294 ENTREPRENEURSHIP
game season for each player, many of them
young men hoping to work up to the major
leagues. Economies of scale are another
benefit. For example, the league bulk pur-
chases balls for all their teams for just $3
instead of the usual $4. Unlike the major
leagues, the Golden League actively recruits
advertising sponsors, and every player wears
a shoulder patch promoting
AlphaFlexOmega5 fish oil.
Centralized ownership permits the league
to use profits from the more successful teams
to offset losses of the other teams, or to use
those funds for league expansion. Describing
the minor league baseball experience as an
“alternative entertainment platform,” the
league currently targets for expansion com-
munities far from large cities. Attendance is
good because there are fewer competing
events.
It took Kaval and Pavel over a year to
raise the $5 million they needed to get start-
ed. Their target investors were successful
entrepreneurs from California’s Silicon Valley.
Kevin Outcalt, a former Cisco Systems exec-
utive, invested $1 million and became the
league’s first commissioner. Jim Peters, a for-
mer President of Staples, Inc., and former
President and COO of Ross Stores, invested
$1.5 million and became the league’s chief
operating officer. Investors in the communi-
ties where the teams are based tend to belocal business leaders who want to realize
childhood dreams of being sports moguls.
The league started out with eight teams in
2005 but slipped to six in 2006 thanks to
poor attendance. There are four teams in
California, and one each in Arizona and
Nevada. The league hopes to establish a
team in northern Mexico to attract the large
Latino population in the Western states, but
has so far been unable to make a deal for a
suitable Mexican stadium. A Utah team was
added in 2007. While they still have a long
way to go before meeting their target figures,
Kaval says that attendance is up from an
average of 1350 per game in 2005 to 1500
per game in 2006. “Year One was about sur-
vival. The second year has been about
streamlining cost,” says Commissioner
Outcalt. “Year Three will be when we really
pay attention to driving profits.”
While some of the millionaire investors
say they fully expect a healthy financial
return on their investment, others have a
more relaxed attitude. “I know some people
expect this thing to be a home run,” says
investor Pat Sajak. “But me, I’d settle for a
ground-rule double.”
SOURCE: Adapted from Gary Rivlin, “Root, Root, Root for
the Start-Up,” New York Times, July 9, 2006. Retrieved
from the Web July 8, 2006.
http://www.nytimes.com/2006/07/09/business/your-
money/09golden.html?adxnnl=1&adnn and http://www.golden-
baseball.com.Case Questions
- Describe the nature of the initial financing of the Golden Baseball League (GBL).
- How is investment in the GBL similar to and different from financing in technology ven-
tures? - Describe and evaluate the GBL’s business model. Do you think it can work? Why or why
not? - What additional recommendations would you make to the owners of the GBL?