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NPB needs major reform, vision to prosper like MLB

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NPB needs major reform, vision to prosper like MLB

by Robert Whiting (Apr 13, 2007)

Special to The Japan Times

This is the third installment in a four-part series.

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Nippon Pro Baseball's fragmented structure is a system that worked for a long time. Like the Liberal Democratic Party and the Yamaguchi-gumi, it suited the postwar economy.

Now, however, with tighter economic conditions and new accounting laws that make it more difficult for large corporations to write off a ballclub's red ink, it doesn't work so well anymore. It is as unrealistic to expect MLB teams to refrain from preying on Japanese talent, as it was to expect Toyota to stop selling cars in the U.S.

The shoguns of the NPB know they must change their system. They know they must learn marketing and merchandise.

They must learn how to make money -- and a lot of it. They know they must learn how to take care of themselves.

Although there are few signs that NPB leaders have the desire to make the required changes, and although some of them are reflexively loathe to copy American ways, simply because they are American ways, MLB's experience does provide a handy template, given the $ 3.7 billion jump in revenue that it managed to accomplish in the past 17 years.

Granted, one-third came from taxpayer-funded ticket sales, thanks, as we have seen, to the building of new, taxpayer-funded, "retro" stadiums with expensive luxury suites -- 20 new MLB stadiums in all built in the past two decades.

However, the remaining money came from improved centralized marketing of broadcast rights, as well as skilled merchandising and licensing and the establishment of MLB's remarkable Internet site, established in 2002, which shows every game played live, and also presents taped highlights, replays of classic games, documentaries and talk shows.

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Sadaharu Oh, who hit a record 868 home runs as a player for the Yomiuri Giants, managed Japan to victory in the inaugural World Baseball Classic in 2006. AP PHOTOS

It brings in an astonishing figure of around $ 250 million a year, from subscribers all over the world. There is no equivalent of this in Japan.

A central revenue fund instituted several years ago in the North American game distributes money annually. This season, every one of the 30 major league teams received over $ 30 million from the MLB, as its share of national TV-radio-Web broadcast rights and merchandise and licensing contracts, while the 17 small market teams received a total of $ 312 million from the 13 larger market teams.

Japan's teams, by contrast, have to pay 80 million yen (about $ 680,000) apiece to the Commissioner's Office, to keep the NPB afloat. Those funds, plus revenue from the All-Star Games and the Japan Series, are all the income the office has.

The NPB individual team owners -- meaning their parent corporations -- certainly have the financial and technological resources to transform NPB into a baseball league competitive with the MLB.

The Yomiuri media conglomerate, for example, is one of the largest and richest in the world. Softbank owner Masayoshi Son regularly appears on Forbes Magazine's list of the world's wealthiest individuals. Unfortunately, the collective desire to drive such a transformation is lacking.

Some teams are trying to become more profit-oriented.

In 2005, for example, the Hawks, installed 30 Web cameras at the Fukuoka Dome (renamed Yahoo JAPAN Dome) by which subscribers at home can follow the games on their computers.

With the click of a button, fans can watch manager Sadaharu Oh contemplating strategy, catch coaches stealing signs in the bullpen or even observe reporters sleeping in the press box.

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Fiery Leader: Ichiro Suzuki, who was initially reluctant to participate in the World Baseball Classic, inspired his compatriots to victory in the 16-nation tournament.

The Chiba Lotte Marines, owned by a chewing gum company, have instituted pre-game promotions, one of them a ballroom dance exhibition by tuxedo-clad coach Bobby Valentine, himself a former schoolboy social-dance champion.

Also after games, they allow young fans to come on the field to run the bases and have their photograph taken with Chiba Lotte stars.

The newly formed Tohoku Rakuten Golden Eagles, owned by an online shopping mall, include herbal footbaths among the many attractions they offer to the fans. These are significant for the NPB where the games themselves have been considered the only promotion necessary.

But, one asks, why are there no integrated broadcast and merchandising rights under the control of the commissioner?

