, process and structure which result to long-term success, devotion to sound business practices and giving priority to partnerships. The MLB also focuses on increasing interest and participation in baseball among underserved youths, promote academic achievement and participation, teach teamwork value, promote greater minorities inclusion into the game mainstream and increase talented athletes prepared to join minor and college leagues (MLB Community, 2016). The organization main objective is to enhance growth of baseball in the country and to integrate all in its development. It focuses on enhancing the future continuation of baseball by encouraging the involvement of young players through academies and their reviving baseball in inner cities (RBI) programs. The organization’s other major objective is to change the economic life of Americans including the minorities through baseball sponsored business partnerships (MLB.com, 2016). Strategic Objectives Programs The MLB organization has employed various strategies to accomplish its mission and visions. One of the main strategies is the use of programs. The RBI and diverse business partners (DPB) are two programs that the organization has employed to enhance the growth of baseball in the country, and the enhancement of economic life of baseball players and its partners. The RBI programs include boys aged between 13-18 years from 200 cities in the globe. These boys are engaged in local leagues at division levels and annual tournament. The boys are divided into three major groups that include seniors ranging from 17 to 18 years, juniors ranging from 15 to 16 years and freshman ranging from 11 to 14 years. The program is designated with over $30 million that is contributed by the 30 clubs of the organization. The program is also supported by the MLB supporters that include Head & Shoulders, Louisville Slugger, Outdoor Cap, Sr. Foundation, Cal Ripken, and Majestic among others (MLB Community, 2016). The DBP program focuses more on the inclusion of minority in the baseball community by demonstrating the importance of diversity. It focuses on creating partnership with women and minority in business by increasing the women and minorities’ opportunities to take part in MLB procurement activities. The program acts as the main diversity supplier program in sports. It has developed chances for thousands women- and minority-owned business across different industries (Hagen, 2015). Sport Financing Strategies MLB is one of the sports organizations with the best revenue in America. The organization sources its revenue from different sources that include signing contracts with both local and national televisions that include Fox, ESPN, SportsNet LA and Turner Sports. The organization has managed this due to high live watch of its matches, enhancing a great chance for TV advertisements. The organization also generates revenue by selling its tickets, either for individual game or seasonal game tickets. This accounts for about one-third of its total revenue. The game popularity in the company and the strong brand has highly enhanced its ability to attract high revenues through ticket selling. Concession is another form of generating revenue used by the organization. The organization takes a point of selling drinks and food during their games. Sponsorships and licensing agreements is another form of generating revenue where the organization has contracts with some big sport companies in the country, for instance New Era Cap Company INC., and Nike Inv., to officially offer licensed apparel to both fans and players. The organization has also managed to acquire sponsorship from various great companies in America. They include Ford Motor Co., PepsiCo Inc., Mastercard Inc., and Bank of America Corp. among others (Fontinelle, 2015). MLB financing strategies can be considered to be very efficient since they allow the organization to earn enough to pay all its players, to sponsor its projects and programs, and to maintain all its operations without depending on loans. In 2014, these strategies enabled the organization to collect revenue of $9 billion, which was said to be about a billion higher than 2013 revenue. This demonstrates a high level of efficiency in the current organization’s financing strategies. The organization also has a target of raising its annual revenue to $15 billion in the next few years and to $25 billion by 2027. This demonstrates the organization’s dependability of the current employed financing strategies (Fisher, 2015, p.1). Brand Promotion Strategies MLB is a strong brand which has been known since 1903. The organization has highly managed to maintain its brand strength through the employment of new policy and involvement in community development. The introduction of Joint Drug Agreement and effective revenue sharing have highly facilitated in the growth of the organization brand, attracting more partners and sponsors. In addition, the engagement in the RBI and DPB programs has highly increased the popularity of MLB, earning it a higher level of popularity and support from the public. According to Loughney (2014, p.711), MLB has also adopted eco-friendly policies in all its franchises. This demonstrates its concern for environment and green production. This is another aspect that has highly added to the MLB brand strength. It involvement in the community development and well-being is evident to all Americans, especially the youths, women and minorities. The MLB appears to recognize market benefit and moral imperative in publicized sustainable efforts. This has highly increased its profitability, as environmentally based publicity products and campaigns continue to experience success. The efficiency of the brand promotion strategies can highly be demonstrated by constant increase of the organization’s funs particularly in their leagues from one year to another. The