Record Profits for Major League Baseball

Earnings growth might be hard to come by in the S&P 500 but Major League Baseball is on a roll. The recent American League Championship Series wrapped up with a bang:

Fox’s live coverage of the Boston Red Sox victory over the Cleveland Indians in Game 7 of the American League Championship dominated Sunday night in the ratings, giving the network the lead in virtually every hour of prime time. TV Decoder

Joe Torre and the Yankee faithful might not be thrilled with the state of the game, but baseball has been able to shake off the steroid scandals as America gets back to embracing its Pastime. The Yankees are not the only big draw, and other initiatives are producing revenue as well:

The total major league attendance of 79.5 million, an average of 32,785 per game, was an increase of 4.5% from 2006. The Yankees went over 4 million, nine other clubs surpassed 3 million (Boston just missed at 2.97 million because of Fenway Park’s limited capacity) and 14 more exceeded 2 million, including the Brewers, with a club-record record 2.87 million......and hundreds of millions of dollars coming in via television and radio broadcasts, on both the national and local levels, and Major League Baseball’s Internet division producing income far beyond original expectations, the game is doing business like never before. Milwaukee Journal-Sentinel

As Bud Selig’s hometown paper notes, MLB revenue is on the verge of surpassing the National Football League’s top line, which has been a goal of Selig’s since he assumed the role of Commissioner. Selig is not much better at estimating financial results than Merrill Lynch, but this surprise ends well.

Revenue in 2007 is expected to top $6 billion, up substantially from the $1.2 billion the league posted in 1992 when Selig assumed the corner office. And the results were far ahead of his internal estimates and the $5.4 billion the league posted last year.

Selig has taken his share of grief over the years, but appears to be having the last laugh....“People used to say baseball was ‘past its time,’ “ said Selig, recalling the phrase used to mock a sport that saw its once-firm grip on the country’s sporting fans slip badly.

“Make no mistake about it. Our sport is more popular than ever and it is still the national pastime. No question about it. And I have a lot of statistics to back that statement.”

Bob Bowman has a lot to do with the financial success. As we noted back in the depths of winter:

The CEO of MLB Advanced Media was once an up and comer on Wall Street. He joined Goldman Sachs fresh out of the Wharton Business School but burnished his legend as the youngest Treasurer in the history of the State of Michigan back in the 1980’s.

He was credited for steering Michigan’s pension fund to outsized returns in the 1980’s. although the bull market certainly might have helped. He was also once known as a stockpicker and achieved some notoriety for championing the purchase of Digital Equipment Corporation which was The Apple of its day. 2.27.07

Bud Selig has taken a lot of flak over the years, but has staged an impressive turnaround since he grabbed the reins fifteen years ago. Many of his most controversial moves had paid off, and he has been able to deflect much of the damage the ongoing steroid scandals have created. The final chapter in steroids will come after the World Series, when George Mitchell will release the final report that will surely implicate new players and set off a media frenzy.

But that should be history by the time spring training starts in 2008. The Rockies will be reigning as World Series champs, and all will be good in baseball’s universe once again.

A guy can dream can’t he? Sorry Boston, the trend is our friend.

Bases Loaded
Milwaukee Journal-Sentinel

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