Steroid specter hangs over MLB

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By all accounts, Major League Baseball should be on a high.

Attendance? Up. The league drew a record 73,022,969 fans last year, a jump of 8.1% on the 2003 total.

TV ratings? Up. Despite the fact that the World Series was a four-game sweep-denying News Corp.'s Fox three extra games of ad income-the 2004 Fall Classic drew a 15.8 national rating from Nielsen Media Research, the highest in five years.

History and tradition? Up. A big reason why the World Series drew so well was the dramatic story of the Boston Red Sox, who became the first team in baseball history to come back from an 0-3 deficit in a playoff series. The Red Sox rallied from that hole to beat the vaunted New York Yankees 4-3, then swept the World Series for the first Sox title in 86 years.

But the only "high" that fans have been captivated by in the off-season has been the grand jury testimony that leaked out in December in the government's case against a San Francisco-based lab company. At least two major stars, Barry Bonds of the San Francisco Giants and Jason Giambi of the Yankees, testified they took some sort of steroid. In Mr. Bonds' case, he says, unknowingly. The release last week of former player Jose Canseco's book, "Juiced," only adds fuel to the steroid debate.

Now MLB, with a slew of aggressive initiatives planned for 2005 and Opening Day about seven weeks away, has to wonder: Will its marketing plans and the history of the game be enough to overcome a strike against its integrity?

NEW TESTING POLICY

The league thinks so. An MLB spokeswoman says the steroid controversy has been settled with the announcement of the league's new testing policy last month, and she believes its marketing plans won't be affected this upcoming season. In fact, the league signed new deals with corporate sponsors Ameriquest Mortgage Co., Bank of America and Taco Bell, and reupped with Anheuser-Busch and Century 21 for higher fees.

"The steroid issue is a problem, yes," says a marketing executive at one of baseball's corporate partners. "But is it a problem to the point where we're ending sponsorship agreements and shifting ad dollars? No, I don't think so. Hopefully, the issue was relegated to the few players who have so far been affected. I think we're a forgiving society, and I think the fans will forgive the players a transgression."

Others aren't so sure. Aside from the fact that some have criticized baseball's new policy for not being stringent enough-it takes getting caught four times before being banned for a year-there's skepticism among fans.

According to a recent survey conducted by Quinnipiac University in Connecticut, 93% of fans polled believe the use of performance-enhancing drugs in baseball is a problem, with 65% calling it a "major problem." Sixty-one percent say players who test positive should be banned from the game, and 52% say these athletes should be banned from the Hall of Fame.

LOYALTY INDEX IN FLUX

Another study among 1,200 baseball fans in MLB's markets conducted by consultancy Brand Keys, which produces an annual Customer Loyalty Index, reveals that the MLB brand has gone up and down since the announcements.

The MLB brand, which had been one of the strongest in sports, had an index strength of 112 (benchmark being 100) as measured against a fan ideal of 120 before steroid admissions were made public. After the grand jury revelations, the MLB brand strength fell by 16% to 94.

The agreement between the players union and Major League Baseball reinforced the brand strength by 6 percentage points, pulling MLB back to an index of 100.

"When it comes to athletes taking perform- ance-enhancing drugs, that behavior erodes ... the bond fans form with individual players and ... loyalty in the overall MLB brand," says Brand Keys President Robert Passikoff. "When you speak of the trust [of] fans, unadulterated talent is most important in Major League Baseball. Players need to be deeply concerned."

Still, the fans appear to be there. The league held a promotion in several cities last month, looking for the craziest, most loyal fans in each town to appear in a spring ad blitz for the "I live for this" campaign. Fans and media showed up in droves in New York, Boston, St. Louis and Anaheim, Calif.

There appears to be a key distinction in this whole issue. Fans seem to realize that the game itself and the league aren't at fault, and instead place the blame on the individual players.

Mr. Bonds is expected to break Babe Ruth's record of 714 home runs for a left-handed hitter sometime in the early spring, and could conceivably break Hank Aaron's all-time record of 755 home runs-arguably the greatest, most treasured record in baseball. Yet MLB and MasterCard International both backed off a planned yearlong celebration of Mr. Bonds' chase, and baseball has yet to say whether it will chronicle the feat with any type of promotion or marketing campaign.

In fact, in a list provided by the MLB spokeswoman, the second year of "eventizing" the season includes celebrations around Jackie Robinson Day, Roberto Clemente Day, The Commissioner's Initiative for Kids, Mother's Day, Father's Day and more, but no mention of Mr. Bonds.

ENDORSEMENT ADDITIONS DOUBTFUL

So it's doubtful that Mr. Bonds will be gaining any new endorsements despite closing in on one of the most hallowed sports records of all time. Nor is it likely that Mr. Giambi will reprise his Pepsi spot with Sammy Sosa.

"Corporate America is not going to touch these guys," Larry McCarthy, an associate professor of sports marketing at Seton Hall University in New Jersey, told the Toronto Globe & Mail. "They're essentially tainted."

"The game now sits with a public perception that anyone who is primarily a power hitter must be on steroids," Maury Brown, co-chair of the business of baseball committee of the Society for American Baseball Research, said in the same article. "Baseball will have to rebrand to an extent to minimize that perception."

What's at stake

Steroid use can jeopardize a player's health and his potential as an endorser, but Major League Baseball generates more than $1 billion a year from TV networks, sponsors and fans that could become disenchanted by the controversy. Among those stats:

* $3 billion-plus in TV rights deals at Fox ($2.5 billion for six years, ends after 2006 season) and ESPN ($851 million for six years, ends after 2005 season).

* $494 million in TV ad spending in 2003.

* $33 million-plus annually in ball park naming rights fees. Leading the way is Houston's Minute Maid Park, at an average of $6.1 million annually for 28 years.

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