Why Are the Dodgers Like the Muppets?

October once again, the maddest month in sports with baseball’s league playoffs, the World Series and the National Football League combining to provide a harvest of televised attractions.

But who’s watching? Fact is, the ratings are down for football, according to Nielsen Media Research, whether for the games played on CBS and NBC on Sunday or for Monday Night Football on ABC.

The same goes for baseball: The league playoffs have been declining in the ratings, and even the World Series is down to 23.9% last year--when Oakland played Los Angeles--from peak ratings of 28.6% in 1986--when Boston played New York.

That means money--at least $9,000 in the price of a 30-second commercial for each ratings percentage point. And low ratings may be crucial at the moment because the National Football League--which receives more than $500 million a year from its existing contract with the TV networks and ESPN, the cable channel--is entering negotiations for a new TV agreement.

Dollars Roll In

So what is likely to happen? Against all apparent logic, football is almost certain to get a big boost in TV revenues, says Steven Matt, an appraiser of sports franchises for Arthur Andersen, the accounting firm. “I expect football to achieve substantially greater revenues under its new contract,” says Matt--”look at what baseball received.”

He’s referring to the astounding $1.1 billion that CBS has pledged to pay Major League Baseball for the right to show the World Series, league playoffs and the All-Star game for the next four seasons. ESPN threw in another $400 million so that it could show 175 games a season from 1990 to 1993.

Economics seems upside down in sports. Though half the teams in the NFL are losing money, and spiraling player salaries make it certain that some baseball teams and many National Basketball Assn. franchises are in the red, the value of sports teams keeps rising dramatically.

The Dallas Cowboys were sold for $145 million this year, 80% more than the team sold for five years ago. Baseball’s Seattle Mariners recently sold for $76 million--almost six times the price the team last sold for in 1981.

What is going on? Sports has become part of the global entertainment industry and is being pushed by the same wild economics that these days cause movie studios to sell for billions of dollars.

First, the television networks want attractions to fill air time and sports programs turn out to be cheaper than originating shows or buying movies from Hollywood film libraries. Furthermore, there is a demand from advertisers for sports programming because it reaches a specific audience--and sometimes a high-income audience, as indicated by the many computer ads aired during championship games.

International Dimension

Second, global industry is not a misnomer. American football is spreading its appeal to Europe and Latin America. Baseball is big in Asia and Latin America and basketball is established and growing in Europe. An estimated 200 million non-Americans watched the last Super Bowl, along with 80 million Americans in the households that Nielsen counted; for the World Series, 60 million Americans may have been joined by 160 million non-Americans. Numbers like that inspire broadcasters to see the total market growing even as U.S. ratings sag.

And others share the vision. Some NFL owners plan to launch a spring league of U.S. and non-U.S. teams in 1991, counting on global TV revenues for the games. Teams look forward to sales of shirts and caps and souvenirs around the world, as global television makes the L.A. Dodgers and New York Giants household names in distant lands. “The international dimension is one of the real long-term trends in sports,” says Michael Megna, of American Appraisal Associates, the leading evaluator of sports franchises.

Why are team values rising? Because existing owners will benefit from these trends and from the desire of more cities to have a team of their own--any team, as long as it’s major league. Sacramento is offering $35 million cash and a new taxpayer-financed stadium to lure football’s losing Raiders and their owner Al Davis up from Los Angeles.

Even poor businessmen benefit in such an environment: Owner George Steinbrenner has turned the once proud New York Yankees into chronic losers, yet Madison Square Garden is paying $500 million for 12-year rights to televise Yankee games locally.

Money, money. Do traditional fans and a winning team even matter anymore? Yes, they do. Baseball has increased attendance by making sure that its parks remain safe and attractive for family entertainment, says appraiser Matt, and “you have to have strong field performance to keep fans coming.”

Still, team image can set values beyond wins and losses. “The Chicago Cubs,” says appraiser Megna, “have an image the world over, and have a higher value than the Chicago White Sox.”

Which is only saying in baseball terms what is evident whenever millions are paid to acquire films such as “Lawrence of Arabia” or cuddly characters like the Muppets: We live in a time when the greatest values lie in recognizable entertainment programming for a growing world market. It’s the most powerful trend in business today.