Mixing Sports and Business

In the last two days I've devoured every article in the Washington Post about the Nationals painful and epic defeat on Friday night in the NLDS. It was a tough way to see the season end, there's no doubt about that.

(from wallyg on Flickr)

These articles make it clear that there are a lot of people emotionally invested in professional sports. I think they sometimes they forget that, ultimately, Major League Baseball is big business. Each team is a major corporation and the league itself is an organization governed by a bunch of executives. The television networks that show the games are under contract with the team owners and the games aren't usually available to those without cable.

This is why it can be so hard to be a fan in this game. It's the multi-millionaire and billionaire owners that call most of the shots. They get to decide how much they're willing to spend on players. They get to decide who to hire as the CEO of the company. They get to decide how much they charge their fans for the privileged of attending a game. They get to decide whether having a winning team is more profitable than having a losing team. Hell, they get to decide whether to even stick with their current city or pack up and leave for another.

In this arrangement, the "fans" are really "customers" and the "players" are just "employees" of the company that is the franchise. The fans put their hearts into their favorite teams, but it usually feels like the billionaire owners think about themselves before they think about the fans. Psychologically, fans don't like the idea that they're customers of their favorite team for the same reason college students don't like the idea that they're customers of the school they attend.

There were a lot of shenanigans that got on my nerves at the end of this year's regular season. Lerner's refusal to put up a few thousand dollars to keep Metro open late was at the top of that list. The actual cost would have been chump change, given how profitable a single postseason game surely was. But the refusal to do it made me feel conflicted - how could I be enthusiastic about a team who's owner behaves like such a selfish jerk?

The way MLB handled playoff scheduling and their contract with TBS was another thing that bothers me. The Nationals had the best record in baseball, but only got to play one night game in the five game NLDS. For the first home game of the series, MLB stuck Washington with the 1pm game and decided that it would be shown on the obscure Major League Baseball Network. Even the games shown on TBS seemed amateurish and the commentators were downright terrible.

Should the playoffs be a time to reward teams for their performance in the regular season? Maybe; but MLB's playoff scheduling is deliberately designed to put the most "profitable" games in prime time and stick the less profitable games in the afternoon time slots. The Nationals may have had a lot of success during the regular season, but they didn't have the all important "brand" that MLB cares about.

People like to think of professional sports as a game and not as a business. At least baseball would be a lot more enjoyable for the fans if their interests were aligned with the team owners - winning games. The reality is that fans of some teams have it better than others, but at the end of the day, it's all business, and it's all money.

Businesses as Third Places

Jessica Sidman has a well-written story about Yola, the recently-shuttered yogurt/coffee shop in Dupont Circle. I'll admit that I didn't go to Yola especially frequently, though I don't work too far away. That said, it was the kind of business that people frequently say they want in their neighborhood - a warm, inviting shop with lots of seating and better than average food and drinks.

(from Brother O'Mara on Flickr)

One of the store's partners is surprisingly open about the experience and the hardships that came with it. It's a story that makes me feel pessimistic about doing something as entrepreneurial as opening my own coffee shop in the city. She explains the problem about as explicitly as anyone ever has:
"We are a $5 average check size business in a close to $10,000-a-month rent location. It just doesn’t work. The math doesn’t work.” 
It's easy for an observer to sit back and recount the ways the business was a failure, or how it was doomed from the start. The same thing happened when Mid City Caffe shuttered last year. These people would say "a businessperson who knew what they were doing would have never opened in the first place, because the conditions weren't right".

Unfortunately, that's the reality and the problem. The environment is such that either a bright-eyed entrepreneur tries, and eventually it doesn't work out; or the business simply never exists in the first place. So whether or not it ever gets a chance, it simply isn't a sustainable proposition.

To survive, the business has to make either the revenue side of the equation, or the cost side of the equation, work in their favor. The problem is a classic chicken and egg: in order to make revenue, you need volume, and volume is highest where there's a lot of foot traffic.  Rents are also highest where there's a lot of foot traffic. Given that constraint, how do you make it work?

When I researched and wrote about this last year, the owner of Peregrine Espresso explained it to me in pretty clear terms. You have to keep the rent costs down, which typically means having as few square feet as you can reasonably operate a coffee shop in. It means you do a lot of take out business, and dis-incentivize "camping" at tables. In essence, you make it work by not being a "third place".

 Over at District Bean, coffee guru Jonathan writes:
In the grand scheme of things, though, there is so much activity in the DC coffee scene that the closing of one shop is but a blip in a wave of progress. 
I think he's right, but I also think this points to the divorce between coffee and third places. We'll still have coffee shops, especially ones that serve good coffee, because more people are demanding it than ever. But these coffee shops will either be located in storefronts with virtually no space, requiring you to take your drink to-go; or they'll share space with a business that can successfully cross-subsidize the coffee side, like a bar.

At the end of the day, a business can only be a viable third place if it's also profitable, and I think the days of coffee shops being meeting places or studying places or blogging places are over. Good coffee will live on, but the space where we enjoy it will change.