Former MLB Exec Offers Insight Into Sport Sponsorship

Prior to John Brody leaving his position as the senior vice president of corporate sales and marketing for Major League Baseball, Sport Marketing Quarterly Industry Insider section editor Jim Kadlecek interviewed Brody, now with Wasserman Media Group, about a variety of topics. The full interview appears in the December 2010 issue (Vol. 19, No. 4) of Sport Marketing Quarterly.

Q: As a league it seems you have intentionally not sliced categories up but instead have focused on fewer, bigger, and more comprehensive deals that make it a greater value for your partners. Has that been a deliberate approach?

Brody: It is deliberate. Another one of our philosophies is less is more. We don’t have a number. It could be five partners, it could be 30 partners. But if you are truly able to support the all-in philosophy, if you are a best in breed, and we are, then you can be very selective. We are stewards of this great American brand known as Major League Baseball. If we are going to tie our brand into another intellectual property, we want to make sure we do our research. The companies that we are tied to are also best in breed. There is a reason why we are with who we are with. It is not just about finding the right partner who can spend the right amount of money. It is finding the right partner who markets their brand in a way that we want to market ours and also embraces and understands the all-in philosophy.

We have been successful in adding partners strategically but it has always been about less is more; having fewer partners doing more. We believe this is a better philosophy over the long term than expansion of the business in any way, shape, or form that will allow us to get revenue in the short term. We think you do better by having a consistent approach and having the best in breed partners doing more.

Q: Can you tell us about your relationship with Holiday Inn? They seem to have done a very good job of leveraging their relationship with baseball.

Brody: This is an example of what we try to do for brands. Last year they re-launched the Holiday Inn brand in America. Intercontinental Hotels Group, the parent to Holiday Inn, is the largest hotel chain in the world. Holiday Inn is one of those golden brands in America and to change the brand as significantly as they did is a tremendous undertaking. We worked with them for the better part of two years to re-launch the Holiday Inn brand. The first real execution tied to the re-launch of the Holiday Inn brand was around the 2009 Major League Baseball All-Star Game for a few reasons. The simplest reason is the media strength of the All-Star game, using the ability that we had to plan and orchestrate a complete solution on how they would go to market through media and different executions tied to the re-launch of their brand. They knew that they had a big event coming in 2009 and we executed it for them. They have been successful as they looked to 2010 as the first year that this new brand launched. A lot of it had to do with how we unveiled it during All-Star week last year.

Q: With respect to Major League Baseball, can you talk about the role of technology and its impact in the world of sport marketing?

Brody: Technology is, in its simplest form, an enabler to allow people to have greater access to the sport in different ways. If you go back 50 years you needed either to be near a Major League Baseball ballpark or you needed rabbit ears on your television or radio so you could actually hear the game broadcast. Technology has impacted the way that people can enjoy sports, whether you want to instantly find a score update on your PDA or watch a game online on MLB.com even if you are out of the country. I am certainly not the one to predict what the next iPhone application will be, because I am not a technology expert. We have experts here at baseball through our Internet company and our network.

Our job on this side of the business is to try to find more access points for baseball and sports in general. I think technology will continue to find incredibly innovative ways to deliver content. Sports content and baseball content in particular is something that people crave. That is why MLB.com launched at the turn of the century. That is why MLB Network launched this past year and it is the largest launch in the history of cable television—not in cable sports television, but in cable television vs. the likes of MSNBC and OXYGEN and CNBC, FOX Business. We are in more than 54 million homes. That is about access and I think technology will continue to evolve as great minds throughout the country and the world find new ways to integrate technology into customers’ consumption of media and content.

Generally, as a sport and as a property we embrace technology to make the fan experience better. It may be in other forms of media that I talked about or along the lines of what we did with our partner at MasterCard. When you go to the hot dog stand to get your hot dog and a Pepsi you can just swipe your MasterCard rather than having to fumble for cash. We think that is technology being an enabler for improving the customer experience. All of those different forms of technology really help make the experience better. This is a small example, but instant replay began in a limited way in our sport in August of 2008. We looked to our technology partner Sharp to provide the LCD televisions for all 30 Major League ballparks after the commissioner made the decision to allow instant replay in limited forms. Those are just a couple of examples of technology.

