Baseball

International Business of Professional Sports
Jamie Tutko
June 16, 2014
Saint Leo University
MBA 575 Global Business Management

During the era in which we currently live in, sports play an impacting role in many lives around the world. Whether it be with young children playing sports and learning valuable life lessons, to adults spending money and going to sporting events to cheer on their favorite team. Professional sports do not only have a major economic impact in the United States, but also around the entire world. Currently, professional sports in the United States and Canada consist of what is called the Big Four; National Football League, Major League Baseball, National Basketball Association, and National Hockey League. These big four professional sports leagues have franchises all across the United States and Canada and bring in billions of dollars in revenue every year. Along with the Big Four, there are mega sporting events that take place around the world such as the Super Bowl, FIFA World Cup, and Olympics. These events can bring in millions of dollars in revenue while at the same time losing money for some cities.
Major League Baseball Major League Baseball has always been known as ‘America’s favorite pastime.’ It has been an extremely popular professional sport for well over 100 years. But recently, players from all over the world have taken their baseball talents to the United States to compete in Major League Baseball. The sport is now very diversified and has players coming from as far away as Japan and Australia to play at the games highest level. One of the most popular countries to have an impact on Major League Baseball over the past twenty years is the Dominican Republic. Today, almost every MLB franchise has an academy in the Caribbean island where kids as young as sixteen are signed to professional contracts and begin training full-time. There is an estimated 1600 ball players from the Dominican playing minor league baseball right now, which equals to about 25 percent (Cary 2007). The recent influx of Dominican born players making an impact in the MLB has changed the economics of the poor Caribbean island. Baseball is more than a sport in the Dominican Republic, and instead is a way of life. The entire island is about a third the size of Illinois, and small towns all around the country have produced impactful Major League talent. Players such as Valdimir Guerrero, David Ortiz, Manny Ramirez, Miguel Tejada, Alfonso Soriano, and Pedro Martinez all came from small towns in the Dominican Republic and have been playing baseball since they could walk. One of the main reasons for all the talent is the weather on the island. Unlike in some places in the United States, boys can play baseball all year long in the Dominican. This gives players the opportunity to be outside and physically practice no matter what time of the year. With the popularity growth of baseball and the new academies run by Major League franchises, salaries for Dominican born players is consistently rising. In 1988, MLB had 31 Dominican-born players on its rosters on opening day, with salaries totaling around $14 million. By 2007, that number had grown to 94 players with salaries totaling around $292 million (Baseball Reference 2010). Those figures only show Dominican-born players on MLB rosters, and don’t include the over 1,000 players on Minor League rosters who are still competing for a chance at the highest level. In real terms, baseball salaries for Dominican-born players in the Major Leagues have a growth rate of 14.3 percent per year from 1998 to 2007. The Dominican economy has also grown rapidly in recent years with the GDP growth in real terms over the decade from 1992 to 2002 was 6.2 percent (World Bank data). The Dominican Republic economy suffered a setback in 2003 with the collapse of a major bank, but quickly picked things back up. The country had real growth rates of 9.5 percent in 2005, 10.7 percent in 2006 and 8 percent in 2007 (EIU Country Report 2007). There is no direct evidence that shows that Major League Baseball is having a drastic impact on the Dominican Republic’s economy, but evidence suggest that it is helping. The one picture that goes unnoticed when it comes to Dominican born baseball players helping their economy is the money that most players put back into their local communities. For example, players such as George Bell, Salomon Torres, and Melido Perez have invested a great deal of their earnings into baseball academies around the island. These academies provide young players with much better fielding conditions and facilities where they can practice their craft. Pedro Martinez, who is from a small town called Manoguayabo, has helped transform the old neighborhood he grew up in by building new houses, paving the main road, and building a church and new school. He also owns a window factory and has helped employ many people who are very desperate for jobs. Vladimir Guerrero, who hails from Don Gregorio de Nizao, has also done many great things for his community. He started a seafood distributing company. His company will buy fresh seafood from local fishermen and sell it elsewhere. He was also building and renovating so many houses that he decided to build a concrete factory, a hardware store, a propane distributorship, and a trucking business. This has provided numerous jobs to his small town that were never available before. Other players have contributed by offering start up loans to local Dominican businesses, building car washes, supermarkets, vegetable farms, and many other businesses that have provided work for their local communities (Millman 2007). It is not evident that every player from the Dominican Republic will spend money and invest back in their home country, but many of them have. None of this could be possible if it weren’t for Major League Baseball giving these talented players the opportunity to play at the games highest level.
English Premier League
Most people in the United States might not believe this, but soccer is the most famous sport around the world. It is most popular in Europe and South America, but it’s the one sport that is played in every country. With that being said, soccer obviously plays a very impactful role on international business. The biggest and most prestige soccer league is the English Premier League. This league is equivalent to Major League Baseball, the National Football League, the National Hockey Association, and the National Basketball Association, where the top players from around the world compete at the games highest level. The Premier League consists of twenty clubs all located in England. These twenty clubs all act as shareholders in a corporation. The EPL has grown so big over the past thirty years that games are now televised live in over 212 countries around the world. They average that the potential television audience is around 4.7 billion people. What makes this league so popular is the influx of international players every year that come to England to play for one of the clubs. In fact, during the 2013 season, only 32% of the players in the EPL were born in England. Since 1992, there have been players from 97 countries compete in the English Premier League. France and the Netherlands represented the most players with 169 and 100 respectively. The United States ranked 13th on the list with having 38 players represented since 1992 (myfootballfacts 2014).
Because of global expansion in the EPL, there has been an international impact. According to the Russell Taylor, the global audience for the Premier League shows Asia with 31 percent, Europe 23 percent, Middle East and North Africa 16 percent, United Kingdom 16 percent, Africa 7 percent, North America and Caribbean 4 percent, South and Central America 2 percent, and Oceania 1 percent (Taylor 2013). These numbers have drastically increased over the past twenty years. Another example of the International growth of the English Premier League would be the addition of preseason matches being played internationally. In 2013, clubs Manchester United and Chelsea played a preseason match in Thailand. Also that year Arsenal, Manchester City, and Liverpool engaged in matches in Indonesia, South Africa and Australia respectively. These preseason matches hold significant importance in many areas. It gives the opportunity for the English Premier League to show their skills to a different audience in the hopes of gaining more fans and attention. If people from other countries, who might not be able to see any EPL matches, see the level of talent and competition, they might be more inclined to become fans. The preseason games also give the Greater Manchester businesses the opportunity to develop new markets. Some of the benefits include increased brand recognition, encouraging tourism, and generating business and investment opportunities (Taylor 2013). Another major factor the English Premier League has on an international level is the inauguration of the Premier Skills. This group consists of players and coaches from different teams throughout the league that have traveled across countries in Asia, Africa and the Americas and have offered thousands of coaching and refereeing training opportunities benefiting over 400,000 people. The more the English Premier League continues to expand its brand, the more successful they will continue to be on an international business and economics level.
Super Bowl vs. Other Mega Sporting Events
The National Football League Super Bowl is one of the most viewed single sporting events in the entire world. Super Bowl Sunday in the United States has become a holiday over recent years. Friends and families get together for a cookout or meet at their favorite bar or restaurant to take in the game. Major retail stores have sales on televisions in the weeks leading up to the games and besides Christmas, there is no other time of the year where more televisions are bought than before the Super Bowl. It has become quite the event where people from all over the world will spend thousands of dollars for the chance to watch the three hour game in person. Ad revenues for commercials increase every year and it is a prestigious honor for an entertainer to be able to perform the halftime show. The FIFA World Cup is the most popular sports tournament in the world. The tournament, which is held every four years in a different location, consists of thirty two teams that are representing their respective nation. The World Cup took place in South Africa in 2010 and is currently being played right now in Brazil. These games are viewed on television by an estimated 26 billion people around the world, with the final match having an estimated 700 million people tuning in to watch. The below table shows some economic statistics regarding the Super Bowl and World Cup
Select Statistic Comparing the Super Bowl to the World Cup

