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Can MLB Weather the Recession? PDF Print E-mail
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Ticket & Attendance Watch
Written by Maury Brown   
Tuesday, 26 February 2008 22:03
MLB and the Recession
A Look at How the Downturn in the Economy Might Impact MLB, with up-to-date ticket sales information for the Diamondbacks, Mets, Tigers, Indians, Angels, Cubs, and Phillies
 
You can’t deny it any longer, ladies and gentlemen, we are in a recession. The Labor Department today reported that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that most economists had been expecting (and think, it was up 7.5 percent over the past 12 months, the most in 26 years), along with news that home foreclosure rose a staggering 57 percent in January compared to a year ago.
 
Yes, the U.S. economy is taking a severe hit.

But, here’s a prediction for those watching the economic outlook for Major League Baseball: it’s not going to be impacted by the U.S. economy gloom and doom, or at least not as much as many might think.

This isn’t to say that all markets will be impervious to the economy. It may be difficult for Orioles, Rays, or Marlins fans to get excited about the upcoming season based on the losses over the past few seasons, or how they approached the off-season in terms of player movement. Fan apathy would most likely be in place with some teams, regardless of any recession.

But, if your team made moves in the off-season that will give fans hope, made it to the playoffs last season, or has a new ballpark ready to open, then economic downturn, or not, many clubs will continue to reap benefits in ticket sales as the new season approaches.

Contacting several clubs that either made the playoffs, or made key moves in the off-season reveals an economic outlook that runs counter to how domestic spending has been.

Select Read More to see ticket sale details and other analysis regarding MLB's economic future.

Ticket Sales 

Arizona Diamondbacks

Coming off winning the NL West, sweeping the Cubs 3-0 in Division play, before losing the then white-hot Rockies, the Diamondbacks are seeing a resurgence in fan attendance and ticket sales that have been missing for several years. According to the Diamondbacks:

  • The Arizona Diamondbacks have seen an increase in attendance over the past two seasons after season attendance totals had been on the decline for three consecutive years from 2003-05. The team drew 2,325,233 fans to Chase Field in 2007, which was its highest attendance mark since drawing 2,519,560 fans in 2004.
  • The D-backs had 12,471 full season-ticket equivalents during the 2007 season. The team has already surpassed last season’s FSE number and has a goal of reaching 15,000 FSEs in 2008.
  • Currently, the D-backs have sold $3.2 million in new season ticket revenue for the 2008 season compared to selling $2.184 million in new season tickets during the entire 2007 season.
  • Currently, the D-backs have sold $2.3 million in group ticket sales compared to just $1.2 million at this time in 2007. The D-backs finished with $3.9 million in group ticket revenue in 2007 and are projecting a $1 million increase for 2008.
  • Heading into the 2008 season, the D-backs renewed 93% of their season ticket holders compared to just 84% renewal rates heading into 2006 and 2007 seasons.

Cleveland Indians

The Business of Sports Network’s runner-up for MLB Organization of the Year, the Indians won the AL Central, beat the much vaunted Yankees 3-1 in Division play, and pushed the Red Sox to a Game 7 in the AL Championship Series before their impressive playoff run ended. Dovetailing off of an impressive 2007 season, the Indians report that:

  • The Indians tickets sales have exceeded 1.3 million sold to date; they did not hit the 1.3 million mark until late April last season
  • Indians season ticket sales are up 20 percent, eclipsing last year’s total Season Ticket number in early January
  • Group sales are up 39 percent compared to last year at this time
  • From the day after Thanksgiving until this coming Saturday, March 1st, the Indians were selling exclusively Opening Day 2008 (which sold out in less than 3 hours); Opening Series (a 3 Game set vs Chicago), select 6-Game ticket plans (13 variations); 20-GamePlans , 40-Game Plans and Full 81-Game Plans. This does not include single-game sales, which begins this Saturday, March 1st.

Philadelphia Phillies

The Phillies won the NL East last season, the first time they had done so since 1993. With the run to the postseason and winning the Division, the Phillies report that:

  • Sales for full-season equivalents are at 19,600 already this season, compared to 17,100 FSEs last year. That marks a 15 percent increase before the season has started.
  • Individual ticket sales are at 250,000 compared to 150,000 at the same point last season.
  • Group sales at 180,000 compared to 150,000 last season.