number of audience for the organization leagues has increased from 10000 in 1950s to over 30000 in 2012. This exponential growth demonstrates how the brand has been selling in the market (Lindholm, 2014). In addition, the success of brand promotion can be demonstrated by the constant increase by the amount of revenue contributed by the sponsors who want to be associated by this brand. The leagues sponsoring revenue has increased form $585 million in 2011, to $626 million in 2012, then to $663 in 2013, then to $695 million in 2014 and finally to $778 million in 2015. This is a clear demonstration of growth in the brand loyalty and its preference by more sponsors year after year (Pro Sports, 2015). Marketing Strategies MLB has employed various marketing strategies to attract more audiences, sponsors and partners in the organization. Some of these strategies include online marketing where the organization updates its site with recent leagues and tournaments information and also by allowing selling of their tickets online. This makes it easy for all its fans to obtain relevant information regarding any MLB game, venue, cost, clubs involved, and time among others (Fidelman, 2014). The MLB TV is another form of advertisement that the organization has adapted. The TV airs all about MLB activities, changes, and programs. It focuses on live games broadcasting, and viewing of multiple games. The TV broadcasting can be watched at home or even away from home (PWC, 2012). The site also allows for the sale of MLB sports goods online with free shipment. The e-commerce system enhances viewing of the available products and their description. This makes it easy for the organization to create customer awareness of new products and increase its market shares by selling in a wide range of areas including internationally (Close et al., 2012, p. 425). The organization site is directly connected to different social media that include twitter, Google plus, and Facebook. This gives the organization the opportunity to share different information with its fans and to receive feedback through these platforms (MLB.com, 2016). Social marketing is thus, highly embraced and even those fans that do not get a chance to visit the site can easily get information on various games. The organization targets young and mature males aged from 18 to 49 years. Thus, internet marketing acts as the best form of marketing for this generation (McEneany, 2012). The success of the organization marketing strategies can be demonstrated by constant increase in the organization revenues years after years as demonstrated above. It can also be demonstrated by constant increase in the number of audience and sponsors. The organization is also managing more viewers over the television year after year. It is attracting more local and international viewers every year. According Karp (2015), all national MBL TV partners experienced increase in MBL leagues viewers on their respective channels. Fox experienced 16 percent increase in the number of viewers in 2015 from what it recorded in 2014. All these demonstrate effectiveness of the organization marketing strategies. Management of Expenses and Sharing of Revenue The teams of MLB take part in revenue sharing, which is a system of income distribution from highly lucrative to lowly lucrative teams in a trial to enhance competitive balance. The notion is to keep poor teams on an even level of competition with highly wealthy teams in their aptitude to attract most expensive and the best players. Every team, based on collective bargain of 2012-2016 agreement, contributes 34 percent of its local revenue to the organization pool, which is later divided among each team equally. The clubs that earn high revenues pay higher than what they get back while clubs that earn less pay less than they receive back. This implies that big teams such as Yankees, Red Sox, and Dodgers subsidize small teams such as Oakland, and Kansas City (Fontinelle, 2015). The organization expenses and revenue sharing strategies efficiency can be demonstrated by the organization ability to maintain all its strong players from all clubs despite of their financial ability. It can also be demonstrated by the organization’s ability to fund different programs that are meant to enhance to promote the community without recording any financial gain. The organization is able to fund all its internal and external activities without any financial strains and all its players are satisfied by their salaries and other facilities provided in the organization. Overview of the Baseball Special Features based on Major League Baseball Leagues The MLB performs different leagues on monthly basis. Each league contains five clubs that compete within themselves before the winner meets the winner in the other two leagues. Each game is involves three leagues which are divided based on regions. Leagues are normally based on the 30 clubs in the organization and thus, to complete a whole league two categories are made each with fifteen clubs (MLB.com, 2016). These categories include American Leagues and National Leagues. Each category contains three leagues and thus there are a total of 6 leagues in a year. The organization also organizes leagues for young people who are involved in RBI program. These leagues are played locally where the teams are divided into five divisions (Nesbit & King-Adzima, 2011, p. 494). Tournaments or Events The organization organizes various tournaments mostly for minors in RBI programs. These tournaments are divided based on regions which include east, west, south, northeast, southeast, southwest, central region, mid-Atlantic region, northern NJ section and Caribbean region. Other events include worldseries for juniors, seniors and softball for girls, all in RBI program (MLB.com, 2016). Teams The organization is made up of 30 clubs, where 29 of them are based in the