The Pittsburgh Pirates Profit Through Defeat

Most professional baseball organizations spend money to make money; a few keep their money and profit from revenue sharing. Either method can work, as evidenced by the Pittsburgh Pirates’ financial success during the 2010 MLB season. Unfortunately for the Pirates, records detailing their finances were leaked earlier this year, and the contents were upsetting to many fans.

Pittsburgh’s opening-day player payroll was the lowest in the league in 2010 ($34,943,000). All but eight of the 30 MLB teams had payrolls that were double that amount, but by keeping spending to a minimum, the Pirates managed to bring in a profit of $29.4 million from 2007 to 2009.

“If they increased their payroll to improve on the field, then they would not be profitable, because their costs would go up by more than their revenues,” said University of Alberta sport economist Brad Humphreys, the associate editor of the International Journal of Sport Finance.

Their success may have been better-received by baseball fans if it didn’t seem to hinge upon the team’s failures. But the Pirates’ most recent win-loss record of 57-105 makes this their 18^th consecutive losing season—an all-time record in the history of major American professional sports leagues.

The Pirates say they have gained the flexibility to make better future investments by trading All-Star players such as Jason Bay, Matt Capps, Freddy Sanchez, Jack Wilson, and Jose Bautista, who led the majors with 54 home runs in 2010. The Pirates were led by the 21 home runs of Garrett Jones.

Pittsburgh’s assertions about investments would make more sense if the team were not in the habit of trading players when they develop into budding stars, replacing them with minor league prospects or even more youthful players. From an outsider’s perspective, it seems as though instead of trying to field a competitive team, Pittsburgh is intentionally fielding a cheaper, non-competitive team composed of untested players.

To be fair, the Pirates’ reliance on young talent and a low payroll has been a philosophy implemented by other teams, including some who have enjoyed success. The San Diego Padres have the second-lowest opening-day payroll in 2010, but they were only one victory shy of making the playoffs. That’s certainly atypical success for low-payroll teams, however—“Teams with low payrolls can only succeed in MLB if they make very good personnel decisions or [are] very lucky,” Humphreys said. “The Pirates have been neither.”

So how has Pittsburgh profited despite dwindling attendance and multiplying losses? MLB sources such as revenue sharing, league merchandise sales, and network TV deals provided nearly half the organization’s income; these funds should, according to MLB revenue-sharing rules, be used to make the team competitive. Although the Pirates have been anything but competitive for nearly two decades, Rob Manfred, MLB’s executive vice president for labor relations, told The Associated Press, “The Pirates have fully complied with the Basic Agreement requirements for the use of revenue-sharing proceeds.”

One Pittsburgh Pirates fan decided that since his favorite team is profiting from losing, he may as well cash in on their losses, too. During the 2010 season the fan placed $20 bets against the Pirates every game, and at season’s end he walked away with a profit of $324.

Series Examines Perils of Youth Sports

On the heels of the Little League World Series, The Columbus Dispatch has published an interesting, in-depth, five-day series on the perils of youth sports. The series, complete with stories, interactive data, videos, and photos, details some of the problems with what has grown into a $5 billion industry.  The series reveals how some young athletes are forced to play with pain despite not having fully developed bodies, how many are tempted to use supplements, how they have unrealistic dreams of playing professional sports, and how many non-profit organizations are being victimized by a lack of regulations. The series, titled “Little Leagues, Big Costs” examines some of the pitfalls of youth sport from many different angles, including financial and psychological. Click on the link below to access the series.

[Little Leagues, Big Costs, by The Columbus Dispatch]

Ozzie Guillén shames MLB on Latino relations, but is this just another rant?

Chicago White Sox manager Ozzie Guillen argues with umpire crew chief Gary Cederstrom after being ejected from the game following a bench clearing brawl in the fifth inning against the Kansas City Royals on Sunday, August 3, 2008, at Kauffman Stadium in Kansas City, Missouri. (John Sleezer/Kansas City Star/MCT)

Outspoken White Sox manager Ozzie Guillén kicked over the cultural ant hill last week with his public commentary on how Latino baseball players aren’t getting the same treatment as Japanese players.

