Archive for Business of Baseball
Yanks-Phils Classic sees 42% ratings jump over ‘08
Posted by: | CommentsA year ago, those in charge of baseball were panicking a bit. The 2008 World Series ended amidst some weather-inspired controversies, and no one had watched. Ratings were down 20 percent from 2007, and average of just over 13 million fans, the lowest total since FOX started broadcasting the Fall Classic, tuned in per game. Baseball was on the verge of losing its wider national audience.
However, with the onset of the MLB Network’s wall-to-wall coverage of the sport and, more importantly, the return of the Yankees, the villain of October, to the World Series, ratings for the Series were up a record 42 percent over last year. Although this year’s wasn’t the most watched World Series of recent times, it was the fourth-highest viewed of the last decade and has restored baseball’s October dominance and popularity. Over 19 million fans tuned in each night to watch the Yankees battle the Phillies, and the numbers suggest that the Yankees, as I’ve said before, are good for baseball.
Maury Brown at the Biz of Baseball has more on the ratings:
Fueled by outstanding individual and team performances, dramatic come-from-behind wins and the most one-run games in a single postseason, each round of the 2009 MLB Postseason generated double-digit percentage year-to-year increases in average viewership as compared to 2008, capped by the 2009 World Series averaging 19.4 million viewers, a +42% increase over last year and the largest-ever year-to-year gain in viewership (previous high was 36% from 2000-2001, which followed a low viewership showing for the Subway Series).
Complete 2009 MLB Postseason coverage on FOX and TBS averaged 9.0 million viewers, up +30% over last year and the most-watched since 2005. In addition to the +42% viewership gain for the World Series on FOX, viewership for the Division Series on TBS was up +11% over last year and viewership for the League Championship Series on FOX and TBS increased +14% over 2008.
The 2009 MLB Postseason delivered extraordinary results for FOX and TBS, including leading TBS to the most-watched week in its 33-year history, and catapulting FOX to a commanding +22% lead in the key Adult 18-49 demographic against its network competition. The huge Adult 18-49 season-to-date advantage for FOX is the largest in the network’s history in the fourth quarter and the largest fourth-quarter lead for any network since 2003.
In addition to these hearty aggregate numbers, the World Series was the highest-rated network primetime show during the six nights of games, reports Brown. All over the country, people wanted to watch the Yankees.
And so fans may hate the Yanks. They may root against the team and its payroll. They may say the Steinbrenners bought another title. But the reality of it is simple: Baseball fans tune into watch Goliath because they hope David can win. When David happens to be another team with a payroll in excess of $100 million from a major media market, baseball executives can go home happy. This year, the World Series was very, very good for baseball.
Ratings strong for 2009 Series
Posted by: | CommentsLast year, when the Yankees failed to make the playoffs for the first time since 1994, baseball fans the country over were gleeful. They were also uninterested in watching the postseason, and as the Yanks are now within three wins of a World Series title, a common theme has emerged this October: The Yankees are good for baseball. The ratings from Games 1 and 2 of the World Series are in, and the numbers are great. The ratings for Game 1 were up 34 percent over 2008, and the game was the second most viewed Game 1 since 1999. Last night’s game saw a whopping 48 percent increase in viewership over 2008’s Game 2. If this World Series stretches on long enough, the TV ratings and viewership figures could very well set some cumulative Fall Classic records.
Yankee profits, World Series taxes and steak
Posted by: | CommentsIt’s a three-for-one special this afternoon on RAB. You get three mini-posts about the Yankees’ business and rolled up into one.
Yanks break even in ‘09
Generally, the New York Yankees with their gaudy $200 million payroll, don’t turn a profit. According to team officials, the club operates in the red due to the $100 million in revenue sharing and luxury tax payments it must make each year. In a way, that figure is a bit of an accounting slight of hand because it doesn’t count numerous other Yankee business ventures, including the YES Network, but that’s what the books read.
This year, though, the economics of the Yankees are different. As CNBC’s Darren Rovell reported yesterday, the Yankees are breaking even this year, and the team can thank the generosity and largesse of the City of New York for it. Reports Rovell:
But thanks to higher ticket prices, crowds filling the new Yankee Stadium seats to almost 94 percent of capacity and, perhaps most importanly, the tax shelter associated with new stadium costs that can be deducted from the team’s net revenues, sources say that the Yankees organization will make break even or perhaps even make money this year.
