Are Advertisers Ignoring MLB Players?

Here's why Madison Avenue isn't paying MLB athletes.

Aug 6, 2014 at 10:00AM

Forbes recently came out with its annual Baseball's Highest-Paid Players list. And as expected, the list is filled with talent and includes a Triple Crown winner, three Cy Young Award winners, and a slugger who is one of the top 25 home-run hitters of all time.

What's special about this list is Forbes includes not only salary, but endorsement deals. And while it's easy to focus on the huge salaries these baseball players command, we might want to ask if their agents are representing them as well among the marketing crowd.

As you can see, MLB players tend to derive a large majority of their earnings from salary and not endorsements. The player with the largest portion of his earnings derived from endorsements, Miguel Cabrera, only had 9% of his total earnings come from those deals. It seems that Major League players are increasingly losing out on an estimated $1.1 billion annual market.

Advertisers don't like MLB players
And its not just the top 10 MLB players who aren't feeling the love from the Madison Avenue set. In another list, the "Top 100 Highest-Paid Athlete Endorsers," baseball players fare rather poorly, with only seven on the list and only two -- Derek Jeter and Ichiro Suzuki -- placing in the top 50. As a continued insult, banned MLB pitchman Alex Rodriguez clocks in at No. 82, with $1 million annually in endorsements.

The top 20 spots on that list are dominated by tennis (6), basketball (5), and golf (4), with the PGA's oft-injured Tiger Woods claiming the top spot. Rounding out the top five were tennis' Roger Federer, golfer Phil Mickelson, and NBA players LeBron James and Kobe Bryant. The one thing these five athletes have in common -- sans Phil Mickelson -- is they all represent Nike.

Is it MLB agents, or something more insidious?
Bud Selig turned some heads when he recently came out with his declaration that "Baseball has never been more popular." On the surface, he looks right -- ticket sales are doing well. However, that appears to be more of a function of effective pricing and inventory management than pure demand. But there's a rather worrisome trend in demographics that advertisers appear to notice -- marketing's highly coveted young adults are not tuning in like they once were.

A couple of studies tend to bear this out. First is Nielsen's 2013 Year in Sports report. That report stated that 50% of MLB's demographic profile for the 2013 season was 55 or older; that trailed only the PGA for highest age demographic. And while the PGA has always had older demographics, MLB's median audience is actually getting older by the year. Part of the reason is lagging popularity among younger viewers, who have been tuning in to other sports. A recent ESPN Sport Poll found that Major League Soccer had caught up to MLB in popularity among kids 12 to 17.

Final thoughts
Baseball's has a long and storied tradition -- even earning the monicker "America's Pastime." However, marketers don't care about tradition -- they care only about the future. And right now, Madison Avenue's tea leaves are saying that baseball is becoming a relic.

While it is safe to say that none of these athletes are going to starve, they are missing out on lucrative marketing dollars by not appealing to younger viewers.

Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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