The largely uncharted ocean of Internet broadcasting, into which sports leagues are only now dipping their toes, could become such a source of revenue that small-market baseball teams like the Pittsburgh Pirates and Minnesota Twins will no longer take the field with kick me signs on their backs. The reason: a January decision by Major League Baseball’s owners, typically as fast-moving as a glacier, to consolidate all Internet ventures under one umbrella and share the revenue among all clubs. All 30 teams will kick their Web revenues into the pool, as will Major League Baseball’s portal, major league baseball.com (soon to be mlb.com now that the league finally got its own lawyers at Morgan, Lewis & Bockius to relinquish the pithier address). “I don’t think people completely understand how meaningful this is going to be,” says MLB Commissioner Bud Selig.
Of course not. Nobody in either the baseball or Web intelligentsia knows how well the emerging broadband technologies will be able to approximate TV-quality sports broadcasts as the decade unfolds. For the next year or so, the big leagues’ Web sites will focus on streamlining their ticket, merchandise and memorabilia sales, as well as providing statistics, live-game audio and some rudimentary video highlights. But should high-speed Internet access spread from its current 5 million American homes to 36.4 million by 2004, as anticipated by Forrester Research, Inc., the convergence of the computer and television would allow fans to watch Webcasts of virtually every game, every night, with all teams dancing in the revenue downpour.
This best-case scenario must first weather many ifs: if broadband becomes widespread and inexpensive enough… if Internet advertising and game-subscription packages become a bona fide revenue vehicle… if pumping every game into every city doesn’t produce oversaturation… if technology can be developed to keep Webcasts from invading a team’s local TV turf. The Dodgers, for instance, would object to their Webcasts’ being accessible on computers in Los Angeles, to protect the value of the team’s current over-the-air and cable-television deals. “We have been assured that our local television rights will be preserved,” says New York Mets senior vice president David Howard, whose club is among those with the most to lose. Still, the broadcasting bounties of large-market teams could be endangered if enough eyeballs turn to the Internet, where all revenue becomes MLB community property.
For now the pot is negligible. All the big leagues’ Web sites combined will bring in a projected $50 million for 2000. That’s half the $100 million a year the Yankees themselves might soon get for their TV rights. But MLB has the ability to control all Internet broadcasts and to license out feeds and highlight packages to ESPN.com, Yahoo and the like. It also has the right to deliver games to new foreign markets. This has value because of baseball’s international potential, thanks to 20 percent of its players’ hailing from overseas. Major League Baseball is projecting $1 billion a year in Internet revenue five years from now, according to Bob DuPuy, the MLB executive vice president who has overseen the project while searching for a permanent Web CEO.
Regardless of the Internet’s ultimate value to sports leagues, it gives us more new toys than a zealous grandparent. During the recent U.S. Open, tennis fans could log on to usopen.org and watch any of three matches, zooming cameras in and out from their computers. Can’t get enough of the Sydney Olympics? NBC’s Olympics Web site, NBColympics.com, lets you read biographies of the athletes, interact with other fans in customized chat rooms and take 360-degree camera tours of venues ranging from the soccer pitch’s midfield to the edge of the high-diving board. Al Ramadan, CEO of Quokka Sports, producers of nbcolympics.com, says these features are how the Internet will add value beyond television: “Just jamming the old medium through the new pipes doesn’t make any sense.”
By agreeing to share this undefined but potentially considerable revenue, MLB’s large-market teams–if they understood what they were actually deciding, which some insiders question–are hoping that Internet broadcasting could do for MLB what television did for the National Football League 40 years ago. The NFL’s even distribution of all television revenue from day one has allowed franchises from New York to Green Bay, Wis. (population: 100,000), to operate on effectively equal financial footing. Should baseball’s national-television and Internet revenue grow as MLB forecasts, the ratio of rich-to-poor teams’ broadcasting incomes could decrease from the current 4:1 to a much more competitive 2:1.
While the dominoes will take years to fall, the number of teams with a legitimate chance to win the World Series, currently 10 at most, could broaden to 20 or more, though probably no more than that. “I don’t see us ever becoming the NFL,” MLB executive VP Sandy Alderson says. “So much would have to migrate from traditional revenue streams to the Internet that something in between is more logical.”
Nonetheless, having baseball’s George Steinbrenners and Ted Turners–not known for their magnanimity–go along with sharing anything signals that the large-market teams could finally be losing their grip on some of their longstanding power. Crows one middle-market owner, “This would have happened without them.” Whether legitimate pennant races can happen without all the Internet ifs remains to be seen.