Sources say the savings on the tax shelter are expected to be at least $40 million.
I’ve long contended that taxpayers got a raw deal with the new Yankee Stadium. The city forewent far too much tax revenue and handed out far too many tax subsidies at a time when it could least afford it. The Yanks, though, are benefiting from it. The team has talked about maintaining or reducing payroll for 2010, but with this tax shelter, it appears as though the Yanks could add payroll next year and still come out fiscally stronger than they were a year or two ago.
World Series nets New York $40-$110 million
The New York City economy has long been sagging. Saddled with rising costs and a decreasing tax base due to the current recession, the city is in danger of running a deficit that would trigger state control of municipal finances. Perhaps, though, the World Series can alleviate some of the pain.
According to the Daily News, the World Series is very, very good for the economy. Each game brings in approximately $20 million in added revenue. From taxes on merchandise sales to bar tabs and crowded restaurants, business and the government enjoy the benefits of the Fall Classic. Even the MTA which sees 20,000 more riders per game gets in on the act.
For the Yankees and the City, the ideal outcome too would be a parade. A World Series victory would mean an additional $30 million economic activity. Here’s to No. 27.
NYY Steak roots for rain delays
Finally, we arrive at food. Crains New York spoke with David Miller, the COO of NYY Steak, about running a steak house in a stadium. While fans root for clear skies and warm weather, Miller says his restaurant benefits from rain delayed games and cool winds. “Rain and cold drive up business at the restaurant by at least 20 percent,” he said to Lisa Fickenscher.
According to Miller, the average tab at the steak house runs to around $98, and the place fills up pretty quickly once the game wraps up. It will be interesting to see how both NYY Steak and the Hard Rock Cafe do over the winter. These two establishments will keep their doors open all year long but won’t enjoy the benefits of 48,000 fans traipsing past their doors 81 times as they do during the summer.
Yanks take ratings cake locally and nationally as Senators bet on cheese
Posted by: | CommentsAround America, Sunday night is generally reserved for football. So it was with a little trepidation that FOX aired Game 6 of the ALCS up against a popular New York Giants/Arizona Cardinals game. Although were a disappointment in New Jersey, the ALCS was not. Nationally, the game drew in an 11.4 rating with a 18 share while the NFL contest drew a 10.4 in a 16 share. In New York, nearly 40 percent of all TVs in use on Sunday night were tuned to the Yankee game. That’s popularity, and you can bet that ESPN is awfully happy not to have to air Monday Night Football against a Game 7 tonight.
Meanwhile, in other World Series-related news, New York’s Senate representatives have bet with Pennsylvania’s Senators over the outcome of the World Series. At stake is, as David M. Herszenhorn reports, some cheese. If the Yankees win the Series, Bob Casey and Arlen Specter will send some Philly cheesesteaks New York’s way, and if the Phillies win, Chuck Schumer and Kirsten Gillibrand will ship some New York cheesecake to Philadelphia. Here’s to some cheesesteaks for the Senators from the great state of New York.
Steiner Sports, Yanks sued over stadium seat sales
Posted by: | CommentsA lifelong Yankee fan and 23-year season ticket holder is suing Steiner Sports and the New York Yankees over the way the two parties have handled sales of old Yankee Stadium memorabilia. In the class action suit filed yesterday in federal court, John Lefkus says he paid $2000 for his season ticket seats only to receive a different set of Yankee Stadium chairs. He is alleging deceptive acts and practices and false advertiser, among other charges, and is asking for both injunctive relief and compensatory damages.
According to the complaint, found in full below, earlier this year, Lefkus tried to take advantage of an offer from Steiner Sports to purchase his specific season seats. For $500 extra, he could buy Seats 1 and 2 in Row A of the Main Reserve section 11. According to Steiner’s literature, the special-order normal seats would come completely unrefurbished with the original seat, seatback and arm rests. To verify the seats, all orders were to come with a Letter of Authenticity from Steiner Sports and the Yankees.
When Lefkus’ seats arrived, nearly three months after he placed the order, he was dismayed to discover that his seats were refurbished. According to the complaint, “their original paint was stripped and the seats were repainted in a different hue from original.” He alleges that, during the dismantling, seats “were not properly cataloged or organized and as a result seats sold as specific seat pairs could not in fact have been provided because [Steiner] did not adequately record which seat parts came from which locations and because the seats themselves were dismantled and later reassembled without regard to which seat part went with which seats.”
