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Whole New Ball Game

The first decade of E-business was not an unmitigated field of dreams, but some companies are once again ready to take the field.

Although the opportunity to watch streaming video of hundreds of live and archived games each day is the big draw, MLB.com also offers so-called fantasy games, where subscribers essentially create their own team rosters that compete against the teams of other subscribers. Fans can also buy tickets to all major-and minor-league games in America, not to mention merchandise (caps, bats, jerseys, and so on), memorabilia, and even baseball-themed furniture. To the delight of the obsessive fan, the site also presents a mind-numbing array of statistical information, sliced and diced for free. And don’t forget the editorial content, with hundreds of original stories written each day. “We’ve even got an auction site — stuff like signed bats that are authenticated by Deloitte and auctioned off to fans — with much of the money going to charity,” says D’Onofrio.

Each site feature carries a different revenue model. The big generator is paid content — fans can listen to every game of the entire season for a one-time fee of $14.95, or they can watch the games for $14.95 per month (or $79.95 per year). “We worked out a deal with MSN to distribute the content from all 30 teams,” D’Onofrio explains. “You can log on in Seattle and watch the Yankee games.” The only restriction, given that baseball has local rights-holders, is that you can’t watch the hometown team when it’s playing at home.

The fantasy-game piece of the business, which also includes novel features such as the no-cost “Beat the Streak” (in which fans select different players each game to see if those players can collectively beat Joe DiMaggio’s record 56-game hitting streak), is marketed on a subscription basis or, in some cases, given away for free. Tickets are sold with a slight “convenience” surcharge that MLB.com shares with major ticket providers like Ticketmaster. As for MLB.com’s vast memorabilia and merchandise mart, MLB Advanced Media takes a cut of the sales, which varies depending on the supplier.

Together these various E-businesses generated $135 million in revenue last year (the money is shared equally among the 30 major-league ball teams), up from $36 million in 2001, when the site made its debut. Visitors have skyrocketed from 190 million in 2001 to 1 billion last year, and subscribers are up from 125,000 to more than 840,000 over the same period. To top it off, the company expects to sell 17 million tickets online this year — that’s about half of all the individual (versus season) tickets sold. As good as last year’s revenues were, “we anticipate doing 30 to 40 percent better this year, exclusive of acquisitions,” D’Onofrio says. (In March, the company bought Tickets.com, which specializes in entertainment- and sports-ticket sales, to beef up its ticket business.)

The genius in MLB.com is the recognition that its brand could be leveraged online in new ways to its 73 million-customer base, the fans who annually attend baseball games. But the success owes as much to execution as to vision. “We’ve been lean and mean from the outset,” says D’Onofrio, “and we continue to try to keep expenses under control. The lavish offices and parties that early Internet companies got involved in were not part of the equation for us — even with a relatively young workforce.”

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