Does his argument have merit, or is it more of his usual verbal artillery?

“Very bad. I say, why do we have Japanese interpreters and we don’t have a Spanish one? I always say that. Why do they have that privilege and we don’t? Don’t take this wrong, but they take advantage of us. We bring a Japanese player and they are very good and they bring all of these privileges to them. We bring a Dominican kid . . . go to the minor leagues, good luck. Good luck. And it’s always going to be like that. It’s never going to change. But that’s the way it is.

“I’m the only one to teach the Latinos about not to use [performance-enhancing drugs in the MLB]. I’m the only one and Major League Baseball doesn’t [care]. All they care about [is] how many times I argue with the umpires, what I can say to the media. But I’m the only one in baseball to come up to the Latino kids and say not to use this and I don’t get any credit for that. They look at you and say, ‘Good for you, Ozzie.’” I did it for the Latino kids . . . I want to help those kids.”

He stated that his rhetoric was “filtered” by the media, saying they isolated his specific comments on the plight of the Latino baseball player. However, his words come at a time when the Federal Government is challenging the state of Arizona in court over immigration and profiling issues; when congressmen and women are trying to change the 14^th Amendment of the Constitution in order to eliminate “dump and run” babies born in the United States by immigrant parents; and when there is an overall sense of tension between many Latino and non-Hispanic citizens of this country.

“Sport is an important barometer of assumptions about ‘race,’ ethnicity, and Aboriginality,” wrote Daryl Adair in his introduction to the book Sport, “Race,” Ethnicity, and Aboriginality: Narratives of Difference and Diversity. His comments are given particular meaning in this instance, where Guillén, the first Latino manager to win a World Series, is one man in a league where 30% of the players and managers call themselves Latino—a rarity in the professional sporting world.

What about Guillén’s comments? Do they have merit? Horacio Ruiz, the leading editor and a contributor to Richard Lapchick’s book, 100 Campeones: Latino Groundbreakers Who Paved the Way in Sport, said, “I don’t completely agree with what he is saying, but I think he does bring up many valid points and has gotten the baseball community to talk about an issue that needs more attention.”

Perfect Lesson from a ‘Perfect’ Game

Armando Galarraga may have lost a perfect game, and Jim Joyce may now be forever known as the man who cost him that perfect game, but the Detroit Tigers’ pitcher and the longtime umpire both gained something arguably more valuable than a footnote in the baseball record books through their actions after Wednesday’s baseball game.

Joyce, the first base umpire, erroneously ruled Cleveland’s Jason Donald safe despite being a half-step late to first base with two outs in the ninth inning. Joyce’s mistake stripped away what would have been only the 22^nd perfect game in Major League Baseball’s 130-year history, and ended Galarraga’s chance at baseball immortality. Instead, Galarraga was forced to achieve a one-hit 3-0 shutout victory, and Joyce was left to deal with an angry Detroit team and fans.

Some umpires would have refused to admit they made a mistake. But after watching the replay immediately following the game, Joyce humbled himself, headed to the Detroit locker room, and offered a tearful and heartfelt apology to Galarraga. Afterward, Joyce owned up to his mistake to the media and said he deserved all the verbal abuse that Galarraga’s teammates and manager gave him immediately following the game.

To Galarraga’s credit, he handled himself with poise in the heat of the moment, laughing off the bad call and regrouping to get the next batter out. Other players might not have had the mental focus to put the incident out of mind and concentrate on the next batter. Afterward, Galarraga appeared to be one of the few that didn’t give Joyce a verbal undressing as the umpire was heading off the diamond.

The following day, Joyce was assigned as the home plate umpire for the third game in a three-game series between the Tigers and Indians. Any further tensions were brushed aside, however, during a touching moment prior to the beginning of the game. It’s customary for the two ballclub managers to hand the home plate umpire the official lineup card prior to the first pitch. But instead of Detroit manager Jim Leyland heading out to hand off the lineup, Galarraga went instead, shaking hands with a visibly emotional Joyce.