In the complaint, Lefkus included a pictorial comparison of the two seats, and the differences are striking. The delivered seats are indeed a different color than the seats were in the Stadium; the numbers on the seats do not properly correspond to Lefkus’ order; and the alleged Seat 1 was not delivered as an aisle seat while the alleged Seat 2 was.
Furthermore, Lefkus’ complaint an admission by Steiner’s agents that “no effective tagging system was used to maintain the integrity of the offer to buy specific seats.” Due to these admissions and the fact that the seats come with a signed guarantee of authenticity, Lefkus is also alleging a breach of implied and express warranty on behalf of the class.
As of press time I could not reach Steiner Sports for comment. I believe, however, Lefkus’ complaint rests on solid ground. He seems to have evidence and admissions from Steiner that buttress his case. He is purporting to represent all buyers of Yankee Stadium seats, and although Steiner and the Yanks may attempt to challenge the class, Lefkus’ lawyers probably have a strong case for certification. (Ed. Note: For a detailed explanation of what this means legally, check out this comment from someone with real-world legal experience.)
In my unqualified opinion — as a law student, I am barred from offering legal advice and have a limited knowledge of the questions of law presented here — I anticipate a settlement in this case. It sounds as though Steiner Sports and the Yanks did not do an adequate job removing and cataloging seats from the old Stadium, and it sounds as though it is far too late to remedy the situation. Meanwhile, as potential buyers get wind of this lawsuit, they may not be so keen on dropping $2000 on a pair of seats that may not be the ones they believe they are buying.
In addition to monetary damages, Lefkus has asked for the court to order an end to Steiner’s allegedly deceptive advertising and marketing practices. How that charge plays out in a settlement is open for debate, but right now, I’m glad I didn’t try to buy my favorite seats from old Yankee Stadium.
After the jump, read the complaint in full. Read More→
Game 2 most watched Sat. night LCS since 2004
Posted by: | CommentsAs we know, the Yankees haven’t been in the American League Championship Series since 2004, and Saturday night’s game was a 13-inning thriller that ended with an Angels’ error shortly after 1 a.m. It is, therefore, not surprising to me that Game 2 was the highest rated Saturday night LCS game since the Yanks and Red Sox squared off in 2004. According to Nielsen numbers, 9.4 million people watched the game — a 53 percent increase from 2008’s Saturday night 11-inning ALCS Game 2. In fact, ratings are up 44 percent for the ALCS over last year. With two teams from the country’s largest media markets squaring off, American League baseball is enjoying a postseason ratings renaissance. As I wrote on Saturday, the Yankees are good for baseball indeed.
As an interesting postscript to the tale of increased TV ratings, Maury Brown explores why games begin at 7:57 during the ALCS. It is apparently MLB and FOX’s nod at the problem of late game times. By starting the game three minutes to 8 p.m., baseball can say the games are starting before 8 p.m. and thus more fans can watch.
What’s good for baseball…
Posted by: | CommentsAs all of the end-of-season numbers come out, certain trends emerge. Mostly, those trends involve the Yankees and their popularity. The team led the AL in home and road attendance, and the YES Network is more popular than ESPN in the New York City area.
Yesterday, Maury Brown at the Biz of Baseball released FOX’s top most watched games of the season, and unsurprisingly, they all involved the Yankees. Take a look:
| Date | Game | Viewers (000) | Result |
|---|---|---|---|
| April 25 | Yankees @ Red Sox | 4.086 | L 16-11 |
| August 8 | Red Sox @ Yankees | 3,962 | W 5-0 |
| April 18 | Indians @ Yankees | 3,546 | L 22-4 |
| August 22 | Yankees @ Red Sox | 3,539 | L 14-1 |
| June 13 | Mets @ Yankees | 3,498 | L 6-2 |
First, the Yanks performed spectacularly poorly on FOX during their most popular games this year. They went 1-4 and were outscored 58-23. No wonder more than a few national baseball commentators were lukewarm on the team for the playoffs. If the representative sample looks so bad, baseball writers tend to ignore the 157 other games and the 102 additional wins.
