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 With the 2009 postseason getting underway, interest in the added revenues that each of the teams that advanced could garner increases. Today, two stories reference research published earlier this year that looked at the added average gate revenue clubs make when making the postseason. From Bloomberg News (see What’s Good for Jeter Is Good for Baseball; Yankees Aid Revenue):
The Yankees averaged $1.93 million in additional [ticket] revenue for each of 42 home playoff games from 1999-2008, according to an estimate from Bizofbaseball.com, the Web site that focuses on baseball business news. In contrast, the Twins averaged $1.53 million for 10 in that time span. MLB itself generated $6.5 billion of revenue during the 2008 regular season, up from $6.1 billion the prior year.
The other article comes by way of the Minneapolis / St. Paul Business Journal (see Twins playoff run means millions in additional revenue):
The Twins generated extra ticket sales from Tuesday’s one-game playoff against the Detroit Tigers and could gross roughly $1 million from Sunday’s American League Division Series game against the New York Yankees at the Metrodome, according to sports business expert Maury Brown. The team will generate more if it survives for additional playoff games at the dome.
[…]
But Brown, president and founder of Portland, Ore.-based Sports Business Network, said the Twins probably won’t see the biggest financial gains from this year’s postseason appearance until their 2010 season.
Both articles reference the article MLB Average Postseason Ticket Revenue Over the Last Decade, which uses a metric called Average Postseason Revenue, or APSR for short.
As the article explains, MLB has collectively bargained that required games of a given postseason series (if it is five games, then the first three; if it is a seven game series, the first four) has gate revenues broken down as follows (exact verbiage from the most current CBA - PDF):
One Players’ pool shall be created from the World Series, the two League Championship Series and the four Division Series. Contributions shall be made into the pool as follows:
(1) 60% of the total gate receipts from the first 4 World Series games;
(2) 60% of the total gate receipts from the first 4 games of each League Championship Series; and
(3) 60% of the total gate receipts from the first 3 games (4 if the Division Series is expanded to the best of 7 games) of each Division Series.
The article then continues:
All games after the required games have been played have 100 percent of net gate revenues going to the club that is hosting a given game. One might ask why the owners retain all gate revenues after the required games. The reasoning seems to be that players could be tempted to throw games in order to have series run to their deciding games, if they were still collecting a piece of the revenue pie.
Estimates place that for a Division Series, a club earns on average $1 million off the gate for each required game.
As mentioned, this is an average. Clubs can have differing ticket pricing structures depending on variables such as seating capacity and overall supply and demand.
Much as there is an average that is pulled in for each required game in a Division Series, so is an average amount of ticket and other price increases from Division Series to League Championship Series to the World Series. Looking at several postseason pricing structures, APSR has been set as follows:
- Increase in revenues from Division Series to LCS – 40 percent
- Increase in revenues from Division Series to World Series – 100 percent
The article then breaks down the average postseason ticket revenues that each club that has reached the postseason has garnered over the last decade.
So, remember as you’re watching the postseason and thinking that all those people in the stands comes as a massive windfall, remember that the real windfall comes from:
- Revenues generated in the off-season in terms of increased interest in season ticket sales for the upcoming season;
- Increased sponsorships;
- Leverage for any television and radio contracts that may be coming up for renewal
In terms of revenues generated during postseason play, remember:
- The players garner a larger portion of ticket revenues for all non-deciding games;
- Owners only retain 100% of the gate on deciding games of a series (Game 5 in the Division Series, Game 7 in the Championship Series and World Series)
- Owners garner extra revenues on concessions, and many times, parking
The Biz of Baseball will examine average postseason gate revenue at the conclusion of the 2009 World Series.
RELATED READING:
MLB Average Postseason Ticket Revenue Over the Last Decade
OTHER NEWS FROM THE BUSINESS OF SPORTS NETWORK
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 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 available for hire or freelance. 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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