Galarraga and Joyce turned what easily could have been a contentious situation into a valuable lesson. Joyce showed that by being humble and acknowledging shortcomings, you can diffuse potential hostility. Galarraga showed that one can remain poised even when in the midst of an unfair and frustrating situation, and that it’s often best to extend forgiveness rather than display anger.

So even though Galarraga didn’t technically pitch a perfect game, he and Joyce have both been a perfect example of sportsmanship and everyone can learn from their actions.

Panel of Pro Sports Experts Offers Insight, Opinion

A group of proverbial heavyweights in the sport industry gathered at West Virginia University Wednesday night to share their insight, opinions, and plenty of jokes during “The Business of Sports” discussion.

The distinguished lecture series featured Ken Kendrick, managing general partner of the Arizona Diamondbacks; Bob Nutting, principal owner of the Pittsburgh Pirates; Oliver Luck, president and general manager of the Houston Dynamo; and Sam Huff, a Hall of Fame linebacker and current radio broadcaster for the Washington Redskins. It was a great opportunity to hear the foursome’s viewpoints on a variety of timely topics and their responses to questions were, at times, as humorous as they were insightful.

Below are some of their thoughts on a variety of topics that were discussed.

• On public financing of stadiums

There has been plenty of research, much of which has been published in the International Journal of Sport Finance, regarding the benefits and/or drawbacks of public financing for construction of new stadiums and arenas. All three panelists associated with professional teams claimed that there were long-term benefits for communities that receive a new professional sports facility, despite many sports economists who claim otherwise. Both MLB owners on the panel also happen to own teams that received public financing to help fund stadium construction projects.

Pittsburgh footed a large portion ($174 million) of the bill for the Pirates’ new PNC Park, which opened in 2002 but was five years prior to Nutting’s ownership. Kendrick’s Diamondbacks and their retractable roof stadium (Chase Field Ballpark) cost taxpayers approximately $238 million.

“It’s difficult to talk about public funding of stadiums during these economic times,” Kendrick admitted. “Economic impact studies show there can be a return on investment. Over time, there is tremendous tax revenue and jobs are created and I think that model still works. But having said that, in this time (of economic struggles) I think public funds should be used other ways.”

Luck was previously the CEO of the Harris County-Houston Sports Authority, which oversaw the construction and financing of Houston’s three new professional sports venues—the Astros’ Minute Maid Park, the Rockets’ and Comets’ Toyota Center, and the Texans’ Reliant Stadium.

“The city of Houston took on approximately $1 billion in municipal debt to build three new venues,” Luck said. “All three were up for a public vote and all narrowly passed and they were funded by hotel and rental car taxes. Because of those new venues, Houston has been chosen to host the Super Bowl (2004), Final Four (2011 and 2016), MLB all-star game (2004), NBA all-star game (2006), and (in 2010) the MLS all-star game and that’s important for a city that was down on its luck after the Oilers left Houston. It helped to rejuvenate the urban core of Houston.”

• On small- and mid-market teams competing in Major League Baseball

Both Nutting and Kendrick consider themselves owners of mid-market clubs, although based on the most recent MLB revenue reports the Diamondbacks are a few rungs above the Pirates. The biggest limitation, according to Kendrick, was that small- and mid-market teams are less able to successfully cope with injuries to key players. If they retain All-Star caliber players, often much of the team’s salary is invested in that one player.

The Diamondbacks, winners of the 2001 World Series in a dramatic Game 7, 9th inning rally to defeat the New York Yankees, have had some very talented players on their roster. In fact, five of the past 10 National League Cy Young Award winners played for Arizona (Randy Johnson in 1999, 2000, 2001, and 2002, and Brandon Webb in 2006). Arizona made it to the playoffs in 2007 and finished second in the NL West in 2008 but this past season finished in last place in its division due in large part to an opening-day injury to Webb.

“This year our top pitcher, who had won the Cy Young, was injured in the first game of the year and he missed the rest of the season,” Kendrick said. “That was a devastating injury for us to try to overcome.

“It would be nice to have unlimited money like the New York Yankees. But I think that (Arizona’s) competitive model is a very good one and, frankly, for me it’s a lot of fun to beat teams like (the Yankees).”