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2023 preview: MLB and Steve Cohen

New York MetsThe person impacting the 2023 MLB season most over the long term won’t appear in uniform this year, as New York Mets owner Steve Cohen stands to have the biggest influence on the long-term development of the industry.

Hang around professional sports long enough and you realize how modest most baseball operations are, with relatively small crews dealing with billion-dollar businesses, relying excessively on bare-boned, underpaid staffs for some very important tasks. League and college conference offices are even more modest and understaffed. An example: the current collapse of the regional sports network economy was foretold by experts years ago, with cord-cutting an inevitability and cable subscriptions an endangered species. Yet when first Diamond Sports Group and then Warner Brothers Discovery’s AT&T SportsNet announced financial woes that would directly impact the immediate bottom lines of teams as well as wreak havoc across the sports-broadcasting industry, it was pretty clear MLB didn’t have a strategy to address the issue, staffing up only when it became apparent there was no other choice. An industry that approached $11 billion in revenue in 2022 should be much more proactive on such an important part of the business.

We are in the midst of tremendous technological change in the game across every level of the game: player development, fan ballpark experience, and broadcast experiences. Yes, the baseball audience can be a little conservative—the reactions to the very rational and modest rule changes implemented this spring were mostly of the knee-jerk variety—but at least they were tested and yielded positive results in these tests.

Operating in this conservative and modest environment, Steve Cohen’s impact on the sport is measurable in both good and bad ways. Yes, he’s a multibillionaire, and he’s operating in a very corporate way. Take away the $340 million payroll, however, and that corporate tone would still be an upheaval in the industry. We can explain the business environment of the baseball world: most baseball teams are still run as modest family businesses, revenues be damned. That can be a good thing: if you’re part of the family, you’ll be treated well, and by reducing budgets to their minimum, profits are pretty much guaranteed. But with so many complicated issues confronting the sport, the family-business aspect of the industry presents a very limited agenda. It’s no coincidence the most successful teams on and off the field in the last decade are the most corporate in nature, like the Los Angeles Dodgers and Atlanta Braves.

Reading this exhaustive article in The New York Times, it seems to be a very balanced look at how Cohen does business. Yes, he’s responsible for the new luxury tax, which he’ll blow right by apparently without a twinge of regret. He’s resigned to losing money on the Mets yet has revamped the team’s business structure, bringing in execs from his hedge fund, Point72. He says one reason he’s forced to spend so much on payroll is the sad state of the Mets farm system, but has put more money into nonglamorous things like facilities and scouting. (The team’s minor league camp in Port St. Lucie will reportedly undergo further investment in performance-related technologies, a Cohen investment operating under the radar. The Mets are not the only big-market team making such improvements these days.) He’s worked to improve the Citi Field experience both for players and fans. And though he spoke little about this during negotiations to buy the Mets, he’s been working with community and elected officials to develop the Citi Field acreage. Insiders know there is tremendous value to this property—during their bidding for the team, Alex Rodriguez and Jennifer Lopez were very public about their desire for development—but in the end Cohen is actually making progress on the issue. From The Times:

To former business associates, Cohen’s template is familiar: outsize compensation and clear expectations.

“He was flexible on signing bonuses,” Nick Tiller, who spent 12 years working for Cohen, said of his contract negotiations….

The analytics department, expanded fivefold since he bought the team, has been aided by a Point72 data executive. Cohen’s chief technology officer and head of human resources have assumed equivalent responsibilities with the team. He talks up the “risk-taking mentality” that hedge fund thinking imposes on a risk-averse sport.

Of course, it’s a little easier for Cohen to take some risks: he has the finances to shake them off and move to the next risk. But MLB overlords and MLB owners are aggressively risk-averse, sticking to what worked in the past instead of embracing change potentially yielding a greater reward—as evidenced by the sport’s broadcast/streaming issues. The last MLB owner to individually show the benefits of taking huge risks was the late George Steinbrenner—and if current trends continue, Cohen will likely have the same impact on the game as did Steinbrenner.

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