Monday, April 02, 2007

Take me out to the ballgame – MLB 2007 Opening Day ticket price analysis

Major League Baseball set an overall attendance record for the third consecutive season with more than 76 million fans filling major league ballparks. Team Marketing Report Sunday released their annual MLB ticket and Fan Cost Index Report. In what shouldn’t come as a big surprise overall ticket prices which increased by more than 10 percent collectively in 2005 and 2006, are set to increase by only 2.5 percent in 2007.

According to TMR, 19 teams raised ticket prices; only nine teams did so by more than 5 percent. Six of those teams had playoff berths, which included: Los Angeles Dodgers (up 26.9 percent), New York Mets (up 11.8 percent), Minnesota Twins (up 11.6 percent), Oakland Athletics (up 8.1 percent), San Diego Padres (up 6.3 percent) and Detroit Tigers (up 5.2 percent).

Surprisingly, the World Series Champion St. Louis Cardinals did not bump up ticket costs, as is traditional for a championship team. With the team’s move to a new facility in 2006 and an accompanying price increase, the Cardinals chose to freeze pricing for the 2007 season.

“Our fans and season ticket holders always make a significant investment in our success, but that has been especially true with the closing of our old ballpark, the opening of new Busch Stadium and our run to a World Series Championship,” said Cardinals’ President Mark Lamping in a press release. “Our fans have purchased a lot of post-season tickets, memorabilia and merchandise, and have spent a lot of their afternoons and evenings here at Busch Stadium. We recognize that, and we’re grateful.”

In Boston, Red Sox Nation has come to appreciate the full meaning of the law of supply and demand when it comes to Red Sox tickets at Fenway Park. The Red Sox remain the most expensive average ticket price in MLB, with an average ticket price of $47.71 in 2007 a 2.7 percent increase over their 2006 average of $46.46.

TMR’s Fan Cost Index (FCI), which estimates what it would cost a family of four to attend a sports event pegs the FCI at Fenway for the 2007 season at $313.83 an increase of 9 percent over the 2006 season FCI at $287.84. The cost of tickets increased by a modest 4.27% at Fenway last year. After winning their first World Series in 86 years, Red Sox tickets increased by 9.30% in 2005 to a league leading average ticket price of $44.56. The average ticket price for Red Sox games in 2004 was $40.77. 2003 -- $38.59. 2002 -- $39.68 (the first year under the teams’ current ownership group). According to TMR the Red Sox have had the highest average ticket price since the 1998 season. The Yankees had the highest average ticket price in 1997 -- $18.36. The Red Sox average ticket price nine years ago, in 1997 stood at $17.93.

In the last decade, the average Red Sox ticket price has increased by more then 250 percent. The ever evolving secondary ticket market had to have opened many eyes in the Red Sox front office in September. Yes the Red Sox managed to sellout their September home games, but hundreds of tickets were available at face or less then face value through the secondary ticket market. On August 17 the Red Sox were 1.5 games behind the Yankees. Two weeks later the Red Sox were 8 games behind the Yankees as August turned to September. The Red Sox where 6.5 games out of the wild card playoff spot – to Red Sox fans the season was over. The Red Sox have sold more than 2.5 million tickets for the 2007 season (the season is virtually sold out). If the Red Sox 2007 season falls by the wayside before September, it will be very interesting to see how Red Sox fans react when it comes to so willingly prepared to pay the highest ticket prices in baseball.

Fenway’s capacity for 2006 was listed at 38,805. According to’s MLB attendance database, the Red Sox averaged 36,182 fans per game for 2006. Using that figure, multiplied by the teams projected 81 home games (the Red Sox reschedule every rainout as a day/night doubleheader, with two separate admissions), times the Red Sox average ticket price of $47.71, the Red Sox projected ticket revenues for the 2007 season stands at an awe inspiring $139,913,623 for the season or $1,727,328 at the Fenway Cashbox. Fenway Park may have the smallest capacity of any MLB ballpark but the Red Sox generate more revenues in ticket sales than the other 29 MLB teams.

The Dodgers increasing their 2007 ticket prices by 26.9 percent follows the 10.3 percent increase Dodgers fans experienced in 2006. Two years ago the 2005 average ticket price for Dodgers game stood at $18.94. Fans can look forward to paying $26.28. Is the increase of more than 35 percent in two years a market correction or price gouging? Bottom line -- the Dodgers sold 3,758,421 last year, establishing a single season Dodgers attendance record. Bottom line the Dodgers sold more than 82 percent of their available ticket inventory last year, a 3 percent increase over 2005. The Dodgers made the playoffs in 2006. Clearly in the Southern California market the Dodgers ticket price increase as significant as they may have been over the last two years appear to be a market correction, ticket prices clearly didn’t reflect how the market would react.

