Did Mac And Sammy Save Baseball? Truth be told, the game hasn't capitalized all that well on the home run chases

September 19, 1999

To borrow a phrase, one would imagine that the home run derby
that's now in its second year would be berry, berry good to
baseball. On the surface, anyway, it is. As Mark McGwire and
Sammy Sosa again take their cuts at history, major league
baseball attendance is up slightly from where it was at this
time last season and the public's attention is being diverted
from the labor hassles with the umpires and directed toward
baseball's answer to Magic and Bird. The company line spouted by
baseball execs is that the epochal duel between McGwire and Sosa
has breathed new life into the sport.

If that's the case, it still would be wise to keep the defib
paddles handy. Surprisingly, the economic impact of the home run
derby is something short of miraculous. "The effect of
McGwire-Sosa is more than transitory, but it's a lot less than
long-term," says Stephen A. Greyser, who teaches sports
marketing at the Harvard Business School. "It's one thing to
have an exciting phenomenon like this and quite another to fully
capitalize on it."

Start with TV revenues, the lifeblood of sports leagues. In
spite of McGwire's and Sosa's historic sequel, national ratings
are down 3% on Fox this season, and they are down on ESPN, as
well. Can baseball expect a huge dollar increase when its TV
contracts with Fox, NBC and ESPN expire? Unlikely. Not
surprisingly, when neither McGwire nor Sosa plays, viewers tune
out. Consider that the ratings for last year's World Series were
the lowest ever. A home run chase might be a ratings bonanza,
but baseball can't guarantee to networks and advertisers
when--or if--another will occur. "It's not like when the NBA
could promise Michael Jordan," says Neal Pilson, the former head
of CBS Sports, now a television consultant. "The price of the
next baseball contract will go up, but not way up." In other
words, baseball might improve on its five-year deals with Fox
and NBC and its seven-year contract with ESPN, which are worth a
total of $1.7 billion, but it won't enjoy anything close to the
300% increase (to $17.6 billion over eight years) that the NFL
extracted from the networks a year ago. (ESPN may not even be in
the bidding; it's suing to stop baseball from terminating its
contract, originally intended to run through 2002, because the
network wants to move its Sunday-night baseball games to ESPN2
during the NFL season.)

McGwire's and Sosa's effect on attendance is also questionable.
Their presence in a particular city has the same impact on the
gate that Oprah's endorsement has on book sales; though neither
team is in the playoff hunt, the Cards and the Cubs regularly
play to packed houses at home, and their road attendance is more
than 5,000 fans per game above the league average. On the other
hand, though overall attendance jumped 3.8% per game last year,
it is up less than 1% this year and, even with an influx of
expansion teams and new ballparks, baseball's average per-game
attendance is still down almost 6% from the prestrike 1993 season.

Further, chicks may dig the long ball, but Madison Avenue is
somewhat ambivalent. For years the endorsement incomes of
baseball stars have lagged behind those of players in other
sports. After last season McGwire might have been able to
reverse the trend, but befitting someone who draws a walk every
fifth at bat, his pitch selection has been unusually
discriminating. Preferring to concentrate on baseball and save a
shred of his privacy, he has rejected countless opportunities to
shill. In this age of the rapper-action hero-pitchman who
moonlights as an L.A. Lakers center, McGwire's approach is
admirable. Nevertheless, his paltry $3 million take from
endorsement deals--which, for perspective, is less than tennis
star Lindsay Davenport earns--has had the effect of blunting
publicity for his sport. "It's unfortunate for baseball that its
biggest superstar is a reluctant superstar," says Bob Williams,
head of Burns Celebrity Service, a sports marketing firm in
Chicago. "If he were more aggressive, he could be making between
$12 million and $20 million in endorsements and giving baseball
that much more exposure."

True to form, Sosa has taken a more free-swinging approach.
Making pay while the sun shines, he has become a one-hombre
cottage industry. To the tune of an estimated $10 million--which
outstrips his Cubs salary of $9 million a year--he has deals
with companies ranging from Kmart to little-known Native
Eyewear; he's the eponym of Slammin' Sammy's Frosted Flakes
cereal; and he plans to open a restaurant in downtown Chicago
and host a variety show on Telemundo. Not too shabby for a guy
whose endorsement income was less than $100,000 early last season.

Yet Sosa still isn't in the class of, say, Shaquille O'Neal or
Grant Hill, who make around $28 million and $15 million in
endorsements, respectively, per year. One thing undercutting
Sosa's potential is that McGwire has generally been unwilling to
do spots alongside Sosa, even though the sluggers are friendly
competitors who play off each other well.

Home run fever has been a financial boon to both Chicago and St.
Louis. George Rafael, an economist for the St. Louis Regional
Commerce and Growth Association, estimates that McGwire
generated $35 million in new income for the local economy in
1998. Cubs executives say that Sosa has made a similar impact in
Chicago. But like most sequels not starring Mike Myers, Home Run
Chase '99 has had a tough time matching the original. Even the
celebration of McGwire's 500th career homer on Aug. 5 had a
distinct been-there-done-that aura. "The worst thing that could
happen to baseball is if McGwire's single-season record is
broken this year," says Allen Sanderson, a professor of
economics at the University of Chicago. "It will mean last
season wasn't so special after all."

License! magazine estimates that sales of Major League Baseball
merchandise--bolstered by Sosa and McGwire items--rose to more
than $2.1 billion last year, far less than the NFL's $3 billion
but a marked improvement over the $1.7 billion baseball took in
during 1997. However, it's pretty unlikely that fans who
purchased a $100 McGwire batting-practice jersey last season
would have bought another this summer. Mike Steinberg, assistant
manager of St. Louis's team store, the Cardinals Clubhouse, says
that business is still brisk on McGwire apparel but not what it
was a year ago. "It used to be 90 percent McGwire stuff," he
says. "Now customers also ask for Fernando Tatis, J.D. Drew, Joe
McEwing." Likewise, Mike Wisniewski, the director of
merchandising for Cubs products, says that, whereas Sosa apparel
was responsible for 65% of team sales last year, it currently
accounts for 10% to 15%.

One ancillary product that took off during last year's home run
race continues to benefit. You would think the sales of andro,
the artificial growth hormone, were, well, on andro. McGwire may
have weaned himself from the stuff, but sales have exploded by a
factor of 10, to more than $50 million annually. Call it the
doctrine of unintended consequences.

From baseball's perspective, the ultimate windfall from the home
run chase and its redux has been intangible and immeasurable.
It's goodwill. It's watercooler fodder. It's the shift in focus
from Don Fehr and Richie Phillips to the game on the field. It's
salve on the wounds wrought by the 1994 strike. A study recently
commissioned by the players' association revealed that on the
heels of last season's Mac and Sammy drama, 50% of American
adults consider themselves fans of major league baseball,
compared with 33% three years ago. "Mark and Sammy's race might
be the best thing that's ever happened to baseball," says Howard
Smith, baseball's vice president of licensing.

Others, however, claim that baseball's inability to transform
McGwire and Sosa into a serious bottom line enhancement bodes
ill for the future. "If a captivating home run chase doesn't
significantly improve the economics of baseball," asks Williams,
"what will?"

COLOR PHOTO: STEPHEN GREEN

Chicks may dig the long ball, but so far Madison Avenue has been
a little ambivalent.

It's unfortunate that baseball's biggest superstar is a
reluctant superstar.

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