Home teams win big from stadium pitches

A change in the law for advertising rights at the Jamsil Baseball Stadium in southern Seoul will be a big financial benefit for the two home teams, the LG Twins and Doosan Bears. [NEWSIS]

Three Seoul-based baseball clubs are in line for a financial home run involving billions of won after a change in the law governing advertising rights at the city stadium.

Last week, the Seoul Metropolitan Council approved a revision of the ordinance controlling the operations of the city’s sports facilities. The change means that the Seoul-based Korea Baseball Organization (KBO) clubs - the LG Twins, Doosan Bears and Nexen Heroes - will get priority over advertising rights in the city-owned baseball stadiums.

Previously, advertising rights for the electronic scoreboard and fences at the stadium were offered to anyone through an open bidding system.

The revision of the city’s ordinance last Tuesday gives the three professional baseball clubs priority for advertising rights until 2017. This allows them to keep the profits through advertising sales, though they still have to pay a commission fee to the city.

For the Jamsil Baseball Stadium in southern Seoul, the home stadium for the Twins and the Bears, a private advertising agency currently owns the rights. It pays the city more than 10 billion won ($8.6 million) per year.

For the Mokdong Baseball Stadium in western Seoul, the Heroes currently own the rights, but they took part in an open bidding system.

Before 2012, the Twins and the Bears had control of the advertising rights. However, all advertising revenue had to be returned to the city by law. While the rights were therefore of no benefit to the club, they were paying a stadium rental fee of more than 2.5 billion won per year.

“In 2011, I also supported that these big corporations [which own baseball clubs] should not be given benefits,” said Moon Sang-mo, the city councilman who proposed the revision. “But as I worked in the Culture, Sports and Tourism Committee, I noticed that these baseball clubs contributed a lot to developing the business market.”

According to the city council, the Twins and the Bears can now expect to profit by 2 billion won of revenue per year. However, some critics are concerned about whether they can actually maximize their new advertising rights.

The two clubs currently have no experience selling and marketing the stadiums’ advertising space.

The teams also need to consider how to deal with advertising competitors’ products. In Korea, baseball teams are affiliates of conglomerates and receive financial support from companies under the same umbrella.

“If an advertising agency puts an ad from Samsung Electronics at our home stadium, what should we do?” said Baek Soon-gil, the general manager of the Twins, which is run by Samsung’s rival, LG Electronics. But the advertising rights are too big to be forfeited. In 2012, advertising rights at the stadium cost about 2.4 billion won. Today, they are worth more than 10.5 billion won.

Experts say teams should change their thinking and build an independent financial structure instead of getting support from mother companies.

Ironically, the Samsung Lions, which is run by Korea’s No. 1 conglomerate Samsung Group, have only three marketing officials, according to the KBO’s seasonal notebook. Meanwhile, the Heroes, which are not affiliated with the conglomerates, have eight marketing employees.

The Korean baseball clubs were born as affiliates of conglomerates and have been recognized as a means for the companies to improve their public image and highlight social contribution. With a certain amount of cash support guaranteed by mother companies, teams have been passive on making profits on their own.

“[Baseball teams getting the support of conglomerates] is like a two-sided coin,” said Jeon Yong-bae, professor of sports marketing at Dankook University. “It may be difficult, but teams also need to think about business in addition to their league performance. In particular, teams in big markets need to [financially support themselves].”

The change will impact the Heroes, who are currently negotiating with the city on a move to the Gocheok Dome Baseball Stadium, currently under construction. The Heroes now pay more than 1 billion won for advertising rights at the Mokdong Baseball Stadium. The Gocheok stadium is Korea’s first covered baseball stadium and due for completion in October.

The Seoul Metropolitan Council’s decision is also likely to impact clubs in other cities. The Kia Tigers, based in Gwangju, currently have advertising rights for the Gwangju-Kia Champions Field. However, the team does not appear to be actively pursuing advertising because of negative publicity that it is showing advantage to Kia Motors, owner of the Kia Tigers.

BY CHOI MIN-KYOO [joo.kyungdon@joongang.co.kr]