Second, the Yankees are good for baseball. Their games draw viewers to FOX. Although one of these games was the first national exhibition at the new stadium, the rest were just your run-of-the-mill midseason games against a few archrivals. That popularity means more money for baseball.
For Yankee fans, this news means more Tim McCarver and Joe Buck and more weekend Boston/New York series. TV executives and the scheduling gurus recognize that these series are great for baseball. People are taken in by the games, and generally — although not as much this year — the baseball is crisp and compelling. Analysts and fans of other teams might like to complain, but in the end, the truth is simple: The Yankees are good for baseball. Just look at the numbers.
YES more popular than ESPN in the Big Apple
Posted by: | CommentsI don’t really buy into the argument that ESPN is an extension of Red Sox Nation, but among Yankee fans those sentiments run high. To combat that, we enjoy our own version of the baseball world as seen through Yankee-colored glasses. The YES Network — a RAB partner — features Yankee baseball and a whole slew of programming designed to promote the New York Yankees image and brand.
In the largest media market in the biggest city in the country with some of the game’s most devoted fans, that network is reaping the benefits. According to ratings numbers released this week, the Yankees Entertainment and Sports Network is the most watched regional sports network in the nation, and within the New York Designated Market Area, it has been more popular than ESPN over the first three quarters of 2009.
For the most part, YES’ success has come from Yankee telecasts. Ratings for games were up 9.5 percent over the network’s 2008 numbers. They remain a shade below the 2007 figures for all-time best. According to Nielsen ratings data, approximately 101,000 households watch YES during prime time, making it the most-watched team-centric network in the nation.
Interestingly enough, YES’ broadcast of the post-game show saw a significant increase in ratings this year as well. The analysis and locker room interviews witnessed a seven percent boost in viewership, and I believe this stems from a more comprehensive post-game show. With Kim Jones in the locker room, Yankee fans get player and manager reaction minutes after the game ends. We no longer have to wait for newspapers to release stories, and instead, we can hear thoughts straight for the horses’ mouths.
These numbers are of course good news for YES and would only increase if, say, the River Ave. Blues TV show became a reality. (Right, guys? You would all watch of course.) Seriously, though, if YES were to increase its original programming to feature more news and analysis programs instead of showcasing the 800th rerun of Reggie Jackson’s Yankeeography, the network could do even better. For the Yanks’ TV cash cow, being at the top is satisfying, but in my opinion, the Network would still tap into an even larger audience.
How much is that playoff berth in the window?
Posted by: | CommentsSince the Yankees last won the World Series in 2000, baseball has enjoyed a period of nearly unparalleled parity. Thirteen different teams have made it to the World Series over the last eight Fall Classics, and only the Yankees, Red Sox and Cardinals have made more than one appearance this decade.
This year, though, baseball will see a reversal of this drive toward playoff equality. In all likelihood, the Yankees, Red Sox, Tigers, Angels, Phillies, Cardinals, Rockies and Dodgers will be in the hunt for a World Series trophy, and seven of those teams have made it to the Fall Classic already this decade. The only exception is Joe Torre’s team in Los Angeles, World Series-less since winning the trophy in 1988.
By itself, these repeat visits to October aren’t a problem for baseball’s drive toward equality. Some teams will just be better than others, and this year seems to be the culmination of a very good decade. Yet, look at what happens when we take a look at the MLB salary list. Below is a shortened version of CBS Sports’ MLB payroll information. I’ve included the top ten teams and the two playoff teams who miss that cut.
| Team | Payroll |
|---|---|
| Yankees | $201,449,289 |
| Mets | $135,773,988 |
| Cubs | $135,050,000 |
| Red Sox | $122,696,000 |
| Tigers | $115,085,145 |
| Angels | $113,709,000 |
| Phillies | $113,004,048 |
| Astros | $102,996,415 |
| Dodgers | $100,458,101 |
| Mariners | $98,904,167 |
| Cardinals (13) | $88,528,411 |
| Rockies (18) | $75,201,000 |
Outside of the Rockies, every team in the playoffs this year is among the top 12 most expensive teams in baseball. Six of them are in the top ten, and the three of the four teams that aren’t making the playoffs — Mets, Cubs, Astros — were plagued by either terrible management or terribly costly injuries (or both, in the case of the Mets). Once again, the rich will get richer in baseball, and the poor will continue to play out their 162-game seasons facing an uphill climb to October.
