Please ensure Javascript is enabled for purposes of website accessibility

Navigating the New Economics of Baseball: Inside The Colorado Rockies’ Most Strategic Play Yet

“Tinkers-to-Evers-to-Chance” is the rhythmic phrase describing the legendary double-play troika presented by three Chicago Cubs infielders during the early 1900s.

The players — shortstop Joe Tinker, second baseman Johhny Evers and first baseman Frank Chance — so reliably broke the hearts of opposing teams by dispatching groundballs that the poet Franklin Pierce Adams memorialized their work in a 1910 poem.

In “Baseball’s Sad Lexicon,” Adams told the tale from the vantage point of a fatigued New York Giants fan as he lamented the ruthless predictability of this infield trio.

That was then. But 124 years later, we’re blithely updating the phrase to describe a new formula underlying the modern business of baseball. We’ll call ours “Tickets to Airwaves to Chance.”

READ: Working in Colorado’s Professional Sports Industry is Not as Glamorous as You Think

Clever, huh?

As in: Three key economic pillars that support the ability of baseball stewards like Charlie Monfort, the owner and general partner of the Colorado Rockies, to pay their bills and, ideally at least, make some money.

Tickets

The “tickets” part is what it has always been: revenue flowing from the rental of ballpark seats, along with spillover spending from live attendees on munchies and merchandise. The latest estimate from magazine publisher Forbes (for the 2022 season) is that the Rockies took in $75 million in gate receipts, representing just over one-fourth of the team’s $286 million in total revenue.

The ”tickets” part is vital given the deterioration of a second contributor to baseball’s coffers: airwaves.

Airwaves

For the past two decades or so, teams like the Rockies have been blessed by large sums of money paid by regional sports networks (RSNs) — a once-thriving component of what had been a lucrative pay TV ecosystem. Per Forbes, 2022 RSN rights payments to the Rockies amounted to $57 million.

READ: Altitude Vs. Comcast — The Changing Economy of Sports Media

Now, the RSN kingdom is a withering vestige of what it used to be.

Erosion of traditional pay TV subscriptions has cut these sports networks down to their knees. Pay TV used to present a reliable money stream — basically everybody with a cable or satellite TV subscription kicked in money for sports networks, regardless of whether they wanted to. Now, the RSN category is on life support as millions of Americans cut the pay TV cord, and in doing so, choke off a good share of the money flowing to RSNs.

The tea leaves lately have read so dour that some RSN operators, including longtime area provider AT&T SportsNet Rocky Mountain, have called it quits altogether.

Worry not, Rockies fans: The mothership MLB organization reportedly has been plotting to take over the task of producing and distributing Rockies games this season. But that’s a stopgap.

Over time a new video model is likely to arrive, whereby teams and their media partners put together a mix of old-school pay TV distribution coupled with newfangled streaming packages and arrangements to televise some games the old-fashioned way: via free, over-theair TV.

Right now, however, this is all a work in progress. And it’s this exact same uncertainty over baseball-media economics that leads us to the “Chance” part of our expression.

Chance

Here, the term refers not to Franklin Leroy Chance, the Chicago Cubs infielder whose professional career began in 1898, but to a red-hot sports gambling category. Legalized betting and the fervor surrounding it is seen by many sports industry figures as a salvation for a deteriorating media environment.

To be sure, teams like the Rockies don’t directly benefit from the large sums wagered by sports bettors. (Last July, for example, Coloradans bet close to $105 million on baseball, per the Colorado Department of Revenue, with winners pocketing $98 million in payouts.)

The Rockies don’t operate a casino in Black Hawk or accept bets from the Will Call window. Rather, the proceeds go mainly to sports books like FanDuel and BetMGM Sportsbook, which rake in the bets, dole back winnings, keep some of the spoils, and pay taxes to state governments.

READ: Live from Colorado — The Future of Sports Betting 

But teams benefit in other ways.

For one thing, sportsbooks spend hundreds of millions of dollars on advertising and sponsorships, with a good share going to media partners and TV networks that, in turn, pay teams to license their games. Separately, interest stirred up by betting opportunities further bonds fans to teams and games, contributing to TV viewership, ticket sales, player merchandise, and edge-of-the-seat interest for those wagering whether Rockies shortstop Ezequiel Tovar will ground out during his final at-bat.

There are direct partnerships, too, like the sponsorship alliance the Rockies struck last August with the sports betting company bet365.

The point being: The new mix of economics, and the entrance of gambling as a revenue generator, isn’t happening in a vacuum.

If baseball owners weren’t worried about long-term attendance trends, shifting demographics and the decay of an old-school pay TV model, I’m not sure legalized gambling would cast quite the same spell. But conditions change, and so do business models.

As Rockies President and Chief Operating Officer Greg Feasel told a Colorado Business Roundtable audience recently, “You survive by adapting.”

The new rules of the sports-business road demand just that. It’s like the Chicago Cubs double-play formula of old: A shifting interplay of “tickets, airwaves and chance” represents a new twist on an old ambition: how to get your team out of a jam when trouble’s brewing.

