What MLB Teams Can Do in This Struggling Economy
Every industry from banks to hotels to professional sports leagues have been affected by this global economic crisis. So far, only the Arena Football League has been forced to shut down, at least for the 2009 season.
Major League Baseball will be the first league to open a season during what seems to be the worst portion of this recession. The NFL, NBA, and NHL all began their 2008-09 seasons during the very beginning of the crisis.
There are a few things the league and its teams can do to stay afloat and keep fans in the stands.
The first thing would be to rethink which players are worth millions. The teams with the three highest payrolls did not make the playoffs last season (Yankees, Mets, and Tigers. This begs the question, are teams getting the most for their money? The answer is a resounding no.
In the case of the Yankees, I question whether Sergio Mitre deserves a $1.2 million salary. Mitre did not pitch last season, but did go 5-8 with a 4.65 ERA in 2007, when he made $325,000 as a member of the Florida Marlins. Starting pitchers with those kinds of stats do not usually get $1.2 million salaries.
Detroit, a team that finished 14 games under .500 in 2008, has 17 players on its payroll making seven figures.
While a salary cap does not seem likely, as the MLBPA is vehemently against it, teams should work with players whose contracts are expiring to either keep the salary the same or include more performance incentives as opposed to base salaries.
Performance incentives should not be milestones that the player has achieved in the past. Encouraging the player to go above and beyond what they have done in the past will help the player with bonuses and the teams with better production.
There are fans out there who will always buy season tickets. They are willing to sacrifice so much just to have their own seat in the ballpark. For the average fan, however, this kind of investment is just not feasible. Teams must market the baseball experience like other industries market their products.
A successful strategy that has been used in the resort and vacation business is the all-inclusive package. In the care of a luxury resort this includes lodging accommodations, unlimited food and beverages, spa treatments, recreational activities, so on and so forth.
A baseball team could apply this concept and include parking, concession vouchers, and a free gift included with the price of the ticket. While the price would obviously be higher, fans would know how much they are spending before they get to the ballpark.
This psychological phenomenon has been used by a certain theme park company (I won't name names, but it is run by a mouse) for years.
The comfort of knowing how much a certain experience will cost before you experience it is a great incentive to do it.
You are probably wondering why I have not suggested something like cutting the price of concessions. The reason is two-fold.
One, I'm not a communist and teams have a right to charge what they want.
Secondly, most of the food service operations in ballparks are not run by the team. A contractor such as ARAMARK or Sodexho is hired to provide concessions at stadiums.
These contractors in turn have to cover their costs, but most importantly pay a percentage of their sales to the owner of the stadium. In most cases this is the team, the local government, or a combination of both.
A final recommendation I would make to teams is to not build new stadiums, or wait to begin planning to build a new one until we have recovered from this recession. Instead, renovations should be done as needed.
Also, taxpayers will not take kindly to a team that shells out millions of dollars in salaries asking for millions to build a new stadium. Support for capital projects such as stadiums is not high right now as more social programs are becoming necessary.
Baseball survived the Great Depression, two World Wars, a lockout, and has hung in so far during the steroid era. This economic situation is just another challenge America's past time will have to endure.
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