United States, while one is based on Canada. The teams are divided based on if they were initially under American or National league prior to teaming up into Major League. They are then subdivided based on regions which include East, west and central in each case (MlB.com, 2016). Academies All the 30 MLB clubs contain academies in Dominica Republic, which is identified to have great baseball talents. These academies include coaches and players’ dormitories, training facilities, weightroom, playing fields, clubhouses, recreational areas and classrooms for participating players. The academies have been in position since early 1980s (Alicia, 2015). The organization also has an academy in Australia Analysis of the Contextual Factors and Potential Strategic Alliances of Major League Baseball Leadership and Management Strategies Each MLB team has its own complex and large management structure. This is due to the complexity of running MLB together with its minor league teams. The management can normally be divided into the coaching staff, and the front office. Coaching staff are highly visible management team, which is highly involved in decision making in the field; during the game. The coaching manager contains the general responsibility of managing the team. He is responsible of choosing players based on different games and when to make substitution and with whom (MLB.com, 2016). The manager is helped by first base coach, third base coach, hitting coach, pitching coach and bench coach. The front office contains the general manager who is responsible of handling extensive player-personnel problems. The GM focuses on the longer picture of the team, rather than daily activities. However, the two managers must work in collaboration to enhance the success of the team. In addition, GM work in collaboration of minor league teams, high school and college teams to be able to pick more talented players who can ensure the continuity of the club. The organization is then managed by commissioners who include the GM of the clubs, and a selected commissioner, who is the overall boss of the organization. The selected commissioner plays a great role in managing the organization, setting new changes and enhancing the organization development (Howbaseballworks, 2016). Sponsorship MLB works with a wide range of sponsors who facilitate in the organization revenue. The sponsorship process is highly facilitated by advanced media, which is MLB interactive arm that manage and oversee mobile and online sponsorship, social media content, merchandise, editorial, and ticketing for the MLB site and the individual sites for the 30 involved clubs (MLB.com, 2016; Santomier, 2008). The current major MLB sponsors include FritoLay, Arm & Hammer, Chevrolet, Mastercard, Falken Tires, Esurance, Bank of America, Gillette, The HartFord, Draft Kings, EMC2 Aquafina, Nike, OxiClean, Scotts, Pepsi, T-Mobile, Star.wood Hotels and Resorts, and Siriusxm among others (MLB.com, 2016). It therefore depends highly on the sponsorship as its main source of revenue. The sponsorship in this case involves endorsement of the company’s products during the live games, in the games or in some of their products (Katzmark, 2015). Diversity and Inclusion The organization has highly embraced diversity and inclusion in its system. This started after the death of the first organization commissioner where the racial barriers were broken. Since then, the organization has been fighting to enhance diversity management and inclusion of minority communities in baseball (Crockett, 2010). Inclusion has also been enhanced by the implementation of the DBP program that focuses on promoting the life of women and minorities in the society. The organization has also tried to include women in the game by the development of softball, which is purposed for women only. The RBI program also focuses on all youths including those from minority communities in the United States. The organization has already recorded an increase in the number of African-American players in their clubs and more minority groups are anticipated to join the organization in the future (Hugen, 2015). Education and Training Players’ education and training normally takes place at clubs level. The organization clubs contain coaches who are involved in training players on daily bases, preparing them for tournaments and leagues (MLB.com, 2016). Beside this, the organization has a number of academies that focuses on young players interested in playing baseball in the future. Most of these academies are managed by the clubs found in the organization. Training is also offered to young boys between 12 and 19 years in 200 cities, through the RBI program. This focuses on nurturing young talents in baseball (MLB Community, 2016). Next steps in the Major League Baseball lifecycle MLB Product Life Cycle The MLB has a slow lifecycle and thus its product remains in one stage of lifecycle for quite a long time (Lussier & Kimball, p. 112). The baseball product was in its early introduction stage between 1860s and 1900. The baseball game started experiencing exponential growth in 1900s when the MLB was formed and set national rules, which have been improved for quite a long time. Thus, the years from 1900 can be regarded as the growth stage. Although the game seems to have attains its maturity, there are still a number of changes that show that the game is still evolving. This includes the introduction of new laws and agreements recently on drug use, and new programs focusing on inclusion of minority. It can therefore be said to be in its growing stage, but approaching maturity. The organization is also tending to maturity based on the number of audience. Although the organization demonstrated a great increase of audience in 1900s, the number seems to stabilize (MLB.com, 2016). The Anticipated Changes in the Major League Baseball Lifecycle MLB may