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Sports Economics

MLB's new killer app

Baseball has always been different from other professional sports because local TV revenues are significant. They're large because they can provide much content to broadcasters -- 162 games in MLB versus 16 professional football games. But now we learn that one broadcasting stream with equal revenue distribution in baseball is internet broadcasting.

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The most successful, and most valuable, franchise in baseball in the last few years isn't the New York Yankees or their rivals, the Boston Red Sox.

It's Major League Baseball Advanced Media, which is worth more than those two deep pocket teams combined -- an estimated $2 billion to $2.5 billion, according to investments banks that looked into a possible initial public offering for the business a year ago.

And because of the success of MLB.com and other parts of MLBAM, the advantage that the Yankees, Red Sox and other rich teams have over the have-nots could shrink, eventually.

It probably won't happen in five or 10 years, but in 20 years, MLBAM could make the sport the share-the-wealth socialist paradise that has been long entrenched in the National Football League.

Revenue has grown from $5 million in 2000 to $265 million today and generated a positive cash flow of $55 million in 2004. And it draws traffic year-round.

I'm a user of the MLB's TV streaming videostreaming video, paying $29 for a full year of games last year. Until September, I only watched my team, the Red Sox, but found myself watching many other games as pennant races heat up. Undoubtedly the bigger market teams are the biggest draws to online content, but as the article states, "Once there's an agreement to split the money evenly, it's tougher for the big market teams to back out."