One of the more interesting 2007 ticket price increases is the New York Mets 11.8 percent increase. The Mets made it to the National League championship series before losing the NL pennant to the St. Louis Cardinals who won the World Series. The Mets didn’t raise ticket prices in 1996, but are leveraging their 2006 NL East title as rationale for a double-digit increase this year. Ticket prices don’t go backwards (save for the Charlotte Bobcats), and with the Mets set to move into CiTi Field in two years time, into a new stadium with a much smaller seating capacity, the Mets 2007 average ticket price of $28.26 might be a bargain when the Mets have 9,000 fewer tickets available for each game in 2009. Shea Stadium’s capacity is around 54,000 their new stadium will seat a much more cozy 45,000.

The New York Yankees led MLB in attendance last year. The Yankees regular season attendance topped 4.2 million. The Yankees drew more than 4 million fans for the second consecutive season. The Yankees will move into a new Yankee Stadium in time for the 2009 season. The Yankees increased ticket prices by 2.6 percent this year to $29.91. It will be interesting to see how the Yankees handle their ticket pricing for the 2008 and 2009 seasons. Next year will be the teams’ last in the House that Ruth Built and the franchise will move into a new state-of-the art stadium in 2009. The Yankees new stadium will feature many more suites than the current Yankee Stadium does, but given how nostalgic baseball fans are Yankee fans could face a double-digit ticket increase each of the next two seasons and face little if any resistance in the marketplace.

Why the Colorado Rockies decided to increase their ticket prices by 12.1 percent is a question only Rockies management might be able to answer. However, upon closer examination – Rockies fans do not appear to that concerned about their teams’ on-field performance.

The Colorado Rockies joined the National League in 1993. The Rockies stunned the baseball world by selling 4,483,350 in their inaugural season, establishing a single MLB season attendance record in their first season. The Rockies played their first two seasons, 1993 and 1994, in Mile High Stadium before moving to Coors Field before the start of the 1995 season. Mile High Stadium’s capacity was 76,098, also served as the home of the Denver Broncos.

Coors Field built at a cost of $300 million seats 50,200. Rockies attendance topped 3 million fans each of the franchises first seven seasons. Selling more than 80 percent of their available ticket inventory for seven consecutive seasons sends an interesting message to consumers. The law of supply and demand – Rockies tickets were in demand.

That was before the 2002 season. The Rockies sold 2,737,838 tickets, averaging 33,800 fans or 67.3 percent capacity. In 2003 the Rockies attendance continued its freefall. The team sold 2,334,085 tickets, averaging 28,815 fans or 57.1 percent capacity. In 2004 the Rockies sold 2,338,069 tickets, averaging 29,595 tickets or 58.7 percent capacity. In 2005 the Rockies attendance experienced yet another dramatic fall to 1,915,586. In 2006 Rockies attendance actually increased to 2,105,995.

The Rockies won the NL wild card spot in 1995 losing the NLDS to the Braves. In their last six seasons the Rockies have averaged 72 wins, losing an average of 90 games. That doesn’t create consumer confidence, it offers the consumer quite the opposite – the product you’re interested in having someone purchase has little if any value. Since the 1998 season, nine seasons, the Rockies have finished fourth five times and fifth the other four seasons. Again a strong message of an expectation that stakeholders (in this case the ticket buying public) will readily support an inferior product.

Still at an average price of $16.50 Rockies fans have the third lowest average ticket price in MLB in 2007.

While a handful of teams are asking their fans to endure double-digit increases, the Arizona Diamondbacks are rolling back the clock, or in this case the cost of tickets to attend D-Back games. According to Team Marketing Report the Diamondbacks tickets will drop by 29.9 percent in 2007, one of the biggest price drops for any sports franchise in any sport in years. The Buffalo Sabres dropped their ticket prices by 35 percent a few years ago and have experienced 100 percent capacity this year. The Sabres will increase their ticket prices by 9 percent next year and have pre-sold 14,800 season tickets for next year even with the increase. The Sabres understood where their organization was in terms of their marketplace. Any team a sports franchise drops ticket prices by close to 30 percent all one needs to do is look at the Diamondbacks attendance trends and it becomes clear why the team decided to move in the direction they have for 2007.

The Arizona Diamondbacks won a World Series in their fourth season; proof positive money can buy a championship. In 1969 the baseball world marveled at The Amazin’ Mets, winning the World Series in their eighth season. Jerry Colangelo’s personal investment in the Arizona Diamondbacks was less than 2 percent. Colangelo had the unique ability to raise hundreds of millions of dollars in getting people to support projects he believed in. Colangelo sold Major League Baseball on the Phoenix market, found a group of investors, secured the additional funding for Bank One Ballpark and then built (bought) the 2001 World Series.