Statistic/Event
Super Bowl
World Cup
Viewership
106.5 million (2010)
715.1 million (2010 final) and an estimated 26.29 billion for all 64 games (2010)
Number of games
1
64
Total Time Played
60 minutes
96 hours
Ad Revenue
$213 million (2009)
$1 billion (estimated for 2010)
Ticket Price
$800-1,000 (2010)
$400-900 (2010 final)
Ad Revenue per minute of playing time
$355,000
$176,000
Source: http://matadornetwork.com/sports/the-world-cup-is-246x-bigger-than-the-super-bowl

This table shows that both the Super Bowl and the FIFA World Cup would qualify as mega sporting events on a global scale, even though the Super Bowl is primarily viewed in the United States. The next table shows the ad revenue earned during the Super Bowl as compared to both the World Series and the NCAA Men’s Basketball Final Four.

Statistics Comparing the Super Bowl to the
NCAA Final Four and the World Series

Year/Event and Ad Revenue ($Millions)
Super Bowl
World Series (Number of Games)
NCAA Men’s Basketball Final Four (Number of Games)
2002
134.2
141.2 (7)
101.3 (3)
2003
130.1
124.3 (6)
117.6 (3)
2004
149.6
113.4 (4)
126.4 (3)
2005
158.4
146.9 (4)
142.2 (3)
2006
162.5
160.5 (5)
154.7 (3)
2007
151.5
156.4 (4)
168.4 (3)
Source: http://www.datasofa.com/app#/data_sets/1142

