Shinsegae's baseball team on the rise: SSG Landers

Many professional sports teams are not profitable as they incur significant operating costs to secure star players and run related facilities while sales of tickets, the major source of revenue, are limited. Therefore, companies that own sports teams typically use the business as part of their marketing or social responsibility activities.

However, South Korean baseball team SSG Landers run by retail giant Shinsegae Group stands out with the largest improvement in earnings among the 10 local professional baseball teams last year.

Shinsegae has focused on the profitability of SSG Landers, formerly SK Wyverns, since the retail group acquired a 100% stake in the baseball team for 135.2 billion won ($98.1 million) in 2021.

SSG Landers swung to the black with 4.4 billion won operating profit last year, compared with a 16.7 billion won loss in 2022 due to contracts with players including Kim Kwang-hyun, a former Major League Baseball pitcher. The Korean baseball team logged 58.5 billion won in revenue last year, up 6% on-year, according to its regulatory filing on Thursday.

DIFFERENT STRATEGIES

Compared with SSG Landers, four local professional baseball teams posted losses last year.

LG Twins, which won the final championship Korean Series title for the first time in 29 years last November, had a 1.6 billion won loss in 2023 due to a 33% increase in the team's operating costs. KT Wiz, which claimed the second spot in the regular season last year, spent 63.9 billion won on team operations and logged a 10.9 billion won operating loss.

Since the acquisition, Shinsegae has prioritized overhauling the business practice of supporting the team through advertising.   

When it was SK Wyverns under Korea’s No. 2 conglomerate SK, the parent group would increase advertising expenditures for the team when it posted a loss. After the acquisition, Shinsegae reduced its advertising expenditures for the team and increased advertisers outside the parent to help the team’s self-sustainability.

SSG Landers expanded premium seats in special zones for attendees, instead of increasing ticket prices. The zones include the barbecue zone where sports fans can watch baseball games while grilling meat, and the green zone where attendees can watch the games on grass.

Despite higher prices than regular seats, the premium zones were a big hit with baseball enthusiasts.

The baseball team’s strong performance also backed its earnings improvement, according to industry watchers.

SSG Landers’ ranking jumped from sixth in 2021 to second in 2022. It fell to third place last year, but the team attracted more than 1 million attendees, the standard level for popular baseball teams.

SSG Landers aims to generate operating profits with more than 60 billion won in revenue this year. The parent Shinsegae Group plans to launch Starfield Cheongna, a shopping complex with a multi-purpose sports stadium, in Incheon by 2027 to create synergy between its retail and sports businesses.

Write to Jong-Kwan Park at pjk@hankyung.com

Jihyun Kim edited this article.