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Home Maury Brown Despite Chilly Economy, Signs Pointing to MLB Having Better Season Than Initially Projected

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Despite Chilly Economy, Signs Pointing to MLB Having Better Season Than Initially Projected PDF Print E-mail
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Written by Maury Brown   
Friday, 22 May 2009 09:13

Bud Selig

When MLB’s owners broke from their quarterly meetings yesterday in New York, I reported about what wasn’t addressed (arcane television territories that impact blackouts), as opposed what was.

Commissioner Selig addressed the media afterwords, and based upon reports by the owners, MLB is in better shape than they had been expecting

As reported by Ronald Blum of The AP, “attendance is down 6.4 percent from a year ago and 20 of 30 teams have experienced drops,” a decline that is not nearly as steep as what baseball braced for in the off-season. The league has three scenarios on attendance: flat, decline of 10 percent, and decline of as much as 20 percent.

Congratulations, you’re somewhere just below nirvana (flat) in this chilly economy.

And consider this: the decline of 6.4 percent comes as both the Yankees and Mets moved into far smaller facilities, when it comes to seating capacity. As Blum notes, “the Mets saw average attendance fall 22 percent and the Yankees saw theirs decrease 14 percent.”

A large part of this has to do with clubs wisely lowering ticket prices after seeing an double-digit increase in league average ticket prices last year (for more, see the graph and table in Redefining "Commitment" When It Comes to Ticket Prices). As further reported:

[Selig] said 15 or 16 teams held ticket prices even, six or seven cut them and the rest raised them. Many teams instituted discounted tickets and cheaper food prices, including $1 hot dogs.

"Frankly, recession or not, this is the way it should be every year," he said.

It is Selig’s last comment here that should be latched onto. As noted in the graph and link in Redefining "Commitment" When It Comes to Ticket Prices, the league saw the average cost of a ticket to an MLB game rise 10.46 percent in 2008, and 4.54 percent this season. With the economy not looking to pull out of its malaise any time soon, the league will need to do their level best to keep prices at, or possibly even lower, than they are this year during the 2010 season.

Finally, there is a question as to whether the league’s revenues will be diminished due to the lowering of prices and declines in attendance. While television continues to make in-roads as a key revenue generator, ticket sales are still the league’s bread and butter.

One bright spot has been the creation the league’s MLB Network. The largest cable channel launch is biggest in history, reaching approx. 50 million homes. The league and MLBN have continued to work on carriage agreements to increase that figure further.

Selig said that the channel was doing well in an ad market that is seeing declines the likes of which it hasn’t seen since the ‘80s. To back that comment, when MLB Network held a conference call with Bob Costas, Jim Kaat, and the network’s President and CEO, Tony Tony Petitti in mid-April, Petitti confirmed that MLBN was hitting all of their advertising marks.

If MLB Network, and revenues from sources such as MLB Advanced Media (MLBAM) continue to increase, it is possible – possible – that league revenues could hover around the league’s record $6.5 billion last year. Selig would not commit to a 2009 revenue projection, but said he was encouraged as to where the league was currently at. It seems fair to say that league revenues could hit the $6.075 billion figure that was reached in 2007, a then record figure.

Bottom line? The bottom line for the league should end better than what was being projected heading into the 2009 season. The league’s owners should hold back from making increases to off-set the adjustments made this season (sorry, it’s too late for the Yankees and Mets), and keep prices at, or near flat going into 2010. That will keep fans going to game and, more importantly, keep cash registers ringing.


Maury BrownMaury 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 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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