The information above clearly shows that the Super Bowl makes more money per game on ad revenue than both the World Series and the NCAA Men’s Basketball Final Four. While the ad revenue is greater, the costs of hosting the Super Bowl can become very expensive for a city. Cities that wish to bid for the Super Bowl will almost always need public funding. Some of the costs will go towards improving infrastructure, transportation, communication, and accommodations for the teams, officials and spectators. Because the Super Bowl is a one-day event, it can be much harder to get public funding than it is with the FIFA World Cup, but the costs are far less. For an event such as the World Cup, cities must build brand new stadiums in order to be a host. These stadiums are sometimes left unused once the event is over, and the city is left with the costs. The Super Bowl, on the other hand, does not have to build a brand new stadium because the host already has the stadium in their city. Instead, what the National Football League has done is grant the Super Bowl to cities that have recently built a new stadium for their local tenant. Even though the city is spending a huge deal of money on a new stadium, they will be able to use that stadium for years to come, unlike the World Cup. The following table shows the economic impact of hosting a Super Bowl, provided by Boosters.

Economic Impact Estimates Provided by Boosters
For Selected Super Bowls between 1995 and 2008

Year
Author
City
Estimate in millions of $
1995
NFL and Kathleen Davis, Sports Management Research Institute
Miami
$365
1998
Price Waterhouse Coopers
San Diego
$295
1999
NFL and Kathleen Davis, Sports Management Research Institute
Miami
$393
2000
Jason Ader, Bear Stearns
Atlanta
$410
2003
Super Bowl Host Committee
San Diego
$375
2007
Price Waterhouse Coopers
Miami
$390
2008
W.P. Carey MBA Sports Business Program
Phoenix
$500.6
Source: Baade and Matheon (2006), “Padding Required: Assessing the Economic Impact of the Super Bowl,” European Sport Management Quarterly, Vol. 6, No. 4, December, p. 355.

The National Football League has estimated that the Super Bowl is the most profitable of all professional sports mega-events. Even though it is a one day event, the fact that no new real infrastructure is needed saves the National Football League and the host city a great deal of money.
Conclusion
Professional sports play a major impact, not only one the lives of countless individuals, but also internationally and economically. As the tables have shown, mega-events such as the Super Bowl and World Cup bring millions of people together and generate millions of dollars. With Major League Baseball and the Dominican Republic, hopefully more players from outside of the United States will begin to put more money back into their own local economies. This will only make the game much more competitive and give people the opportunity to live better lives. It is no shock that professional sports will continue to be a huge economic and international event and will continue to bring people together all around the world.

References
Baseball Reference. (n.d.). Baseball-Reference.com. Retrieved June 20, 2014, from http://www.baseball-reference.com/
Cary, Peter. “Where ballplayers are born and made.” U.S. News & World Report, March
26, 2007.
Economist Intelligence Unit. Country Report, Dominican Republic, August 2007.
Hendrick, M. (n.d.). The Impact of Foreign Players on the Premier League and on England 's National Team. The Huffington Post UK. Retrieved June 22, 2014.
Matheson, V., & Baade, R. (n.d.). An Evaluation of the Economic Impact of National Football League Mega-events.Holy Cross. Retrieved June 14, 1920, from http://college.holycross.edu/RePEc/hcx/Baade-Matheson_NFLMegaEvents.pdf Millman, Joel. “On Home Field, A Baseball Family Builds Lineup of Jobs.” Wall Street
Journal, February 18, 2005: A1.
My Football Facts & Stats | Premier League | Foreign Players by Club & Country. (n.d.). My
Football Facts & Stats | Premier League | Foreign Players by Club & Country. Retrieved
June 22, 2014, from http://www.myfootballfacts.com/PremierLe

Sustainable Brazil. (n.d.). Economic Impact of 2014 World Cup. Retrieved June 20, 2014, from http://www.ey.com/Publication/vwLUAssets/Sustainable_Brazil_-_World_Cup/$FILE/copa_2014.pdf The Premier League 's Response to Call For Evidence On The Independent Review Of
Intellectual Property And Growth. (n.d.). Premier League. Retrieved June 14, 1920, from http://www.ipo.gov.uk/ipreview-c4e-sub-premier.pdf

References: Baseball Reference. (n.d.). Baseball-Reference.com. Retrieved June 20, 2014, from http://www.baseball-reference.com/ Cary, Peter 26, 2007. Hendrick, M. (n.d.). The Impact of Foreign Players on the Premier League and on England 's National Team. The Huffington Post UK. Retrieved June 22, 2014. Matheson, V., & Baade, R. (n.d.). An Evaluation of the Economic Impact of National Football League Mega-events.Holy Cross. Retrieved June 14, 1920, from http://college.holycross.edu/RePEc/hcx/Baade-Matheson_NFLMegaEvents.pdf Millman, Joel. “On Home Field, A Baseball Family Builds Lineup of Jobs.” Wall Street Journal, February 18, 2005: A1. June 22, 2014, from http://www.myfootballfacts.com/PremierLe Sustainable Brazil Intellectual Property And Growth. (n.d.). Premier League. Retrieved June 14, 1920, from http://www.ipo.gov.uk/ipreview-c4e-sub-premier.pdf