16 March 2016

Baseball: A Model of Successful Business Adaptation

Guest Post by Steven Koonz

Baseball is as American as apple pie. It has been the American pastime since the late nineteenth century. Major League Baseball has been played since 1876. Over the years, baseball has changed and evolved into a billion dollar industry. The game today would be barely recognizable to a baseball fan in the 1870s, both in the way it is played and in the way the business of baseball is conducted. So how did we get to where we are now from when that first National League game was played in 1876?

As with any game, the rules of baseball have changed over time. The game played today is very different from the game played in 1876, or even before that. Changes have been made to make the game safer, more fair, and more exciting to watch. A century ago, players did not wear batting helmets. Spitballs were legal. Usually only one ball per game was used. The ball was made of materials that did not jump off the bat like the balls that are used today. These are only a few of the ways that the game was different.
Perhaps some of the biggest changes to the game of baseball were those that led to the end of the dead-ball era around 1920. The ball was switched out for one that was more lively, spitballs and any other form of doctoring the ball were made illegal, and umpires were required to replace the balls when they became dirty, thus making it easier for the batter to see them. These changes led to an unprecedented increase in offense, and paved the way for players like Babe Ruth to become stars. Whether it was the intended consequence of the changes or just a byproduct, these new rules made the game more exciting to watch. Another major change that was designed to increase offense was the implementation of the DH in the American League in 1973.

Rules have been adopted for purposes of safety as well. Helmets have become mandatory for all batters. MLB is experimenting with protective headgear for pitchers as well, although it seems unlikely that it will be made mandatory in the near future. However, with all of the recent concerns about concussions, the league is doing its part to prevent head injuries. Before the 2014 season, MLB tightened restrictions on collisions between catchers blocking the plate and baserunners, with the hopes of preventing injuries like the one suffered by catcher Buster Posey in 2011.

In addition to changes made on the field, the business behind baseball has changed too. Willie Mays, one of the greatest and most dynamic players of all time, made $165,000 in 1973. At the time, it was one of the top salaries in the league. When adjusted for inflation, that equates to around $900,000 in today’s money. The Red Sox just recently signed David Price to a long term contract with an average annual value of $31 million. Advertising deals, broadcast rights, and growing market size have all increased the earning potential of teams. Better technology, and cable TV becoming more accessible have led to huge broadcasting deals, like the LA Dodgers $8 billion, 25 year deal for TV rights. Free agency gave the players more leverage to negotiate their contracts with their teams and other teams, thus further increasing player salaries.

The reason MLB has been so successful over the years is that it has been able to change with the times. Men like Bill Veeck, Branch Rickey, and several others brought changes to baseball that make the game what it is today. It is this ability to adapt that has been responsible for baseballs resilience as our national pastime, despite labor strikes, cheating, and steroid use. When MLB was first founded, its founders probably had no idea that there would be games played in Tampa in air conditioning, or at night under the lights in Los Angeles, or that there would be ‘sausage races’ in Milwaukee. One can make a comparison between Fenway Park and the game of baseball. Fenway park is an old facility, one that has seen more than a century of baseball played on its field. Babe Ruth pitched from that mound. Ted Williams stood in the left handed batter’s box there for 248 of his 521 home runs. Despite its great age and history, Fenway is still a perfectly functional ballpark, with additions and renovations over the years to modernize the facility. Major League Baseball is similar, being an old game that has been modernized over the years.

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