The Marketing Strategies of Major League Baseball - Essay Example

At the beginning of the 19th century a game surged in the American culture whose roots are based on the English game of Rounders referred to at the time as “townball”, “base” or as it is know today “baseball” (Bellis, 2008). The game as is played today was formally crated by Alexander Cartwright in 1845 that developed the set of rules that have ruled the game for over 150 years. In the middle of the 19th century baseball became the national American pastime. The game served as a path to a happy reality in which the turmoil and human suffering the American society was enduring due to the Civil War seize to exist three hours a day while enjoying a visit to the ballpark. The most prominent league which today is a multi-billion dollar sport entertainment business industry is Major League Baseball. This proposal discusses marketing in MLB. Among the specific subtopics covered in the paper are international expansion, large vs. small market team, racial profiling, and social corporate responsibility. The economic growth of baseball has been tremendous especially during the last couple of decades. In November 11, 1979 pitcher Nolan Ryan who holds major league lifetime strikeout and no-hitter records become the first professional baseball player to earn a contract worth one million dollars per year. The salary of baseball players has significally gone up during this time period. In 2006 the average salary of major league player was $2,699,292; in comparison in 1976 the average salary of a Major League Baseball player was $51,501 per year (Espn, 2006). The prosperity enjoyed by these players has been possible due to the massive growth in the attendance and the very good revenues teams are generating in grand part thanks to the effectiveness of the marketing techniques utilized by MLB. Major League Baseball has an excellent opportunity to expand its fan base and increase its revenue during the next 50 to 100 years. The key for the long term success of this business is international expansion of Major League teams to other continents through the world. In Asia the top candidate to earn an mlb expansion franchise is Japan. The large island with a population of 127,463,611 people enjoying a real GPD per capita of $29,251 has a culture that considers baseball its top sport and national pastime (CultureGrams, 2008). The master plan to market baseball to the global audience is based on the creation of serve additional teams in different strategic regions across the globe. The new expansion teams will be 100% owned by MLB to start in 2012. The reason to keep the equity is to eliminate the bureaucracy and accelerate implantation, control decision making, and be able to use the earning of the league owned teams to solve problems as the inequity between small market teams and large market teams. This goal is the direct recipient of the monetary numbers illustrated in the books, but the primary goal is to execute and launch a full and diverse marketing plan to exploit the league strengths while attacking the weakness to minimize its effect and reverse these factors to benefit the company. The international expansion plan includes a comprehensive marketing plan that utilizes many contemporary marketing schemes that follow the latest trends in the business marketplace. The seven international locations for the expansion project are Puerto Rico, Mexico, Australia, London, Japan, China and South Africa. A secondary project with to the expansion initiative is a location in Antarctica to showcase the parks of the future under extreme weather conditions. In order to defeat the travel constraint most of these location present which covers five of seven locations the teams would have a special travel arrangement setting. The season would be divided in home and road segments which would entail three separate 27 game home stands and road trips. The beauty of the expansion project is that the economic pressures of bringing major league baseball to the far location on earth with relation to the United States is a cooperative effort in order to eliminate inequity between large and small market teams. The imbalance in baseball is horrendous. The average attendance in 2006 in MLB was approximately 33,000 visitors per game (Mlb, 2006) In order to visualize the disparity a comparison to make is the home attendance of the richest team in baseball with the team with the lowest home attendance. The New York Yankees received in their home games an average of 52,739 per game, while the attendance bottom dwellers Florida Marlins received 16,919 (Mlb, 2008). The New York Yankees attendance which represents ticket revenue and loyal fan base that generates other revenue is 60% higher than the average team, while the Marlins attendance is over 90% below the average team. The New York Yankees historic franchise has won the most championship titles in the historic of Major League Baseball. Legends such as Babe Ruth, Mickey Mantle and Reggie Jackson were members of the franchise. The high revenue stream of the team allowed them to attract fans by build teams based on star power. Alex Rodriguez the top paid player and the MVP and home run champion in the American league in the 2007 season is an example of the types of assets the Yankees can afford. The television contract the team owns to televise its home games is most lucrative individual team contract in baseball. This along with high attendance, winning history, and the a fluent fan base in economic terms means the appraisal of the franchise to determine its current value was determined to be $1.2 billion dollars (Beamer, 2007). The Florida Marlins are part of the expansion wave in baseball which took place in 1993. The location of a franchise in Florida at the time seem like a fabulous idea since major league baseball has a growing Hispanic fan base and the Hispanic population in Florida made up in large part