Costs squeeze profits at Japan`s baseball teams

(BASEBALL, REVENUE, TEAMS, THEIR, COSTS, TIMES)

By Junko Fujita
TOKYO (Reuters) - Japanese baseball pulls in the fans, produces the players and rakes in revenue many American clubs would be proud of -- but in terms of profit they still languish in the little league.
Despite earning similar revenues to Major League Baseball teams in North America, few of Japan`s 12 big professional outfits say they are profitable, prompting even their once-indulgent owners to cut costs in tough times.
Add in the credit crunch and sliding TV revenues and teams are tightening their purse strings in ever more dramatic and visible ways, including the imminent departure of high-profile American manager Bobby Valentine from the Chiba Lotte Marines.
"However hard Japanese baseball teams work to cut costs and boost revenue, most of them can`t become profitable," said Munehiko Harada, a sports management professor at Waseda University. "They have done so much but they are still struggling. We might be seeing the limit of their potential now."
The contrast with U.S. teams, almost all of which are reported to be profitable according to a Forbes magazine list, comes down to huge stadium fees faced by Japan`s teams.
DIFFICULT TIMES
U.S. baseball teams typically own stadiums or get subsidized access to public facilities but most Japanese teams hire venues at commercial rates, often from private investors.
The Fukuoka Softbank Hawks pay 4.8 billion yen ($49 million) a year, a quarter of their annual revenue, to the Government of Singapore Investment Corp (GIC), owner of the team`s home stadium, said Itaru Kobayashi, a team director.
That is about seven times the sum the New York Yankees paid New York City for its former home, the Yankee Stadium, records from the New York City Comptroller`s Office show.
The Hawks, now owned by a mobile phone company, Softbank Corp, have never made a profit since the team was founded in 1938 despite having the fourth-highest audience.
"I always ask myself why it costs so much to operate a baseball team in Japan," Kobayashi laments.
Japanese teams survive because their losses are treated as tax-deductible marketing costs for their corporate owners, which include meat packer Nippon Meat Packers Inc, leasing company Orix Corp and drink maker Yakult Honsha.
But the sustainability of that model may be in doubt as team owners such as Orix, with a huge exposure to a troubled property market, face difficult times.
FIGHTING BACK
The departure of just one team could threaten a 60-year-old system of two leagues with just six teams each, as it did when high costs drove out Kintetsu Corp`s Buffaloes.  Continued...
Original article