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Tackling the Business of Sports

Get that bum off the team. Trade for that star. Sign that big free agent.

These are basic desires of fandom, expressed every day in bars, barber shops, blog posts and tweets — variations of ways we think the people who own our favorite teams should spend their money. But over the last generation, we’ve gained a far greater awareness of just how much of that money there is, and how it may or may not make sense to spend it.

Professional sports have always been about money, of course — and so, for a long time, have big-time college programs. But fans’ conversations now delve much more deeply into their teams’ finances — in this era of year-round fan interest and instant access to a massive amount of information, you increasingly have to understand contracts, player values and the basic finances of the sport to be considered a well-informed fan. In the same way, being a beat writer now demands being as familiar with financial matters as you are with being able to describe on-field events and work a locker room for fruitful discussions with athletes and coaches.

I’ve never been a beat writer, but I do have a background as a business reporter. Truth be told, I never thought that was my calling — my first couple of weeks at the Wall Street Journal Online were spent trying to comprehend the through-the-looking-glass world of mortgage-backed securities, which I found alternately terrifying and insanely dull. (I had no inkling that mutated versions of these inscrutable financial instruments would one day threaten to crack the underpinnings of modern society.) Nothing I did at the Journal disabused me of the notion that I wasn’t a born number-cruncher, but I’m glad for the education I received nonetheless. I can break down quarterly earnings well enough to see red flags, and look at an intriguing Web site or digital service and ask that first, unwelcome question: This is great, but what’s the business model?

That awareness has helped me as a Mets blogger, as a fan and — since this column is being written on Father’s Day — as father to a budding baseball fan. When my 7-year-old son wants to know why the Mets don’t just get rid of Oliver Perez, he deserves a better answer than grumbling about overpaid bums. And frankly, the real answer is more interesting, and of far more use to him in learning to understand baseball: This is how a contract works, and waivers, and the unconditional release. This is why a player with a certain amount of experience can’t just be sent to the minors, and why if you were a player you’d want or even need that kind of protection. By the same measure, this is why you can’t just declare a player injured and stash him on the disabled list. This is what a sunk cost is, and these are the very human reasons people who run teams don’t always think about things in terms of sunk costs. This is how teams set budgets, and how they make money, and why teams make different amounts of money, and why some teams spend lots of money and some teams don’t, and how we might argue that that’s unfair on both ends of the spectrum, and what can or can’t be done about it.

From one sensible question springs a baseball education that may not be as much fun as learning about the on-field game, but will prove just as essential as my son gets older. (If I was the father of a young Cavaliers or Bulls or Heat or Knicks fan whose favorite player was LeBron James, I’d have other questions to answer that demand a trip into fairly deep economic waters.)

My son is still young enough to believe most any explanation I’d give him for why the Mets can’t just make Oliver Perez disappear, but people who read Faith and Fear in Flushing regularly or find it via search aren’t — a serious post about Perez that didn’t address his contract status or the team budget would get a harsh critique, and rightly so. Write too many of those, and we’d start losing readers. The same goes for beat reporters, who face competitors for readers’ time and attention that didn’t exist a decade ago.

“Everybody has become more sensible and aware,” says CNBC sports-business reporter Darren Rovell. “If you want people to pay attention to your blog but you throw out ideas with no sense of business, no one is going to read your stuff.”

The financial side of sports is also an excellent way to unlock sabermetrics for more fans. For me, the search for better ways to assess players’ value and their contributions to teams is interesting in itself. But for other, equally rabid fans, sabermetrics just seem like more-complicated statistical measures than the ones they grew up with. Considering sabermetrics in light of team budgets adds a new aspect that may sway such fans: If your front office has a better way of valuing players that other teams don’t understand, team executives can find bargains that make the team better able to compete — and they’re less likely to be swayed by the unquantifiable, potentially illusory value of expensive veterans. (This, of course, is the lesson of Michael Lewis’s Moneyball that largely got lost in the less-than-edifying Scouts vs. Stats brawl.)

I’ve never felt secure about my business bona fides, which is why I asked Rovell for some tips: If I’m a beat writer or blogger who wants a better grasp of sports business, how can I educate myself and improve that aspect of my reporting?

Rovell’s answers were reassuringly basic and sensible: He didn’t tell me to go get an MBA or crack open some brutal economic textbook.

One basic tip he had was to have a sense of the overall macro business environment, because it affects everything — so stay in touch with basic business news. For an example of what happens when you don’t do that, Rovell recalled a golf writer’s prediction that Tiger Woods’s return would be a big boon to golf and unlock huge sponsorship opportunities. “He pretty obviously didn’t have an understanding that we were in the worst recession ever,” Rovell says.

Another thing to realize is that covering the business side requires writers to speak to people they won’t encounter in the clubhouse. “It’s not like their standard day — watch something and ask the players about it,” Rovell says, adding that his job forces him to uncover stories that aren’t unfolding in front of his eyes. By his estimate, he doesn’t quote about half the people he talks to — rather, he’s constantly talking to people asking them what’s going on that he hasn’t heard about, and poring over documents. (For instance, Rovell’s report that Woods’ troubles cost his sports-management company IMG $4.6 million in 2009 came from a 40-page IMG presentation to potential investors in the privately held firm.)

“Move without the ball,” Rovell advises. “Do things are that not directly related to the story. Call people when you don’t necessarily have a story to talk with them about. … Some of my biggest stories have come from asking people, ‘Is there anything going on?’ ”

I thought that was not just good advice but a welcome reminder that the way to tackle reporting assignments that seem daunting is to use the same basic techniques that work for the seemingly straightforward stories.

But I couldn’t resist asking Rovell an emotional question: Were we better off as fans before the minutiae of salary caps and contract status became part of our watercooler conversations?

No, he said: “Fans who are better-armed with business knowledge and understand business can enjoy being a fan more. Just as journalists don’t have an offseason, fans don’t either. We’re all in the same boat here — that’s just the reality.”

Jason Fry is a freelance writer and media consultant in Brooklyn, N.Y. He spent more than 12 years at The Wall Street Journal Online, serving as a writer, columnist, editor and projects guy. While at WSJ.com he edited and co-wrote The Daily Fix, a daily roundup of the best sportswriting online. He blogs about the Mets at Faith and Fear in Flushing, and about the newspaper industry at Reinventing the Newsroom. Write to him at  jason.fry@gmail.com, visit him on Facebook, or follow him on Twitter.
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