Two clubs that are heading
in opposite directions
Two MLB teams – the Rangers and Mets - are heading in opposite financial directions this offseason.
The Rangers, of course, are coming off a plethora of firsts after winning the American League West Division and making the playoffs for the first time since 1999. They won their first home playoff game, their first playoff series, played in the World Series for the first time in franchise history, and won their first World Series game before succumbing to the Giants in five games. That adds up to an almost perfect prescription for generating more revenue.
The Mets are coming off a disappointing season, even by their own inglorious standards. The team finished next to last in the National League East Division, thanks only to the hapless Washington Nationals. But at least the Nationals showed on-field improvement and may have a rosier future than the disappointing Amazins. The Mets’ on-field incompetence in 2010 translated to the turnstiles, where fans showed their displeasure by staying home in droves.
After setting team records for ticket revenue and percentage of available tickets sold in 2008, their last year at Shea Stadium, and in 2009, the first year at Citi Field, Mets attendance plummeted 19.2 percent last year, to 2.56 million. That figure puts the Mets 12th in average attendance for 2010, but represents only 77 percent of the capacity of Citi Field.
In an effort to reverse the precipitous decline in tickets sold, the Mets took decisive action last week, slashing ticket prices for 2011 by an average of 14 percent. The reductions follow on the heels of a similar decrease following the 2009 season, when average ticket prices were reduced by approximately 13 percent according to Team Marketing Report.
The cuts are obviously designed to stimulate ticket sales, but if the strategy fails, and attendance remains constant or continues to fall, the Mets will be facing the continued loss of tens of millions of dollars in revenue from tickets, concessions, parking, merchandise and sponsorships. All of which means the new brain trust, led by Sandy Alderson and several lieutenants from his Oakland A’s days, will have fewer resources with which to turn around the moribund franchise.
The Rangers, on the other hand, were the Cinderella story in MLB last year. Early in the season, the team was forced to borrow $40 million from MLB to pay its bills after former owner Tom Hicks ran the team into bankruptcy. Operating with the 26th lowest payroll in MLB last year, the team still made it to the World Series, ahead of such big spenders as the Yankees, Red Sox, Phillies, and yes, the Mets, who were fifth on the list of spendthrifts.
The Rangers’ success on the field, along with a new ownership group led by Chuck Greenberg and Nolan Ryan that is marketing savvy, has led to new-found riches. The team recently signed a 20-year TV rights deal that will average approximately $80 million per year when it takes effect in 2015. According to Greenberg, season ticket sales were around 8,000 last year, but some experts are suggesting the Rangers could double that figure by the beginning of the 2011 season. Attendance at Rangers Ballpark increased more than 15% over 2009 figures, to 2.5 million, almost on a par with the Mets. That increase in attendance meant additional revenues from tickets, concessions, merchandise and sponsorships, in addition to the extra revenue generated by the team’s post season run.
It seems almost incomprehensible that the Rangers, playing in the largest one-team market in MLB, have been a revenue sharing recipient, rather than a contributor to the revenue sharing pool. But that’s about to change. The new ownership group has an opportunity to prove what most baseball observers have known for years: Despite operating in a football crazed state, and literally in the shadow of the Dallas Cowboys since “America’s Team” opened their $1.2 billion stadium in Arlington last year, the Rangers have been an under-performing asset. Poor leadership, coupled with oftentimes poor performance on the field, has masked the true potential of the franchise.
If the Greenberg-Ryan group can capitalize on the team’s World Series run - and here’s betting that they will - the Rangers will be the antithesis of the Mets: Successful on and off the field.
Jordan Kobritz is a staff member of the Business of Sports Network. He is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University and teaches the Business of Sports at the University of Wyoming. He looks forward to your comments and can be contracted, here.
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