With this data in hand, two questions come to mind: Does it matter? Will MLB try to do anything about it? As a Yankee fan, it’s tough for me to complain about this state of affairs. While baseball has tried to rein in the Yanks’ free-spending ways, the revenue sharing/luxury tax model has been largely unsuccessful. The Yankees are happy to dole out the money because they can afford to, and putting a winning team on the field is profitable for the Yanks and their various marketing and broadcast ventures. Until and unless baseball institutes a salary cap, the Yankees will spend their way into October, and I won’t care one whit.
The second question is more troubling. The current Collective Bargaining Agreement is set to expire on Dec. 11, 2011, and already, rumors of a tougher negotiation have surfaced. Neither side is too happy with the state of drug testing in baseball, and the owners are well aware that, in a post-Moneyball era, the parity of the early 2000s is starting to slip away.
I don’t know where baseball goes from there. Labor unrest would be terrible for the game but so would seasons where the same eight or ten teams are competitive. While some franchises — the Pirates and the Royals come to mind — are simply mismanaged, others do not have the resources to compete. Problem or not, it’s certainly baseball’s 800-pound gorilla in the room, and it’s not going away any time soon.
A franchise at a crossroads
Posted by: | CommentsOver the last few years with the rise of the new Stadium and the fall of George Steinbrenner, we’ve written a lot about the Yanks’ current upper management structure. Between George’s declining health and the Jennifer Steinbrenner/Steve Swindal divorce, the Yanks went enjoying a solid leadership to suffering through a few years of turmoil.
Right now, Hal Steinbrenner appears to be the one with the power, and he shares it with his brother Hank. Helping him out — and seemingly taking the PR fall — are Randy Levine and Lonn Trost. Late this week, we learned that Trost and Levine may be working on borrowed time. With the team facing a lot of criticism for the way it has handled aspects of the new stadium, the Steinbrenners may look to assert their power and shore up public support.
All of these behind-the-scenes machinations are simply reminders of the unilateral power George Steinbrenner held. Earlier this week, Wayne G. McDonnell, Jr, a contributor to Maury Brown’s Biz of Business and a professor of sports management at NYU, opined on the Yankees. Is this, he wondered, an organization in transition or one being mismanaged?
There is no denying that the New York Yankees have had an awkward and inauspicious beginning to the post George Steinbrenner era both on and off the field. Whether it is selling grossly overpriced stadium memorabilia to the masses or engaging in a war of words with the commissioner of Major League Soccer, the new leaders of the Yankees have already encountered countless obstacles. While the new ball park is extraordinary and surprisingly captures the essence of the old Yankee Stadium, the pricing model is flawed and needs substantial revision to reflect the current market conditions. The Yankees’ overtly aggressive pursuit of the white collar audience is alarming since this type of customer is quickly becoming extinct.
What’s even more disheartening is that the throngs of fiscally challenged Yankee fans have to actively survey the secondary ticket market for affordability instead of desired seat locations. Season ticket holders are now starting to feel the pinch of the prices at the new ball park and they are expeditiously liquidating their ticket inventories at discounts. To put it simply, customers are paying premium prices for a pedestrian product. The constant dependence on the free agent market has been a detriment to the organization. Even though the Yankees have spent almost a half a billion dollars on three ball players this past offseason, they are still mired in mediocrity and struggling with the implementation of cutting edge ideas regarding player development. Fans are paying prices fitting for a team like the 1998 Yankees. Instead, they are receiving the 2008 version…
The new ownership group of the Yankees has made a few gaffes. But, it is not their fault that the economy has imploded and we are now living in a world of unforeseen disarray. Unfortunately, they are a victim of bad timing. Just like our economy, the New York Yankees are trying to learn how to conduct business in an effective and efficient manner. However, they also have to learn how to accommodate baseball fans and make each person who walks through the turn stile feel valuable and important. Only time will tell if the New York Yankees are ready to compete in a world of economic uncertainty or will they adhere to their irrational ideals and principles.
While I’ve been critical of the Yankees’ decisions and many of their public statements, McDonnell is right to question the economics of it and the state of the organization. The Yankees are engaged in what is basically a case study of sports economics. How far can a team push the envelope and still maintain its fan base, its revenue base and its identity? We don’t have yet the answers, but it’s something to ponder on a Sunday morning.