The Butterfly Effect: How MLB Rule Changes Are Reshaping Baseball and Businesses in Denver

More action, fewer delays and baserunners scampering like fire ants are welcome contributions of 2023’s MLB rule changes. That, and a clampdown on a moment even hard-core loyalists detested: Watching a light-hitting infielder adjusting his batting gloves between pitches with the determination of a Parisian chef finishing off tonight’s amuse bouche. Ball one. Delay for glove adjustment. Strike one. More glove stuff. Ball two. Glove needs tightening. Next: another ball. Hmmm, wonder who’s posting on Instagram right now?  

Almost universally, the pivot to a faster-paced, shorter-duration game governed by a pitch clock has won praise. “These speeded-up games are working,” ESPN veteran baseball analyst Tim Kurkjian declared to radio host Dan Patrick early in the season.  

Through about one-fourth of the regular season, MLB games at Coors Field and elsewhere were clocking in at a bit under two hours and forty minutes —a big reduction from the three-hour-plus marathons of old. Casual fans at Coors Field are hereby put on notice: Line up to order a Helton Burger and you risk missing the rest of the game.  

READ: Navigating Sports Politics as College Football Evolves — CU Buffs Aim High

At least, that’s the reaction tied to the playing of the game. Outside the ballpark, in the baseball-meets-business realm, nobody’s quite sure what to make of the new rules.  

Remember the Butterfly Effect, the Chinese proverb brought to popular attention in author Michael Crichton’s “Jurassic Park”? It argues that even the most innocent-seeming actions ripple across the universe. “The flapping of the wings of a butterfly can be felt across the world,” goes the saying. Or, as I like to think of it: “Dinger dances atop the third-base dugout and a bus driver in Oslo belches.” Hey, everything’s connected.  

There’s a Butterfly Effect of sorts happening beyond the Coors Field turnstiles, where a mini ecosystem surrounds the game, with players ranging from Homemade Burrito Woman on 20th Street to parking lot owners and restaurant operators. For them, shorter games have spillover consequences. 

“The entrance to Coors Field is 500 feet from my front door,” observed Josh Kritner when I asked him about the MLB rule changes, “You better believe this has an influence on my business.”  

Kritner runs the popular LoDo hangout Viewhouse on behalf of its owner Lotus Concepts. He says shorter games, in the right circumstance, can provoke more spending. On busy Friday or Saturday game nights, Viewhouse’s servers will pour beers and deliver platters of nachos to 2,000 or more patrons. Historically, many of these were one-and-done customers, in the door for a pre-game beverage or meal and then out for the night. Now, with 6:40 p.m. games often ending by 9 p.m., Kritner is seeing many fans return post-game.  

READ: How the Name, Image, Likeness (NIL) Revolution is Changing the World of College Sports

But the yang to this yin is competition from the Rockies directly. The decision to counter truncated game durations by extending the beer-selling window through the eighth inning – it used to be the seventh – cuts into Viewhouse’s own beverage sales. “As a restaurant in LoDo, that hurts,” says Kritner. “Guys have already had two more beers. There’s no point in coming back to get a cocktail.” 

The Rockies’ decision to keep the taps running reflects the economic importance of the concession business. Food and beverage sales, along with parking fees and other on-site sales, account for about 16 percent of revenues for a typical MLB team, per the statistics analysis firm fivethirtyeight.com.  

At the ballpark, time really is money. Cutting down the minutes people spend on site by nearly 10 percent leaves less time to fetch a Rockies dog or a late-game pile of Dippin’ Dots (you know: colorful frozen orbs served in a bowl that’s supposed to resemble a batting helmet). Beer yields high margins per transaction, so it’s an easy target for recovering some of the operating profit, even if the decision flies in the face of a longstanding pledge to discourage overserved fans late in the game.  

Beyond MLB rule changes, Rockies ownership is feeling residual impact from fan sentiment. A moribund start to the season, coupled with malaise tied to the team’s many errors in baseball judgment — third baseman Nolan Arenado is the No. 1 poster child here — have left their mark. Average game-day attendance through early May was 27,000, down about 15 percent from last year’s number, and down to the lowest level since 2005, excepting the 2020 Covid aberration.  

Fewer fans translates to lower gate revenue (a big line-item, accounting for nearly 30 percent of a team’s total take) along with reduced concession and merchandising sales. Add to that a worrisome development on the media side. Warner Bros. Discovery, the parent of Rockies TV carrier AT&T Sportsnet, wants to wriggle out of the regional sports business altogether, raising questions about who, if anyone, will jump into a market that’s deteriorating thanks to unrelenting pay TV cord-cutting. Finally, out of left field, there’s the possibility of an MLB team landing in Salt Lake City — please, please call this team the Mortons — which could carve into regional allegiances.

READ: Altitude Vs. Comcast — The Changing Economy of Sports Media

So: A combination of new rules, shorter games, sagging attendance, an uncertain media landscape and a possible regional interloper is converging to change … something. What that may be, who knows? Despite the new pressures, few business endeavors offer more predictable long-term ROI than owning an MLB team. Forbes estimates the Rox are now worth close to $1.46 billion – nearly five times the amount calculated 20 years ago.  

Knowing the upward valuation trajectory, an outright change of ownership – the hoped-for outcome of many a fed-up fan – seems unlikely. Even so, sometimes the ball bounces in funny ways. Like a September call-up, it’s possible that at some point, the baseball Butterfly Effect will come into play for the Rockies. Maybe in a big way. 

 

Stewart Schley JpegStewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at [email protected]