By Kim Tong-hyung
Staff Reporter
South Korea's love of baseball ranks up there with any other countries' love of any sport. Just ask SK Wyverns slugger Park Jae-hong, who had a Lotte Giants fan leap over the fence and charge him with a plastic knife in a May road game in Busan, or the relief pitchers of the Samsung Lions, who are often showered with jeers, drinks and debris in the same stadium.
Indeed, the popularity of the domestic baseball league seems to be peaking at the moment, undoubtedly helped by the country's gold medal performance at last year's Beijing Olympics and runner-up finish at the pre-season World Baseball Classic (WBC) earlier this year.
The country's eight professional teams of the Korean Baseball Organization (KBO) combined to sell more than 56 million tickets last year and are on course to exceed that mark by a healthy margin this season.
Too bad the teams have yet to figure out how to convert the impressive fandom into a profitable business.
Of the eight teams, only the Incheon-based SK Wyverns and Busan-based Lotte Giants finished 2008 in black, while the other teams reported losses of around 100 to 400 million won (about $326,000).
However, even these numbers are deceiving, as most Korean conglomerates operating the baseball clubs pour in additional sums of "promotional expenses" to keep the teams running smoothly.
So, the SK Wyverns' profit of 2.4 billion won last year becomes irrelevant when considering that the SK Group had spent an extra 23.7 billion won to support the team in what turned out to be its second consecutive championship season.
The Lotte Giants, which leads the league in attendance, needed a 12-billion-won injection from the Lotte Group to report a 1-billion-won profit. When counting out the extra-marketing funds by ownership, it is estimated that Korean baseball clubs lose between 15 to 20 billion won a year purely on baseball operations.
"Since the league started in 1982, no baseball team has been able to be sustainable on baseball operations alone, and you really can't say that most teams are seriously run with a business mindset," said a former employee of the Seoul-based Heroes, which is now run by the KBO.
"If a team manages to reduce its losses, that likely means lesser marketing money coming from the ownership in the following season, so the motive just isn't there. And since you are using your stadium on a short-term rent, you don't have many options to be creative and offer your customers anything other than the norm."
Granted, baseball teams had never been seen by their owners as revenue sources since the league was launched in 1982, but were merely regarded as publicity projects.
However, with many of the companies now having established global reputations, the money-losing baseball clubs are quickly losing their value as marketing tools, says Yoo Jae-hoon from the LG Economic Research Institute.
The Hyundai Automotive Group, the country's largest carmaker, didn't think twice about discarding the four-time champions, Hyundai Unicorns, at the end of the 2007 season after the economy became tight.
The team, renamed as the Heroes, has been experiencing trouble finding new owners since and is now staying afloat on KBO funds.
"The companies are seeing diminishing returns on the marketing power generated by baseball teams in the local economy. We have reached a point where professional baseball clubs need to change their old ways," Yoo said.
"The companies that own the baseball teams have always focused only on winning percentages and championship banners, but weren't that much committed to building relationships with fans.
"Finding business models is critical, since there is little room to cut costs when you are spending nearly half of your expenses on hiring players and managing their season."
The biggest obstacle preventing baseball from becoming a serious business here is the miniscule size of the professional sports market. The local market for professional sports accounted for 290 billion won in 2007, less than 50 percent of the Korea's sports services industry, despite the increasing popularity of the baseball league and other sports. It's hard to imagine a sports franchise generating a meaningful size of revenue outside of big markets like Seoul, Busan and Daegu.
The ownership of baseball stadiums is also an issue. None of the baseball clubs own their home stadium, but rent them on three-year leases from the local governments that own the facilities.
This discourages the clubs from being creative in developing new products such as premium seats and fan events, while also limiting their revenue from stadium advertisements, in-house restaurants and shops, parking fees and other possible revenue sources. Major League Baseball (MLB) clubs, on the other hand, rent their stadiums on long-term contracts that may extend 20 to 30 years.
And, aside of a few venues such as the Wyverns' Muhak Stadium, Korean baseball stadiums have a reputation for poor facilities and ugliness. Despite KBO estimates that nearly half of the ticket buyers are women, a few of the stadiums are notorious for their lack of women's restrooms.
Fans are not the only ones frustrated about the facilities, as the players constantly complain about the ground conditions.
The Gwangju-based Kia Tigers are clearly Korean baseball's proudest franchise, with nine championship banners under its belt, and gunning for its 10th this year. However, the Mudeung Stadium, the Tigers' home stadium, is clearly Korean baseball's biggest disgrace.
Tigers outfielder Lee Yong-kyu missed a significant amount of playing time after colliding with an advertisement plate loosely attached to the center field fence. And Kim Jung-min and Park Kyung-woan are just some of the players who sustained injuries after running the bases on the notorious artificial grass at the Mudeung Stadium, which baseball insiders say is a badly managed mattress of rubber and sand over a base of concrete.
thkim@koreatimes.co.kr