Why are there no MLB-type souvenir chain shops which are so prevalent in the U.S.?

Where is the equivalent to

Why are there only five teams offering Internet broadcasts, and, with the exception of Softbank, only available in Japan?

And when will there be a revenue sharing system?

Much of the blame can be placed on Yomiuri, which refuses to surrender control of any aspect of its empire.

Imagine how interesting things would become if, say, the Yomiuri Shimbun built a new ultra-state-of-the-art stadium somewhere in Tokyo as part of a Japanese-style theme park so impressive that people from all over the world would come just to see it.

Imagine that Yomiuri also invested billions of yen in buying high-priced free agent players in their prime from the MLB and then recruited Ichiro Suzuki to come and take over as a playing manager.

Ichiro has always said his dream is for Japanese baseball to be No. 1 in the world. This would be his chance to walk the walk, as well as talk the talk.

Actions like these might well transform the Yomiuri Giants into a franchise like Real Madrid, a proud, world-renowned organization which Japanese stars might choose to join instead of packing up and moving 12,000 km across the globe to play ball.

Next imagine that Yomiuri led the way in granting the Commissioner's Office real power to integrate media and merchandising, establishing revenue sharing and create a viable minor league system.

But that is not likely to happen, given the present leadership. While Rome burns, the emperor fiddles.

Aside from the institution of long overdue interleague play and postseason playoffs that have helped stimulate interest to some degree, policies that limit rather than stimulate competition are the order of the day.

Some sort of limited MLB-NPB merger with the winners awarded a playoff slot in North America, is another idea often brought up in discussions as a way to solve Japan's problems.

Although trans-Pacific play, of necessity, would be minimal given the lack of supersonic jet transport, the marketing knowhow that MLB would bring to such an arrangement would surely benefit Japan-based teams.

North American viewers might even develop an interest in watching morning baseball beamed from the Far East, just as many Japanese have come to like MLB, if familiar faces like Valentine were on view on the camera. But that is not likely to happen, either.

Yomiuri's strong man, Tsuneo Watanabe, has repeatedly scoffed at the idea. He warns of another Black Ships invasion (a reference to Commodore Matthew Perry forcibly opening Japan's ports in 1853).

In particular, Watanabe and the other owners fear the incursion of MLB-style unions, which would dramatically raise salaries.

The players themselves would not welcome the elimination of the limits on foreign players, which would be another natural outcome of a merger.

A merger would be impractical for other reasons.

Said Marty Kuehnert, special assistant to the president with the Rakuten Eagles, "The chance of a merger between the MLB and NPB in the near future is minuscule. I've watched Japanese baseball closely for nearly 40 years, and while the players have made huge improvements, management has not.

"There is still little cooperation within the leagues -- there is no fair draft, no or little cooperation on selling broadcast rights, licensing or marketing . . . they don't even use the same baseball.

"You can choose from eight or nine different balls, and change them nightly if you want to. How in the world could they cooperate with 30 teams in North America if they can't cooperate among the 12 over here?"

The MLB seems unlikely to push for such an arrangement either, if their experience with their Japanese counterparts during the negotiations leading up to the first World Baseball Classic is an indication of how smoothly such an enterprise might go.

It was a textbook case of the difficulties Americans and Japanese can face when doing business with each other.

The idea for the WBC was first presented several years ago.

Although all of the other countries had enthusiastically approved the plan -- three rounds of play in March involving 16 nations -- the Japan side stubbornly resisted, long after the other representatives had given their OK to move forward. What bothered the Japanese from the beginning was the fact that the WBC was an all-American project.

It was the Americans who had come up with the plan and taken the lead, and not the sons of old Nippon.

It seemed yet another example of American neocolonialism and was especially painful since it had come on the heels of MLB's acquisition of Japan's two brightest stars, Ichiro Suzuki, and Hideki Matsui, a grim reminder of the power of the Americans.