Built at a cost of $349 million, and seating 48,569, the D- Backs sold 2,091,505 tickets in 2006, averaging 25,821 or 52.7 percent capacity. Winning wasn’t an issue in the teams’ inaugural 1998 season. The D-Backs won 65 games and sold 3.6 million tickets. A year later, the D-Backs won 100 games and made the playoffs. Interestingly the teams’ attendance fell to 3,013,778, a drop of nearly 600,000 but a team that won 35 more games and made the playoffs in their second season. The D-Backs 2001 World Series title attendance fell to 2,736,361. The fall in attendance while delivering a contending and competitive team had to raise a great many red flag about baseball’s future in Phoenix.

The D-Backs enjoyed a nice attendance bump after winning the 2001 World Series selling 3,198,977 tickets, averaging 39,493 or 87.7 percent in 2002. In 2003 the D-Backs sold 2,910,386 tickets, averaging 35,930 tickets or 71.4 percent capacity. The D-Backs won 98 games in 2002 and 84 games in 2003. After the 2003 season the D-Backs completed the dismantling of their 2001 World Series team by first trading Curt Schilling to the Boston Red Sox, and then traded Randy Johnson to the New York Yankees a year later for two players and $9 million. If ever a baseball franchise sent a message to their fans the good days where over it was the Arizona Diamondbacks in dealing Schilling and Johnson.

Schilling shared the 2001 World Series MVP Award star with Johnson. He and Johnson also shared Sports Illustrated magazine's 2001 "Sportsmen of the Year" award. In 2002, he went 23-7 with a 3.23 ERA. Both years he finished second in the Cy Young Award voting to Johnson.

In 2004, the D-Backs first year without Schilling, the teams’ attendance fell to 2,519,560. In 2005, the D-Backs first year without Schilling and Johnson their attendance fell to 2,059,331. Delivering a World Series in the teams’ fourth season was amazing. Winning 100 games in the teams’ second season must have seemed unbelievable, but at the end of the day it’s too much success to early on. How exactly was the D-Backs management team going to follow-up their first four seasons. It was 86 years between World Series titles for the Red Sox. The Chicago Cubs haven’t won a World Series in 103 years. The Cleveland Indians who joined the American League in 1901 have NEVER won a World Series. D-Back fans have no understanding of the suffering and pain fans of the Cubs and Indians have had to endure. They’ve only experienced success, not exactly a recipe for building long term box office success.

Texas Rangers fans will also enjoy a double-digit decrease for the 2007 with tickets falling by 10.3 percent to an average ticket price of $14.19 the second lowest ticket average in MLB.

Texas Rangers owner Tom Hicks offered Alex Rodriguez the largest contract ever presented to an athlete playing in a North American sports league, signing A-Rod to a 10-year, $252 million contract before the start of the 2001 season.

The Rangers won the American League West title in 1999 winning 95 games. A year later (the year before A-Rod) the Rangers won only 71 games in 2000. The Rangers sold 2,800,147 in 2000 and 2,774,501 in 1999. A-Rod was a member of the Rangers for three seasons 2001 through 2003. The Rangers were no better with A-Rod then without Rodriguez. The Rangers won 73 games in 2001, 72 games in 2002 and 71 games in 2003 Rodriguez’s last season in Texas before the Rangers traded a player they never could afford to the Yankees.

There wasn’t any A-Rod affect in terms of the teams’ attendance. In 2001 the Rangers sold 2,831,111 tickets (an increase of less than 30,000 over the 2000 season), 2,352,397 tickets in 2002 and 2,094,394 in 2003 A-Rod’s last year as a Texas Ranger. In 2004, the Rangers won 89 games and sold 2,513,687 tickets, won 79 games in 2005 and sold 2,525,259 tickets and winning 80 games this year, selling 2,831,021 tickets. Winning is always important in selling tickets. It does appear in a market like Dallas, signing a marquee player like Alex Rodriguez isn’t what sports fans in Dallas want from their team.

In a football driven market (Texas) it’s essential the Rangers understand what their stakeholders want (the ticket buying public) and that doesn’t include big name players with gigantic contracts. A-Rod may be traded by the Yankees if he fails to deliver in the post season, but if he is traded any interested team better place close attention how little A-Rod meant to selling tickets in Texas.

Every pre-season ticket selling indicator suggests MLB will set another attendance record in 2007. Most teams have kept their ticket prices where they were in 2006 (with the exceptions noted in this Insider Report) sending a great message to baseball fans – we appreciate how loyal you’ve been the last three years and we’re going to reward that loyalty (or your faith demonstrated by buying tickets) by keeping our ticket prices where they have been.

For Sports Business News this is Howard Bloom

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