InformationWeek
Defining The Business Value Of Technology
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April 9, 2001 |
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Redefining Business:
A New Game Plan
Baseball owners are playing like a team when it comes to their Web strategy
By Clinton Wilder (cwilder@cmp.com)
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et's say you run an enterprise with 30 independent business units operating in every major North American city from Montreal to San Diego. The corporate managers in New York see economies of scale, much richer online features, and huge potential revenue gains by bringing the units' disparate Web and E-commerce initiatives under one corporate umbrella. Such a migration won't be easy; your chief technology officer says the 30 sites range in quality from leading-edge professionalism to mom-and-pop back-room jobs. And the whole project absolutely must be completed in less than a year because of your highly seasonal business.
Your operating units have a checkered history of working together. Some have been in business since the 19th century, others are only three years old. Many are bitter rivals, competing in costly bidding wars for top employees and sometimes for the same customers in a geographic area. Your company's overall customer base--numbering some 73 million--is fiercely loyal but often deeply suspicious of changes in your products and services. How are you going to pull this off?
Could be a heck of a business-school case study. But this is no ordinary business. It's the real-life challenge taken on by Major League Baseball, which opened its season last week with all 30 independent team Web sites now subsumed under http://www.mlb.com, with a consistent look and feel for all teams. (Typing www.red sox.com will still take you to Boston's team site, but it's now located at www.red sox.mlb.com). The site gives fans statistics, interactive games, audio broadcasts, and video highlights--some of it free, some by subscription.
Individual clubs admit that not all their fans are thrilled about the uniformity. This is a business, remember, in which even small changes--from trading a second-string infielder to tweaking the team logo--can cause howls of customer protest. So the overhaul of a team's online customer channel certainly takes some getting used to. Nonetheless, most teams say working together will let them offer online features that will win over their fans. "Our site isn't as good as it was before," says Chicago White Sox owner Jerry Reinsdorf, "but it will get there. In a year, if not sooner, all the sites will be better."
Major League Baseball owners are betting that any short-term disruption will be a small price to pay for a potentially lucrative future. More significant, the Web site consolidation represents an unprecedented willingness to collaborate by team owners. That often-contentious group voted 30-0 early last year to centralize all teams' online efforts--and, more important, to share all Web-related income equally. This is no small feat in a sport struggling with the fact that big-city teams such as New York's have far more revenue than small-market clubs such as Milwaukee or Pittsburgh to lure the best talent.
"The most significant part of our whole Internet activity was the unanimous vote to share the revenue," baseball commissioner Bud Selig says. "That was a very dramatic change in thinking, because disparity is the biggest problem we have."
Selig compares baseball's centralized Web initiative to the National Football League's historic television agreement four decades ago. Then-NFL commissioner Pete Rozelle convinced league owners to pool their TV revenue, paving the way for the football-TV marriage that transformed Sunday afternoons and Monday nights in America.
At a crucial time for the business of baseball, such a change is significant. As crowds flooded into ballparks from Atlanta to Seattle for Opening Day last week, the national pastime circa 2001 finds itself in a best-of-times/worst-of-times situation.
Baseball is more popular than ever, with attendance up 18% in the past five seasons and no less than seven new, highly acclaimed stadiums opening in the past three years. America's game is being aggressively sold overseas, with stars from Japan, South Korea, and Australia joining those from Latin America in big-league ballparks.
Yet the dark cloud of another disastrous work stoppage like the one that wiped out the 1994 World Series looms for next season, and the root of the problem is the growing revenue disparity between thriving big-market teams and struggling small-market teams, with the big-market teams showing little willingness to share.
Against that backdrop, baseball owners seem willing to let the Web play an equalizing role. "This could be a back-door approach to evening things out," says Alan Schwarz, who covers baseball and technology as a senior writer for Baseball America, a leading publication for baseball aficionados and insiders. "The Web money is found money in some respects, and I'm not sure the owners knew what they wanted to do with it. So it may be a symbolic gesture, but at least it's a symbol of moving in the right direction toward revenue sharing."
The big question is when, if ever, the Web will deliver serious revenue. It could be $500 million to $1 billion a year by 2006, says Bob DuPuy, executive VP of administration and chief legal officer in the commissioner's office. But the fact that it's only potential value made the cooperation easier. "Of course, we agreed to share revenues that don't currently exist," Reinsdorf says. "I don't think we could do it at a later date when there was revenue disparity. But if we didn't get our arms around the potential of the Internet now, we'd only be exacerbating the disparity. The Yankees could do something much larger with the Web than, say, the [Kansas City] Royals."
In theory, the Internet is as perfect a match for baseball as hot dogs, peanuts, and a radio announcer's trademark home-run call. No sports fans devour statistical minutiae like baseball's, and the game delivers a feast of such content every day for a seven-month season. The Web's ubiquity, timeliness, and interactivity make it a perfect channel for all those aspects of the game.
Yet baseball's previous Web efforts have been decidedly minor-league in quality. In its early versions, it was a buttoned-down repository of official league information and little else. Baseball didn't even own the MLB.com URL: Fans who typed in that address wound up at the site of Morgan, Lewis & Bockius, which may sound like an old Phillies double-play combination but is in fact a Philadelphia law firm, which sold the URL to baseball last fall.
To play catch-up on the Web, baseball owners had to admit they weren't the most Net-savvy group. The lords of baseball come almost exclusively from traditional businesses such as retail, manufacturing, and television broadcasting. "We weren't known for moving in Internet time," DuPuy says.
So the owners established a separate company, Major League Baseball Advanced Media LP, and recruited a real Web guy, former Outpost.com CEO Bob Bowman, to run it. Baseball may not move at Internet speed, but Bowman does. Once the president of ITT, the hard-charging Bowman showed his ambition early when he was appointed treasurer for the state of Michigan at the age of 27. He's the type who'll suddenly remember he forgot to eat lunch, grab a sandwich, and wolf it down in the back of a New York taxicab while never missing a conversational beat.
"The owners became very aware of the Internet and the good, bad, and ugly of baseball's previous Web activities," Bowman says. "The feeling was that we ought to harness this thing and control it, treat it more like the television medium. By centralizing, we can optimize revenue and minimize costs."
But a fan's relationship with his or her team takes conventional customer-relationship management to a new level. Baseball sages from George F. Will to Casey Stengel have pondered the reasons the game has such a romantic hold, which for MLB and team officials means their business decisions can have a deep and emotional impact on their customers. "People get upset when we take a single RBI away from Honus Wagner 95 years ago, and we're thrilled that they do," DuPuy says. "Our fans really care."
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Illustration by Adam McCauleyPhoto of DuPuy by Anna Curtis
Photo of Bowman by Rahav
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