How the World Series Lost Relevancy

How the World Series Lost Relevancy

I was born the 1950s.  In my youth of the ’60s there was no doubt that the #1 sport in America was baseball.  Almost every boy owned a bat, ball and glove and played baseball.  When we went out for recess there was always a softball game somewhere on the playground.

Fathers told stories about how on the battlefields of WWII they would shout questions about baseball players and World Series statistics to each other to determine if the “other guy out there” was an American, or a German trying to sucker the Americans into the open.  Baseball was so relevant every American was expected to know the details of players, games and series.

In that era, lots of baseball was played in the daytime, since the game and its parks preceded the era of great field lighting.  Men regularly took off work to attend ball games, and it was considered fairly normal.  People listened to baseball games on the radio at work.

world series 2015And when the World Series came along, which was played around Labor Day, it was so beloved that people took TVs to work, hooked up makeshift antenna and watched the games.  Even schools would set up a TV on the gymnasium stage and let the students watch the game — and some enterprising teachers would set up televisions in their classrooms and eschew teaching in favor of watching the series.  It was even bigger than today’s Super Bowl, as pretty nearly everyone watched or listened to the World Series.

No longer.  World Series viewership has been on a decline for at least 40 years.  According to Wikipedia, World Series viewership was about 35million in the 1986-1991 timeframe. By 1998-2005 viewership was down to averaging 20million – a 40% decline. By 2008-2014 viewership had declined to 12million -another 40% decline – or a loss of 2/3 the viewership in 25 years.

By comparison, regular season games in the NFL 2014 season averaged about 18million viewers, and 114million people watched the February, 2015 Superbowl – almost 10 times World Series viewership. Even the women’s FIFA World Cup soccer match last July drew 25million American viewers – twice the World Series.

Are you aware the World Series is happening now?  I will forgive you if you didn’t know.  Marketwatch.com headlined “This Is the Most Exciting World Series No One is Watching.” From what was the #1 sporting event in America, and possibly the world, 50 years ago the World Series has become nearly irrelevant for most people.

Why?  Trends have made the World Series, and really baseball, obsolete.

Big Trend #1 – We’re out of time.  The pace of life is far, far different today than it was in 1965.  Laconic weekday afternoons lounging in a ballpark to watch a game are a thing of the past.  The fact that baseball has no time limit is probably its most negative feature.  Games are a minimum of 9 innings, but in case of a tie they can last many, many more.  Further, if it rains the game is delayed, which can extend the time an hour or more.  Thirdly, you have no idea how long an inning may take.  15 minutes, or an hour, all depending on a raft of variables that are impossible to predict.

Game 1 of this current series is a great example of the problem this creates.  The game lasted 14 innings.  There was a rain delay in the middle of the game.  Overall, it was a 5 hour 9 minute event.  While this set a new record for a World Series game length, it clearly demonstrates the problem of a sporting event which has no clock.

The most popular games are highly clock bound.  Football and basketball not only have limits on the game length, there is a clock limiting the time between plays (or shots.)  Soccer is timebound, and there are no time outs.  In these games that have greatly grown popularity people know how long a game will take, and that is important.

Big Trend #2 – Action.  When was the last time you played a board game, like Monopoly or Life?  Do you even own one any longer?  Today games are action intensive.  In the 1960s a pinball machine was the closest thing anyone had to an “action game.”  Look at any game today, via console, computer or mobile device, and there is action.  Even Tetris had action to it, and that is nothing compared to the modern video game.  People now like action.

Then there is baseball.  A “perfect game” – the ultimate for this sport – happens when 21 people bat, and every one walks back  to the dugout without reaching base.  Quite literally, nothing happens.  A pitcher and catcher play catch, while the batters watch.  The next most vaunted game is a “no-hitter,” in which people reach base via a walk or an error – but it again reflects a lack of action in that no batter achieved a hit.  The third most celebrated game is a “shutout,” meaning one team literally ended the game with a score of Zero.  Goose egg.

Baseball is a game of very little action.  A really good game often ends with each team having less than 10 hits.  It is rare for there to be more than 2 home runs in a game, and often there are games with no home runs at all.  Heck, even in golf at least the athletes are hitting the ball 60+ times apiece!

We live in a world today where people run for fun.  Or ride bicycles.  Where people join gyms to work out on treadmills, rowers, stationary bikes and weight machines.  Nobody did this kind of thing in the 1960s.  People today are active, and being active is a sign of health, vitality and well-being.  Sedentary behaviors are frowned upon.  There is no sport with less action than baseball (except maybe darts.)

