A Day of American Business Milestones
On this day in economic and financial history ...
America's national pastime has been around for more than 150 years, but it was on Feb. 2, 1876, that baseball promoted itself to the major leagues. That day, William Hulbert formed the National League of Professional Baseball Clubs, with eight clubs -- not one of which retains its original name. The National League replaced the National Association, which had been founded five years earlier and was too unstable and imbalanced to survive for long.
The new National League, though, wasn't much better. One franchise, the New York Mutuals, folded after one season, possibly because their name sounded more like an insurance company than a sports team. By 1880, six of the original eight clubs had shut down. The other two continue to play in today's National League as the Chicago Cubs and Atlanta Braves.
The American League rose to compete in 1901, and two years later the two leagues formally recognized each other with an agreement that forged one organization: Major League Baseball. The World Series has been played every year since 1904, with the exception of 1994 because of a labor strike.
According to Forbes, the average Major League Baseball franchise in 2011 was worth $605 million and earned net revenue (less debt payments) of $212 million each, for a total of $18.2 billion in aggregate value and $6.4 billion in aggregate revenue. The 30 teams paid a total of $3.5 billion in player costs that year. The growth of cable contracts in recent years is certain to push all three of these numbers much higher in the near future.
At the end of the 2012 season, News Corp. and Time Warner signed a $6.8 billion broadcast contract that will run through 2021, which brings to $12.4 billion the total national TV revenues Major League Baseball will earn through 2019, thanks to an existing contract with Disney's ESPN. If you've ever wondered why your cable bill is so expensive, blame ESPN and its hefty broadcasting contracts. The sports network generates $5.13 in revenue per subscriber, according to Bloomberg.
More than just a catalog
The first Sears retail store opened in Chicago on Feb. 2, 1925, more than three decades after the company began as an iconic mail-order catalog and a year after Sears had first been added to the Dow Jones Industrial Average , which had made it not only the first retailer on the list, but also the only retailer with no storefront presence to ever make the Dow -- at least for a year.
The company boomed after World War II, reaching $1 billion in sales in 1945 and doubling that total the following year. By 1967, Sears tallied $1 billion in sales per month, and three years later the company broke ground on the iconic Sears Tower in Chicago. By 1985, it was thought that one out of every 30 Americans had worked for Sears in some fashion, and its workforce swelled to 520,000 in 1987.
However, the '90s brought intense competition from Wal-Mart and others, and Sears was forced to retrench. After shuttering its catalog operations in 1993, Sears limped into the new millennium without a clear strategy. A 2004 merger with Kmart, creating what is now known as Sears Holdings , did little to stop Sears from sliding into irrelevance. Sears' retail stores attracted only 1.3% of female clothes shoppers at the beginning of 2013, down from 3.5% a decade earlier, and those women are on average 52 years old. This dwindling, aging consumer base is not what Sears needs to recapture its former glory.
Anyone got a bottle opener?
On Feb. 2, 1892, William Painter received the first bottle cap patent. You've seen his legacy every time you open a bottle of beer or an old-fashioned soda bottle. This invention was called the crown cork, because it originally contained a flat sheet of cork on the inside, but today's bottle caps have moved on to plastic inner linings. The crown cork bottle cap became the first commercially successful disposable product, which inspired King Camp Gillette to develop disposable razor blades.
To capitalize on his invention, Painter founded Crown Cork and Seal -- now Crown Holdings -- in the same year he received his patent. Crown Holdings is now one of the world's leading manufacturers of metal packaging products, operating 139 plants in 41 different countries.
Knowing is half the battle
On Feb. 2, 1964, as the Vietnam War was picking up steam, Hasbro released its first G.I. Joe action figures. The 12-inch dolls originally had a World War II theme and were made to capture the male half of the market ignored by Mattel's Barbie dolls. They quickly became a big success, prompting so much diversification that the brand eventually suffered from gimmick fatigue. Hasbro retired the line in 1978, but not for long -- the early '80s saw G.I. Joe reborn in cartoons and video games, which led to a revival in the action figure line as well. By the end of the '80s, G.I. Joe action figure sales had surpassed $1.2 billion.
Boys of today are just as likely to be familiar with the brand through the 2009 movie G.I. Joe: The Rise of Cobra, which grossed $300 million at the worldwide box office and which is slated to get a sequel in the spring of 2013.
Even old New York was once New Amsterdam
New Amsterdam became a city when it was first granted municipal rights on Feb. 2, 1653. You might know it better as New York, the world capital of finance. In 1664, the English captured the city, and a year later it was reincorporated as New York City. Why they changed it, I can't say. People just liked it better that way.
Today, the New York City metropolitan area generates an annual gross domestic product of $1.29 trillion, larger than that of Mexico or South Korea.
Lead 'er up
On Feb. 2, 1923, the first anti-knock gasoline, which contained tetra-ethyl lead, went on sale at the Refiners Oil Company service station in Dayton, Ohio. General Motors scientists had devised this new formulation two years earlier to prevent "knocking," which resulted from out-of-sequence firing in the engine and caused damage over time. It proved successful because of the low concentrations needed for safe operation, which allowed gasoline to be reformulated inexpensively. Before long, leaded gasoline was the standard across the United States, and other nations quickly adopted it as well. Exactly three years later, on Feb. 2, 1926, Thomas Midgely of General Motors was granted a patent for this development.
Leaded gasoline was eventually found to be toxic in the 1950s, and it was phased out beginning in 1976. A controversial article in Mother Jones, published in early 2013, claims that the subsequent decline in leaded gasoline emissions is correlated with similar declines in violent crime and teen pregnancy rates after the 1970s, which has been corroborated by several studies. It seems difficult to argue that eliminating this gasoline formulation has been anything but a net positive for the health of the human race.
One ... billion ... dollars!
On Feb. 2, 1956, General Motors became the first company in American history to report annual profit in excess of a billion dollars. The company reached this mark -- a total of $1.2 billion after taxes -- on 1955's sales of $12.4 billion, for a net margin of 10%. GM president Harlow H. Curtice offered the press a few other juicy statistics on this record-breaking day:
- Payroll was $3.1 billion.
- Worldwide employment totaled 624,000 people.
- 410,000 U.S. employees earned $2.2 billion, or about $5,365 per person.
- GM paid $1.6 billion in taxes.
The average cost of a new car in 1956 was $2,050, so GM's employees were generally able to afford a new Chevy or Buick. Curtice told reporters that the company's average down payment was 40%, and installment payments averaged only 28 months. Few Americans who wanted one had severe difficulty buying a car. Thanks to this record income, GM shareholders had earned $2.17 per share in dividends for 1955.
GM's current nominal record for annual profit, reached in 2012, is $7.6 billion. However, 1956's total still stands head and shoulders above 2012 in real terms. Adjusted for inflation, GM earned $10.1 billion in 1956.
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