Mickey, it's a different ball game now!

One of the most common misconceptions about the strategic work, is that results must be evident and in a short time span. Well-executed strategic work is usually a result of regular budgeting cycles, and in organizations that empower long-term vision, where administrators and sports managers tend to hover above sports natural state of short-termism driven by sports performance, where wins and its glory tend to be ephemeral.

This is more acutely noticed in the European markets, where promotion and relegation from national and continental competitions pose a very difficult risk/reward map to navigate from a management perspective.

But the long term, if well designed and executed, is always favorable -and profitable. That’s why today I want to share a somewhat time-stamped short chronology of what is in my opinion one of the greatest success stories in sports business: the 20 years that elapsed so MLB Advanced Media became Disney Streaming, a $6 Billion company by valluation, that meant over $4 Billion in hard cash to American baseball and hockey team owners:

In 2000 Major League Baseball decided to create its own media technology operation that consolidated the teams online rights and ticket sales, to best serve its fans. The decision was made that Major League Baseball Advanced Media, L.P. (MLBAM) was to be capitalized with $120 million, with each team contributing $1 million each year for four years. During the first couple of years, they externalized solutions development, and it failed.

By 2002, MLBAM decided to develop tech in-house, and in order to do that leveraged the centralized ticketing rights of all teams (which teams poured into MLBAM, alongside other collective rights like the digital marketing on teams’ websites), and sold those collective ticketing rights to Ticketmaster which paid and advance of $10 million which MLB used to build the MLBAM operation, covering payroll and video streaming capabilities.

A Texas Rangers vs New York Yankees game on August 26, 2002, was the first game produced and streamed online. That was the he basis for a postseason package that same year that sold for $20.

2003 was the year in which MLBAM's capabilities were aimed to be fully displayed, and MLB.tv was launched with a full season package of $79,95 that was bought by 100,000. That was a $7,995,000 business line, of a venture that had only gone through 64% of its foundational runway budget of $120 million, meaning its shareholders (the 30 MLB teams) would not only save a couple of million dollars of that earmarked budget, but could start receiving dividends.

MLBAM went full throttle in 2005, when it bought ticket sales company Tickets.com to pursue more and deeper internal capabilities, and to cater to the increasing demand of online ticket purchases at major and minor league ballparks. The aggregated ticketing business across MLB is near $3 billion today.

Expanding into the centralized ticketing operation, in 2007 in order to regulate tickets reselling (what is known as secondary market), MLBAM signed a five-year deal with StubHub, thus enabling a centralized funnel for primary and secondary ticket sales, which reported profits back to the shareholders.

With a fully centralized digital output in 2008, MLBAM signed with Yahoo for ad sales for three years, boosting the commercial capabilities of its centralized digital offering that included the League and the 30 teams websites, as well as it’s video player that contained all highlights and content produced (content on-demand), included the live streaming. In 2011 the company replaced Yahoo with Auditude in a multi-year deal. By that time, MLBAM produced and served 12,000 live events per year, including MLB games (at a rate of 500 new video assets per day) and the full programing grid of ESPN3.com

Diving deeper on its own venture capital investments, in 2014 MLBAM invested in a joint venture alongside Time, Inc. and the NHL, called 120 Sports which produced and streamed sports news and highlight content catered towards digital platforms and a young adult audience, which has since been merged into the Sinclair Broadcast Group’s Stadium digital network. That same year video game developer 2K, opted out their renewal for the MLB licensed franchise, prompting MLBAM to venture into developing their own game, within a year and a half and a dozen developers, which proved to be unsuccessful. That hiccup made MLBAM develop and launch MLB: The Show, a video game series created and produced by San Diego Studio, a development team that is part of PlayStation Studios, a series that until 2020 was an exclusive title of the PlayStation gaming system.

In 2015 the National Hockey League announced a six-year deal with MLBAM for it to take over its digital properties, including its websites, mobile apps, operations and distribution of its digital streaming service NHL GameCenter Live (renamed NHL.tv outside of Canada), and migrating NHL Network to the facilities of MLB Network. The deal is worth $600 million over the life of the contract, and also granted the NHL an equity stake of up to 10% in the future Streaming Services spin-off that will be called BAMTech. By this time MLBAM was servicing not only the MLB ecosystem and that of the NHL, but also ESPN, WWE and HBO, so MLBAM spun off its streaming technology division as an independent company, with investments by MLB and other minority partners. MLB-specific properties (such as MLB.com and those of the teams) would remain under league control under MLBAM.

The time to harvest came in 2016 when MLBAM sold 33% of BAMTech to Disney for a reported $1 Billion, as Disney was preparing its launch of Disney+. Immediately in 2017, Disney made a further investment to take its stake to 75% by paying MLBAM a reported $1.58 Billion for that additional 42%, while continuing to run services for all clients, changinf the name of BAMTech to Disney Streaming Services.

In 2021 it was reported that, at the end of the abovementioned multiyear deal, the NHL sold its 10% on BAMTech (by that time Disney Streaming) to Disney, for $350 million, making Disney owner of 85% of the company. All that led the way to what just transpired last week, after an SEC disclosure in the quarterly earnings of the company that in November 2022 Disney has completed the full acquisition of BAMTech, by obtaining the remaining 15% in hands of MLBAM for a reported $900 millions price tag (valuing the company at $6 Billion).

The complete sale of what is now Disney Streaming by MLB to the Walt Disney Co. totals $3.48 billion, or $116 million to each of the league’s owners, versus the $2.6 million each one had to put at the start of the venture. All these figures, notwithstanding costs to build BAMTech out which was mostly covered by operating revenues.

Furthermore, that revenue received by the teams don’t count as baseball revenues, thus are not subject to be reinvested into the operations of the team (i.e. player salaries), allowing the owners to pocket those proceeds. As reported by Maury Brown of Forbes, the league is not just in the business of baseball; they are also a strong technology company. MLB.TV, the league’s streaming service dedicated to live-streaming games, registered over 11.5 billion minutes watched during the 2022 season, marking the first time in its history the service surpassed 11 billion. This season’s total is a +9.8% increase over last year’s tally of more than 10.5 billion minutes watched. MLB.TV achieved the previous record in 2021 when more than 10 billion minutes were watched for the first time.

A learning to the global sports industry about investments in technology and building its own IP, pays off if the right long-term strategy is in place.