Baseball is a Business of Amusement
I’d like to start this series with a reminder for us all: Major League Baseball is a business of amusement. Each part of that phrase is important, and maintaining this perspective is critical to figuring out what’s best for Baseball.
Being a business of amusement means:
- It is a business. The MLB franchises each exist as mechanisms by which shareholders can put their own money at risk with hopes of earning a risk-adjusted financial return above what they could get in other assets (e.g. stocks and real estate). They are driven by the profit incentive, which is the only reason we get to enjoy things like the cathedrals of baseball we play in and ability to stream any game, at any time, from anywhere. Building mega-stadiums, creating immersive fan experiences, scouting and developing players from all over the world, and of course, paying players is extremely expensive. Teams (and their owners) don’t spend those massive sums out of the goodness of their hearts; they do it because they think they can get a superior return on their team than with other assets. If you want baseball without a profit incentive, go watch Little League.
- It is a business of amusement. The only way MLB makes money is by pleasing fans, and fans are pleased by Baseball when it amuses them, or brings them joy. Winning may help deliver joy, but it’s not a direct drive of profit. If fans don’t find joy from baseball, then they won’t buy tickets, wear jerseys, or watch games on TV. After pleasing the fans, MLB has no intrinsic value. Playing baseball doesn’t remove carbon from the atmosphere. It doesn’t cook you breakfast. It doesn’t keep your neighborhood safe or defend you in a court of law. It doesn’t even deliver burritos to your door when you’re too lazy to make a sandwich. If Baseball isn’t bringing joy to fans, then it won’t generate a profit and will cease to exist. If you question this, then I’d ask why aren’t you watching YouTube videos of nails on chalkboards? They exist. The reason? They bring you zero joy.
- Players are employees in this business. Just as servers benefit and lose with the successes and losses of the restaurant they work for, so do employees at any other business. The laws of supply and demand especially benefit MLB players, as they possess extremely rare skillsets that are highly valued by the market for their ability to bring joy to fans. However, they are employees still and their paychecks are subject to the financial viability of the business that pays them. It’s also important to note they are paid for “bringing joy to fans”, not necessarily for “hitting lots of home runs” or “striking out lots of batters”. Those things may eventually result in wins and “joy to fans”, but they aren’t what a player is directly paid for. If the player isn’t doing something that helps drive team profits, then it’s hard to justify the cost of their employment. This is true in MLB, restaurants, banks, or any other for-profit business.
Baseball is a business of amusement, and players are employees to deliver this amusement. Short of that, MLB has no other value. If I had to place it on Maslow’s Hierarchy of Needs – I’d put it here:
Where MLB has gotten in its own way is when it forgets this and acts as if the action of a grown man in tight pants throwing a small, white ball towards another grown man in tight pants holding a stick produces an essential good that the world can’t do without. Forgetting the inessentiality of this results in entitled players and owners forgetting the long term importance of amusement. Some examples of this include (but are not limited to):
- Cultivating a style of play that is long, slow, and boring
- Airing the dirty laundry of labor negotiations in public
- Failing to embrace innovation in the in-game experience and game rules
- Toleration of scandals that taint the joy of competition (steroids and sign stealing)
- And many more I’m not thinking of at the moment
Also, there may be things owners and players can do in the short term that are good for personal or business income in the next year or two, such as squeeze a few extra dollars out of the next collective bargaining agreement or squeeze in 2 more commercials between each inning), but there’s a question as to whether or not these things will alienate enough fans or make the game so boring that they destroy value in the long term. When we lose sight of the fact that baseball is business of amusement, MLB will make decisions that are penny-wise and pound-foolish.
As an example, think of Disney World and the joy it brings to people, especially young kids. Now, also image Cinderella at Disney World – not an actress in a Cinderella costume, but the actual Cinderella. The magic and joy of the experience of meeting her in the Magic Kingdom would at least be watered-down if the day before, you saw an angry tweet from Actual Cinderella about how little she trusted Bob Igor and demanded that she only be required to take pictures with less-than 5 guests per hour. But you would never see this, because Disney is a well-run business of amusement and they keep these relationships, negotiations, and operating plans discrete and mindful of the long-term joy of their patrons. Extremely long lines of frustrated and disillusioned 7 year-old girls is not good for the Disney shareholder, and it’s not good for Cinderella’s long-term earning prospects.
So in future of this blog, I will be exploring dilemmas, decisions, and problems that are mindful of the fact that baseball is a business of amusement, and propose thoughtful solutions that satisfy the profit incentive (the only reason MLB exists) by delivering amusement to fans (the only way MLB makes money).