experience a number of changes in the recent years. This will emanate from its current efforts of inclusion in the organization. It anticipated that more individuals from minority communities will join the MLB clubs. Women based softball may also increase in popularity in the future as more and more women get attracted to the game (Mlb.mlb, 2016). The use of internet and website may increase the popularity of MLB tournaments and leagues internationally and thus, attracting more audience. Organization Key Trends and Factors Related to Major League Baseball environment Change in Management Strategies The baseball management is highly changing with change of technology. Coaches are becoming more reliant on big data technology to gather information about player’s skills, and to make decision regarding the best player. This is being done by the use of surveillance video, which captures the movement of the ball and the player in the field (Pedersen & Thibault, n.d.). Deeper Fans Engagement The MLB fans are young people that depend highly on the new technology. In this regard, they consider using their technology for all their activities including watching games at anytime and anywhere the game is taking place (Ballouli & Hutchinson, 2010, p. 398). In this regard, MLB have partnered with YouTube to host recaps and highlights of the most recent games for fans that depend heavily on the new technology. Social media has as well contributed to direct connection between athletes and fans, increasing athletes’ popularity and the popularity of their games (Watanabe & Yan, 2015, p. 621). Employment of Technology for Integration and Sponsorship Just like all other things, sponsorship is also changing to use of social currency rather than the tradition form of sponsorship of attaching company’s logo in the stadium (Mooney, 2014). Fans are turning to be more active following or liking brands in social media as long as they are associated with organizations or clubs of their choice. Thus, marketing data management has turned to be the key thing to the MLB in sponsorship enhancement (Agrawal, 2015). Home Team Globalization MLB is growing in popularity to international level with the current use of mobile and social media technology. Tracking events occurrence through social media and mobile technology is making teams and leagues to accelerate as global programs, and also in their expansion to the international markets. Access of the MLB products online is also increasing its product’s market share at global level (Mooney, 2014). Factors to Consider in New Changes Industry MLB is found in the sport industry which is highly changing with the change of technology. The industry is changing in its forms of management and marketing as more and more fans prefer new technology to access news, and other forms of sports related communications. Sponsorship is being handled online, as well as purchase of the sports products including tickets (Thibault, 2009, p.12). Competitors and Competition Strategies There has been a stiff competition in the sport industry since 1990 as sports become more of a business than a talent or fun based involvement. Currently MLB is experiencing stiff completion from other local and international baseball organizations and also from other sports particularly basketball and soccer. Each sport focuses on attracting more and more sponsors, and audience. Thus, the organization has to remain vigilant to maintain or increase its competitive advantage (Hoovers, 2016). Social, Political, or Environmental Expectations MLB is basically based in America where the political stability is quite high. It is also an American invested game and thus, it trade in a conducive environment where most individual in the population consider it a local game. Its extensive growth gives it an advantage over other games in the country. It early invention provided it with a stronger foundation and thus, its operation are highly favored by the environment and social aspects. Stakeholder Pressure The MLB is highly strategized to enhance its functionality. Its commissioners are selected based on their qualification and ability to govern the organization. In addition, every club is governed independently and only involved partially in organization issues through their top leaders. The organization is also governed based on the agreement where all parties are involved in their formation. In this regard, the organization experiences little or no pressure from the stakeholders. Internal and External Dynamics The organization operations are highly influenced by external dynamics such as the change of technology which has highly impacted the entire sports industry (Smith, 2012, p. 59). Other external dynamics include growth in competition especially from international soccer clubs and leagues from Europe (82games, n.d.). Conclusion MLB is an American baseball organization that was established in 1903 by establishment of national agreement to govern baseball in the country. The organization is made up of 30 clubs which are internally managed by the couching manager and the general manager in collaboration among others. The organization is responsible of setting members’ rules, sharing revenue and settling disputes. The organization is managed by a commissioner with assistance of general managers from its club members. The employ various revenue generation techniques that include ticket selling and sponsorship. It also employs various marketing strategies that include online marketing. The organization major challenge is change of technology and competition. It major involvements that would bring future change include inclusion of minority community. MLB has demonstrated great success in its management and it is highly regard among the professional sports organizations in America. References Agrawal, A. 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