of decedents of the Caribbean region is large. The expansion team made incredible strides on the field and became the fastest expansion team to win a World Series with their amazing accomplishment in 1997 and a second title in 2003. Winning is the key variable typically creates value and high revenue streams for teams that accomplish the ultimate goal of a baseball franchise. The sad thing about this franchise was that despite the on the field success the ownership of the team did not reap any financial benefits out of the team’s success. Imagine an owner who invested hundreds of millions of dollar, then build a championship team to run a business at a breakeven or negative revenue level. The ownership due to the dissolution with the fans in the area broke the team twice. The second time after 2003 the team basically focus on lowing cost to the fullest and not signing free agents. They let their superstar catcher Ivan Rodriguez goes as a free agent to Detroit without matching the offer since they could not afford his salary. The international expansion project will help out low market teams by giving them dividends from the earnings higher than other teams. Attendance will be the variable that will determine the dividend distribution. The composition of the distribution equation formula is illustrated in Appendix A. The formula has a 15% fund left over which will be allocated to find hunger in Africa. The strategy that Major league baseball will used to maximize its marketing potential globally is based on the international corporate trend called social corporate responsibility. The top emphasis of the plan is Africa. The proceeds from the South African team will not be directed to the overall fund and will be assigned to fight the Aids epidemic worldwide. The South African team is an initiative that can captivate the minds of the African American community and will help bring this important minority back to the ballparks. African American attendance in ballparks has gone down a lot since the 1990’s. The attendance of blacks in at the gates has gone down to 8%, a low figure considering this minority represents 13% of the American population, and nearly 25% of the metropolitan cities in the US in that have major league teams (BusinessWeek, 2006). By reaching the roots of mother Africa the African American community will come back and support baseball at level that will surpass the past success of the league at targeting this customer segment. The Hispanic community have become the cash top of major league baseball since the composition of Hispanics among the MLB player population has become immense. Hispanics currently account for 29% of the player composition with most of these players coming from the Caribbean region from the islands of Puerto Rico, Cuba and Dominican Republic (BusinesWeek, 2006). Puerto Rico was chosen as the hot spot location due to the easy access to this market due to the fact that this island is an American territory with the potential of becoming the 51st state of the confederation. Puerto Rico is one of most affluent Hispanic countries with a GDP per capita of $19,000. Baseball is a great passion of Puerto Rican and there are many superstars such as Carlos Delgado, Carlos Beltran, Ivan Rodriguez, and Jorge Posada who have dominated the Major League for many years. Establishing a team in PR can further create interest in the sport among the Spanish community. The Hispanic population in the United States is represents 14.85% of the US population, thus considering nearly 1/3 of MLB are of Hispanic descendant there is still room for growth in this market segment. The Mexican location also attends the need of further attracting the Hispanic community. The ballpark in Mexico will be located in the affluent city of Monterrey. The selection also serves the social purpose of bring to the public light the migration controversy among the neighboring countries and lowering tensions as there will a continuous travel among the borders among players between borders. Japan and China are two Asian powerhouses that will enjoy a baseball team seed during this expansion. Japan is the location is the greatest potential for immediate revenues streams due to its solid economy and passion for the game, while China is the location with the greatest long term potential due to its emerging economy and size of population which surpasses the 1.3 billion inhabitant mark (CountryWatch, 2008). The Chinese expansion will have a tremendous impact on the game and the future of the game. The Chinese people are becoming more affluent year by year even though most of the citizens live in poverty. There are economic projections that the Chinese people will equal the United States citizens in purchasing power parity before the year 2050 (Economic Intelligence Unit, 2008). The exploitation of this market can be achieve by selling baseball related items to the Chinese citizens who are about to have extra money for consumerism purposes and building a fan base to capitalize of television, radio and online broadcasting in the People’s Republic of China. The London, United Kingdom location was chosen due to penetrate the European market which represents the largest consumer market alongside the US market. The reason London was chosen is due to the fact that the true roots of baseball came from an English game named called rounders (Rpi). This fact should be marketed when game play starts in 2012. An exhibition game must be played prior to open day with major league players playing Rounders in the newly build park in London. Further expansion into Europe within the next 20 years is very likely possibility if the London project works out. Australia the final location was a mandatory site since the purpose of the strategy is to bring the game to all parts of the world. Australia is a developed nation with a population of Major league baseball has a public image problem that must be attended immediately