As Jack Sakazaki, a Tokyo-based sports consultant, told Alan Klein in his new book, "Growing The Game," "The MLB says, 'It's our idea. We're taking the risk. We'll make the deal.' This whole thing smacks of imperialism."

Japan, with its own great tradition of baseball, felt left out.

What made matters even worse perhaps was that the WBC proposal was an American project designed to earn profits from a business venture undertaken on Japanese soil -- given that the first Asian round would be played in Japan.

Until the financial collapse of Japan's bubble economy, doing business in Japan had always meant entering into a joint venture with a Japanese firm, and then investing one's share of the profits in localization, research, customer service -- anything other than repatriating them.

Only with the imminent collapse of the major financial institutions and of some manufacturers, like Nissan, were foreigners allowed to gain a significant interest in these businesses, in return for bailing them out and taking on a huge amount of debt.

The MLB, blissfully ignorant of all this history, proceeded to set up an independent shop with an office in the Imperial Tower in Tokyo, the same edifice that houses the NPB Commissioner's Office, as if this were the normal thing to do.

The MLB consulted with NPB but never asked permission to go ahead with the project, which, of course, it wasn't legally bound to.

Thus the NPB's initial hesitation in responding to the WBC proposal was undoubtedly due in part to the simple disbelief that anyone would have the effrontery to do that. The MLB's response to Japan's misgivings, however, was to shrug and say that somebody had to take the lead and get the ball rolling or else it would never get done.

Besides, who else in the world could persuade the players to participate and convince the clubs to release the players to participate?

It was sheer fantasy to suggest that an amateur federation like the International Baseball Federation or a government agency could do that.

(It was also sheer fantasy to suggest that the NPB could organize such an event, given its track record in running itself).

When all was said and done, the MLB padrones said it was a reasonable enough deal for all parties concerned.

In contrast to FIFA and the IOC, which were notorious for behind-the-scenes intrigue and under-the-table corruption, they were offering a straight-up, transparent, business deal -- which no doubt made it suspect in certain quarters.

Said Jim Small, MLB International's Tokyo-based representative, "We, meaning the MLB and the MLBPA, shouldered the considerable upfront costs of the event's productions. We arranged it so that the profit is distributed and every team involved made exactly the same amount per game. The Yomiuri Giants made as much money as The New York Yankees. So how can you possibly complain?"

The Americans pointed to the reaction of the Canadians to the WBC offer.

After hearing the conditions the MLB was proposing, a Toronto-based baseball official had asked, incredulously, "You mean you're going to take all the risk, organize the whole thing and pay all the upfront costs, while we don't have to risk anything, we don't lose any money if it fails to make a profit, but we get paid it is profitable?

"What's the catch?"

From the Americans point of view there was no catch.

It was a sound business venture -- as opposed to a corruption-ridden deficit-plagued taxpayer robbing scheme.

So what was there to choose?

When it became clear that the Americans might actually proceed without Japan, the NPB relented.

That left the NPB Players Association, which had yet to give its consent, to deal with.

But, as fate would have it, an initially reluctant Sadaharu Oh changed his mind and agreed to manage the team.

"I'll do it for the welfare of Japanese baseball, for the future, for 50 years from now," Oh said.

Then Ichiro came on board, metamorphosing from apathetic participant to flaming, patriotic leader and the rest was history.

To smooth over bitter feelings, the MLB promised room for more participation by Japan.

It guaranteed that the NPB and the NPBPA would each be given two seats on the WBC steering committee in 2009 with the promise of a say in how the finances were divided up -- and gave the same deal to the Koreans.

But Byzantine differences still manifested themselves.

The Americans, for example, could not understand why it was Yomiuri honcho Tsuneo Watanabe who sat with MLB commissioner Bud Selig and the Crown Prince and Princess in the Royal Box for the Asian Round final.

Said one official in the American entourage, "Where is the NPB commissioner (Yasuchika) Negoro?"

All of the Japanese, of course, already knew the answer to that one.

The Japan Times

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