Big Trend #3 – Globalization.  Despite Mr. Donald Trump’s xenophobic appeal, globalization is an unstoppable trend.  Our businesses and our lives are increasingly global, as it is doubtful any American goes a day without touching a product or service delivered from an offshore source.  And unlikely most Americans live any given day without talking to someone born in a foreign country, or entertaining them with news, information, sports or programming from outside the USA.

There is no sport which makes this clearer than soccer. Due to its global appeal, 715million people watched the final game of the 2006 World Cup (55 times the World Series.)  909million people watched the final 2010 World Cup game (71.5 times the current World Series.)  [note: FIFA has not published numbers for the 2014 final game in Brazil, but it is surely going to exceed 1B viewers.]

American impact? There were almost as many Americans (11million) that watched the first round match between the USA and Ghana in the 2014 World Cup as are now watching a World Series Game.  And the 2014 World Cup final game had 17.3M U.S. viewers – 34% more than are watching the World Series this year.

Basketball has some international appeal, as there are leagues across Europe and some in South America.  And my son was shocked at how much people watched and played basketball on his trip to China. And we see globalization reflected in the players names now in the NBA.

We also see globalization reflected in the NHL, which has many players from outside the USA.  And viewership is growing for NHL Stanley Cup games, although it is still only about half the World Series.  But given the trajectories of viewership, and the fact that hockey is both a timed sport as well as action-filled, Stanley Cup watchers could exceed World Series watchers in just a few years.

Simply put, baseball has never extended strongly beyond the USA and Japan.  Lacking competitive teams and viewers outside the USA, as well as limited non-USA player recruitment, this “most American of sports” is off one of the country’s (and planet’s) major trends.

In short, the world moved and baseball did not change with the times.  People don’t live today like they did in the 1930s-1960s.  Trends are vastly different.  New sports that were better linked to major trends, and which adapted to trends (by adding things like shot clocks and play clocks, for example) have gained viewers, while baseball has declined.

Baseball didn’t do anything wrong.  It just didn’t adapt.  And competitors have moved in.  Just like happens in business — which, of course, is the reason we have professional sports – you either adapt or you become obsolete.

The World Series was once the most relevant sporting event on the globe.  No longer.  And lacking some major changes in the game, its ability to ever grow again is seriously questionable.

 

 

Gladiators get killed. Dump Wal-Mart; Buy Amazon


Wal-Mart has had 9 consecutive quarters of declining same-store sales (Reuters.)  Now that’s a serious growth stall, which should worry all investors.  Unfortunately, the odds are almost non-existent that the company will reverse its situation, and like Montgomery Wards, KMart and Sears is already well on the way to retail oblivion.  Faster than most people think.

After 4 decades of defending and extending its success formula, Wal-Mart is in a gladiator war against a slew of competitors.  Not just Target, that is almost as low price and has better merchandise.  Wal-Mart’s monolithic strategy has been an easy to identify bulls-eye, taking a lot of shots.  Dollar General and Family Dollar have gone after the really low-priced shopper for general merchandise.  Aldi beats Wal-Mart hands-down in groceries.  Category killers like PetSmart and Best Buy offer wider merchandise selection and comparable (or lower) prices.  And companies like Kohl’s and J.C. Penney offer more fashionable goods at just slightly higher prices.  On all fronts, traditional retailers are chiseling away at Wal-Mart’s #1 position – and at its margins!

Yet, the company has eschewed all opportunities to shift with the market.  It’s primary growth projects are designed to do more of the same, such as opening smaller stores with the same strategy in the northeast (Boston.com).  Or trying to lure customers into existing stores by showing low-price deals in nearby stores on Facebook (Chicago Tribune) – sort of a Facebook as local newspaper approach to advertising. None of these extensions of the old strategy makes Wal-Mart more competitive – as shown by the last 9 quarters.

On top of this, the retail market is shifting pretty dramatically.  The big trend isn’t the growth of discount retailing, which Wal-Mart rode to its great success.  Now the trend is toward on-line shopping.  MediaPost.com reports results from a Kanter Retail survey of shoppers the accelerating trend:

  • In 2010, preparing for the holiday shopping season, 60% of shoppers planned going to Wal-Mart, 45% to Target, 40% on-line
  • Today, 52% plan to go to Wal-Mart, 40% to Target and 45% on-line.