since there is a perception among the fans that the league which includes the owners and especially the players has become all about money and greed is the predominant tendency that is destroying a game which was suppose to be a sport to enjoy a beautiful game. The players must get involved to resolve this marketing variable which will not help the league accomplish its long term goals and earn the trust of its current fan base and the international fan base it wants to obtain. One of the areas of top priority is supporting its history by creating ne pension funds for all the players that help build this game at a time in which it was not about money, it was about the game. All players that played prior to 1980 will participate in the fund along with all players that played in the Negro league. A way to immediately feed the fund is for all Major League Players to donate 5000 signatures to create memorabilia to be sold at approximately $75 a piece. This initiative has the potential to generate over $25 million for the fund. The general public is demand more from the players and wants them to truly show honesty and a real concern for the people suffering in poverty around the world. As part of the international expansion plan all players will commit to paying a 5% excise tax on their base salary to create a fund to help out the poor Latin American communities. The owners who have a year end profit will also give to the fund 5% of their year end net earnings. The Antarctica project is a marketing agenda to bring Major League Baseball to all continents in the world. The launch date is 2015 which is the year the top technologically advanced baseball park will be build in this region. An exhibition game will be played at this location. The idea behind this project is to bring awareness of the climate catastrophe our society is causing worldwide particularly in this region due to global warming derived from air pollution. The park which will be owned by MLB will showcase the latest technologies such as wi-max, wireless cameras, Bluetooth, virtual reality application, RFID, mobile services application among many others. The park during its inauguration year will be the host of the hall of fame induction celebration in 2015. Major League Baseball is a sport organization that has utilize in the past and in the present a terrific marketing strategy that has allowed the business to grow year and after year despite a lot of problems such as the steroid fiasco and the negative perception of the game being about money instead of about the game. One area in which the league and has not been very effective is at showcasing its talent and exploiting the marketing potential of young stars such as Philadelphia’s Ryan Howard and the young slugger of the Milwaukee Brewers Prince Fielder. MLB should follow the example of the National Basketball Association which has always been able to showcase and capitalize on its star power. In the 1980 it was Jordan, Magic and Bird. IN the 21st century names such as Shaq, Libran, Melo and Kobe are household names due to the marketing expertise of the league of letting the fans know who are the stars of the league that they want to watch play. The precise solution to solve this problem is not simple, but investing money in a marketing consulting firm to help them out with this dilemma is a good start toward finding alternative solutions. The average baseball fan is a lower and middle class citizen who plays and enjoys sports all their life who commit themselves to the fullest to their home team. The best thing about baseball fan is that typically once they become a fan they are lifetime customers of the game. Baseball breaks all boundaries and people of all ages, gender and ethnicity can play and follow the game. One of the greatest accomplish of Major League’s Baseball marketing efforts is its online prominence. The official website of the league Mlb.com received last year one billion visitors who surfed 10 billion times (Slepian, 2008). The internet has been the door that has open up the opportunity to spread the game worldwide without an actual physical presence in other region outside of the US with the exception of Canada. If the proposed plan is followed the internet will continue to be extremely instrumental in order for the league to accomplish its long term goals. The game of baseball is simple adventure that allows for relaxation, family time and co fraternization among friends to take place. A game that has been around for nearly 200 years has a history that must be honored. Major League Baseball has enjoyed tremendous success in America and it is now time for the league to truly become a global presence. A plan for international expansion is in place with a master marketing plan to allow the game to be enjoyed and to reach the hearts of another billion humans across the world. Works Cited Page Beamer, J. 14 May 2007. “How Much is Your Team Really Worth.” The Hardball Times. Bellis, M. 2008. “The History of Baseball – Alenxander Cartwright.” About. CountryGrams. 2008. Country Profile: Japan. 24 March 2008. CountryWatch. 2008. Country: China. 27 March 2008. Economic Intellingence Unit. 2008. Country Profile: China. 25 March 2008. Hyman, M. 2 October 2006. “The Racial Gap in the Grandstands.” BusinessWeek. 27 March 2008. < http://www.businessweek.com/magazine/content/06_40/b4003093.htm> Mlb.com. 2008. “MLB Attendance Report – 2007.” 27 March 2008. Rpi.com. “History of Baseball.” 26 March 2008. Slepian, J. 2008. “Major League Baseball Hits Homerun with Marketing Automation.” CRM Today. 25 March 2008. < http://www.crm2day.com/editorial/50030.php> Appendix A Attendance rank Fund Dividend (%) 1 1.00 2 1.00 3 1.00 4 1.00 5 1.00 6 1.00 7 1.00 8 1.00 9 1.00 10 1.00 11 1.50 12 1.50 13 1.50 14 1.50 15 1.50 16 2.00 17 2.00 18 2.00 19 2.00 20 2.00 21 3.50 22 3.50 23 3.50 24 3.50 25 3.50 26 6.00 27 7.00 28 8.00 29 9.00 30 10.00 85.00 15.00 Special fund Read More