Los Angeles Angels 

  • To date, the Angels are running at a greater than 90 percent renewal rate on season seats versus 82 percent last year on this date. There is some "softness" in corporate owned seats versus personal seats from prior years.
  • Sales for season seats running at 50% greater on new season seats versus 2007 primarily due to more availability. Which team spokesman Tim Mead said was, "pretty steady given current state of economy."
  • Suite agreements for them are holding steady, although the Angels did see turnover this year from housing related suite owners - Title companies, homebuilders, financial institutions, etc. However, they say that new buyers are filling those vacancies and will therefore will be at a higher occupancy in suite business for 2008 than 2007.

New York Mets

With the addition of Johan Santana to the starting rotation, the Mets report that they have sold have sold 2.2 million in FSEs, an increase of 15 percent over last year. Single game tickets for the Mets go on sale March 9th.

Chicago Cubs

  • UPDATE (3/1/08): At this point, the Cubs sold more than 2.7 million tickets on March 1, a franchise record for the most tickets ever sold by the Cubs through the end of February.
  • The Cubs did not have season ticket renewal information at this time, but noted "generally speaking, there were only a small handful of folks who did not renew their season tickets for 2008."

Detroit Tigers

The Tigers missed the playoffs last year after going all the way to the World Series on 2006. But, with the aggressive trade made in the off-season that sees Miguel Cabrera and Dontrelle Willis coming over from the Marlins, the Tigers report that:

  • Last year, for the entire season, their FSE total was 19,030. Yesterday, they passed the 26,000 mark in FSEs with six weeks to go before the start of the season.

The Stadium Factor

All this without considering that ticket sales will be for clubs enjoying new stadiums opening in 2008 or 2009. Certainly, the Washington Nationals will see a large bump in ticket sales with the opening Nationals Ballpark opening this year.

But, to add to that increase, the Mets and Yankees will see considerable increases in sales, as well, with both Shea and Yankee Stadium seeing their swan songs this year. While that alone will make tickets extremely attractive, consider that clubs offer incentives in advance of new stadiums opening.

For example, the Mets have announced that Full Season Ticket Holders in 2008 will have priority in purchasing Full Season Tickets for Citi Field in 2009.

The Yankees are, depending on your point of view, either turning a blind eye to the recession, or banking that the fact that New Yankee Stadium will be such a year-round attraction that paying extremely aggressive prices will still be of value in the New York market, regardless of an economic downturn.

While the naming rights for New Yankee Stadium will not be up for grabs, the Yankees and CAA Sports are working on landing a top sponsorship deal that would rake in $20 million annually. On top of that, prime tickets for the approx. 60 front row seats that make up the Legends section will go for an eye-popping $500-$2,500 a game.

All this, in the face of the dire recessionary news.

The View Going Forward

A recession is nothing to take lightly. Team executives that I have spoken with over the past week all say that it is something they are watching closely. As mentioned, some teams will feel the downturn more than others. The question is, will MLB in-total be adversely impacted by the recession?

While we have looked at some figures regarding upcoming season ticket sales, and stadiums coming online in the next two years, the biggest revenue maker for MLB will arrive in 2009 by way of television.

When the MLB Network launches in a year, it will be the largest cable channel launch in history with an estimated 48 million television households. That massive launch is projected to generate total cable subscriber fees of $112 million in 2009 and $152.7 million annually by 2015. While those revenues must be split with other share holders (The channel is two-thirds owned by MLB, with 16.67% of the equity held by DirecTV and the remaining amount split proportionally between InDemand partners Comcast, Time Warner and Cox), it is still a massive revenue stream that will help blunt recessionary forces.

Conclusions

The economy in the U.S. is in the midst of substantial downturn, and one wonders whether we have yet seen the worst of it. With the staggering of new stadium development, thus creating a continued boost to attendance by way of the honeymoon effect, has, in part, created an artificial attendance increase many years running. But, when you throw in the recent run of parity created by the creation of the Wild Card, revenue-sharing, and robust revenue streams, it seems that any team, given solid player development, can make it to the postseason, and with that more teams are enjoying increased ticket sales based off of performances in the season prior, or looking at clubs investing in quality players, and creating a buzz.

When throwing in the launch of the MLB Network in 2009, my prediction is for no worse than a slowing in attendance and revenue growth over the next couple of seasons. But even if the recession becomes monumental, there is always a trump card—a safety net, if needed. Placing MLB Advanced Media as an IPO would yield well in excess of $2 billion.

Commissioner Selig has predicted that this season will see record attendance and gross revenues, yet again for MLB. Doing so will be very tight indeed, but not out of the question, based on the increased passion that fans have for baseball, thin wallets, or not.


Maury Brown

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is also a contributor to Baseball Prospectus, and is available as a freelance writer.

Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network

 
 
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