This trend has been emerging for over a decade.  The “retail revolution” was reported on at the Harvard Business School website, where the case was made that traditional brick-and-mortar retail is considerably overbuilt.  And that problem is worsening as the trend on-line keeps shrinking the traditional market.  Several retailers are expected to fail.  Entire categories of stores.  As an executive from retailer REI told me recently, that chain increasingly struggles with customers using its outlets to look at merchandise, fit themselves with ideal sizes and equipment, then buying on-line where pricing is lower, options more plentiful and returns easier!

While Wal-Mart is huge, and won’t die overnight, as sure as the dinosaurs failed when the earth’s weather shifted, Wal-Mart cannot grow or increase investor returns in an intensely competitive and shifting retail environment.

The winners will be on-line retailers, who like David versus Goliath use techology to change the competition.  And the clear winner at this, so far, is the one who’s identified trends and invested heavily to bring customers what they want while changing the battlefield.  Increasingly it is obvious that Amazon has the leadership and organizational structure to follow trends creating growth:

  • Amazon moved fairly quickly from a retailer of out-of-inventory books into best-sellers, rapidly dominating book sales bankrupting thousands of independents and retailers like B.Dalton and Borders.
  • Amazon expanded into general merchandise, offering thousands of products to expand its revenues to site visitors.
  • Amazon developed an on-line storefront easily usable by any retailer, allowing Amazon to expand its offerings by millions of line items without increasing inventory (and allowing many small retailers to move onto the on-line trend.)
  • Amazon created an easy-to-use application for authors so they could self-publish books for print-on-demand and sell via Amazon when no other retailer would take their product.
  • Amazon recognized the mobile movement early and developed a mobile interface rather than relying on its web interface for on-line customers, improving usability and expanding sales.
  • Amazon built on the mobility trend when its suppliers, publishers, didn’t respond by creating Kindle – which has revolutionized book sales.
  • Amazon recently launched an inexpensive, easy to use tablet (Kindle Fire) allowing customers to purchase products from Amazon while mobile. MediaPost.com called it the “Wal-Mart Slayer

 Each of these actions were directly related to identifying trends and offering new solutions.  Because it did not try to remain tightly focused on its original success formula, Amazon has grown terrifically, even in the recent slow/no growth economy.  Just look at sales of Kindle books:

Kindle sales SAI 9.28.11
Source: BusinessInsider.com

Unlike Wal-Mart customers, Amazon’s keep growing at double digit rates.  In Q3 unique visitors rose 19% versus 2010, and September had a 26% increase.  Kindle Fire sales were 100,000 first day, and 250,000 first 5 days, compared to  80,000 per day unit sales for iPad2.  Kindle Fire sales are expected to reach 15million over the next 24 months, expanding the Amazon reach and easily accessible customers.

While GroupOn is the big leader in daily coupon deals, and Living Social is #2, Amazon is #3 and growing at triple digit rates as it explores this new marketplace with its embedded user base.  Despite only a few month’s experience, Amazon is bigger than Google Offers, and is growing at least 20% faster. 

After 1980 investors used to say that General Motors might not be run well, but it would never go broke.  It was considered a safe investment.  In hindsight we know management burned through company resources trying to unsuccessfully defend its old business model.  Wal-Mart is an identical story, only it won’t have 3 decades of slow decline.  The gladiators are whacking away at it every month, while the real winner is simply changing competition in a way that is rapidly making Wal-Mart obsolete. 

Given that gladiators, at best, end up bloody – and most often dead – investing in one is not a good approach to wealth creation.  However, investing in those who find ways to compete indirectly, and change the battlefield (like Apple,) make enormous returns for investors.  Amazon today is a really good opportunity.

Are You More Like Rupert Murdoch Than You Think?


Bernie Ebbers (of WorldCom) and Jeff Skilling (of Enron) went to prison.  Less well known is Conrad Black – the CEO of Sun Times Group – who also went to the pokey.  What do they have in common with Rupert Murdoch – besides CEO titles?  The famous claim, “I am not responsible” closely allied with “I’ve done nothing wrong.” While Murdoch hasn’t been charged with crimes, or come close to jail (yet,) there is no doubt people at News Corp have been charged, and some will go to jail.  And there is public outcry Murdoch be fired.

Investors should take note; three bankruptcies killed 2 of the organizations the ex-cons led and investors were wiped out at Sun Times which barely remains in business. What will happen at News Corp? Given the commonalities between the 4 leaders, I don’t think I’d want to be a News Corp. stockholder, employee or supplier right now.

