Sunday, August 11, 2013

Times: TV Numbers May Be More Important Than Attendance Numbers

I've always suggested the Rays should have a countdown clock somewhere in their offices to 2017, because that's when they'll get a huge boost in local TV revenues, making their campaign for public stadium dollars a much tougher sell.

And in this morning's Tampa Bay Times, Stephen Nohlgren points out Rays attendance may not matter nearly as much as how many fans are watching their games on TV (and there's a lot of them).  Not to mention the huge MLB television revenues that have started to pad everyones' pockets:
The league recently renegotiated its national TV contracts, which, beginning in 2014, will earn each team an extra $25 million or so a year. That helped the Rays re-sign fan favorite Evan Longoria to a hefty new contract.

The prospect of the team moving from the Tampa Bay area may also diminish as other owners leverage their territory into lucrative, long-term TV deals.

"Television has now become so valuable that you can't move to Portland without impacting Seattle,'' said (Business of Baseball's Maury) Brown. "In San Antonio, the Rangers and Astros would fight any stadium deal.''

Even so, Rod Fort, sports economist at the University of Michigan, thinks the pressure for a new stadium will continue. He thinks baseball could engineer a third team in the metropolitan New York market by generating enough new wealth to pay off the Yankees and Mets.
Nohlgren also acknowledges the Rays may not get rich in 2017 after all, if the cable rights bubble bursts and the team cannot leverage two networks to bid against each other:
In Tampa Bay, Fox remains the only sports network with cable and dish channels throughout the region. It's like the Rays have a rare antique to sell, but only one person might be buying.
Of course, leverage drives up the price in all negotiating, which is why the Rays are probably loving all the Tampa vs. St. Petersburg talk for a new stadium.

Oh, and there was this interesting nugget in the Nohlgren article:
Despite the recent Miami Marlins' debacle, Fort said, new stadiums typically boost team revenue $10 million to $15 million a year.

What television revenues may do "is beside the point,'' he said. "It is always true that they would rather have a new stadium than an old stadium. It is the essence of what Major League Baseball is all about.''
So despite Stu Sternberg telling me the team hadn't looked into the revenues a new stadium would bring, the Rays know exactly what a new stadium is worth....and they know exactly how much they'd be willing to pay for it.


  1. Noah,

    Regarding " stadiums typically boost team revenue $10 million to $15 million a year"

    So, for the Miami Marlins, what are they in fact realizing in boosted revenue, and for how many years?

    You state:
    "So despite Stu Sternberg telling me the team hadn't looked into the revenues a new stadium would bring, the Rays know exactly what a new stadium is worth....and they know exactly how much they'd be willing to pay for it."

    How can Stu know EXACTLY what a new stadium is worth and EXACTLY how much he would be willing to pay?


    1. Because they already done their homework, drew up plans, and are probably ready to implement them when Pinellas co. gets out the way. Really Scott, how dumb do you think the Rays are? Do you think "when givin permission" that they are all of a sudden start figuring about a stadium, lol. Maybe your as naive as NO'ah about it, but as someone on a island on this theory, I believe they know everything they'll need to do to get a stadium built, how it will look, and what the projections of performance the new stadium will help turn out. And I believe some Hillsborough officials know already as well...

    2. With almost 30 "new" stadiums across MLB, it's pretty easy to know what the Rays would increase tickets by and what they'd get from a new concessions contract, etc. etc.

      More importantly, they know what their asset and debt sheets would look like after a new stadium opened, so it's pretty easy to come up with good estimates from a business standpoint.

  2. Ah Noah, I love your analysis on the Rays stadium situation.
    1 - Attendance is good compared to: god awful teams (who's owner ran one of the worst sell off in ML history), April attendance in Minn & Cle, big market attendance figures from the 80s.
    2 - Attendance is poor because of economy: see if they give tickets away, people will come.
    3 - Attendance doesn't matter: because people watch TV, and other teams draw a lot, so they can pay for a new Rays stadium (not that its needed, see pt 1)

  3. Maybe the Rays should examine the feasibility of creating their own subscription-only network online should the market become less favorable when their current tv contract expires in a few years. If younger viewers continue to eschew cable/satellite subscriptions in favor of streaming services like Netflix and Hulu, the possibility of a team handling their own online subscription service could be financially viable in the next few years. Advertisers want to reach that 18-34 yr old demo. If they're abandoning traditional tv outlets in favor of those online, the ad revenue will move with them.

  4. It is always a real possibility that The Rays could start their own network, ala the Yankees and other sports franchises. They could do this either in combination with other teams (Lightning anyone?) or entirely on their own.

    That real possibility should provide sufficient leverage in negotiating a local TV broadcast package. Not that much leverage is needed. It is fairly straightforward to calculate how much money can be generated by televising Rays games, and many entities would be willing to pay a little less than that amount.