How in the world could something like this happen?

Like the infamous trio, Rupert Murdoch was, and is, a leader who defined the success formula of his company.  As time passed, the growing organization became adroit at implementing the success formula, operating better, faster and cheaper.  Loyal managers, who identified with, and implemented intensely, the success formula were rewarded.  Those who asked questions were let go.  Acquisitions were forced to conform to the success formula (such as MySpace) even if such conformance created a gap between the business and market needs.  Business failure was not nearly as bad as operating outside the success formula. Failure could be forgiven – but better yet was finding a creative way to make things look successful.

Supporting the company’s success formula – its identity, cultural norms and operating methods – using all forms of ingenuity became the definition of success in these companies.  This ingenuity was unbridled, even rewarded! Even when it came to skirting the edge of – or even breaking – the law.  Cleverly using outsiders to do “dirty work” was an ingenious way to create plausible deniability. Financial machinations were not considered a problem if there was any way to explain changes.  Violating accounting conventions not really an issue if done in the pursuit of shoring up reported results.  Moving money wherever necessary to avoid taxes, or fines, and pay off executives or their friends, not really a big deal if it helped the company implement its success formula.  Any behavior that reinforced the success formula, as the leader expressed it, made employees and contractors successful. 

Do the ends justify the means?  Of course! As long as the results appear good, and the leader is taking home a whopping amount of cash, everything appears “A-OK.” 

Is this because these are crooks?  Far from it.  Rather, they are dedicated, hard working, industrious, smart, inventive managers who have been given a clear mission.  To make the success formula work.  Each small step down the ethical gangplank was a very small increment – and everyone believed they operated far from the end.  If they got away with something yesterday, then why not expect to get away with a little more today?  What are ethics anyway?  Relative, changeable, difficult to define.  Whereas fulfilling the success formula creates clear, measurable outcomes!

What is the News Corp’s Board of Directors position?  The New York Times headlined “Murdoch’s Board Stands By as Scandal Widens.”  Mr. Murdoch, like any good leader implementing a success formula,  made sure the Board, as well as the executives and managers, were as dedicated to the success formula as he.  Through that lens there are no difficult questions facing the Board. Everything was done to defend and extend the success formula.  Mr. Murdoch and his team have done nothing wrong – except perhaps a zealous pursuit of implementation.  What’s wrong with that?  Why should the Board object?

Could this happen to you, and your organization?  It may already be happening.

Answer this option, what’s more important to you and your company:

  1. Focusing on and identifying market trends, and adapting your strategy, tactics, products, services and processes to align with emerging future trends, or
  2. Focusing on execution.  Setting goals, holding people to metrics and making sure implementation remains true to the company’s history, strengths and core capabilities, customers and markets? Rewarding those who meet metrics, and firing those who don’t?

If it’s the latter, it’s an easy slide into Murdoch’s very uncomfortable public seat.  Very few will end up with an Enron Sized Disaster, as BNET.com headlined.  But failure is likely.  Any time execution is more important than questioning, implementation is more important than listening and conforming to historical norms is more important than actual business results you are chasing the select group of leaders exemplified today by Mr. Murdoch.

Here are 10 questions to ask if you want to know how at risk you just might be.  If even a couple of these ring “yes,” you could be confidently, but errantly,  thinking everything is OK :

  1. Is loyalty more important than business results?  Do you have people working for you that don’t do that good a job, but do exactly what you want so you keep them?
  2. Do you hold certain aspects of your business as being beyond challenge – such as technology base, meeting key metrics, supporting historical distributors (or customers) or operating according to specified “rules?”
  3. Do you ask employees to operate according to norms before asking if they have a better idea?
  4. Does HR tell employees how to do things rather than asking employees what they need to succeed?
  5. Do employee and manager reviews have a section for asking how well they “fit” into the organization?  Are people pushed out that don’t “fit?”
  6. Are “trusted lieutenants” moved into powerful positions over talented managers just because leaders aren’t comfortable with the newer people? 
  7. Are certain functions (finance, HR, IT) expected (perhaps enforcers?) to make sure everyone operates according to the historical status quo?
  8. Is management meeting time spent predominantly on internal, versus external, issues?  Talking about “how to do it” rather than “what should we do?”
  9. Is your advisory board, or Board of Directors, filled with your friends and co-workers that agree with your success formula and don’t seek change?
  10. Do your customers, employees, or suppliers learn that demonstrating dissatisfaction leads to a bad (or ended) relationship?