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Monday, August 04, 2008

Crains: Yankees’ revenues to double; pity the poor Red Sox

Wow! At this rate…pretty soon they’ll be able to build ships or something.

In 1973, George Steinbrenner paid $10 million to buy the New York Yankees, a team now worth $1.3 billion, according to Forbes. His heirs have a chance to coin money much faster once the team moves into its new stadium next year.

The team’s revenues—already the highest in the sport, at an estimated $327 million last year—are poised to double almost immediately. This quantum leap will be driven by factors ranging from higher prices for tickets and hot dogs to increased revenues from the YES Network for game telecasts. There will also be new revenue sources, such as leasing out the new stadium for concerts.

The ballpark promises to once again give the Yankees a decided financial edge over the world champion Boston Red Sox, after their archrival surpassed them on the field last year and narrowed the monetary deficit by expanding seating in cramped Fenway Park and sharply raising ticket prices.

“The new Yankee Stadium will change the economics of all baseball,” says Robert Boland, a sports agent and a professor at New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

Repoz Posted: August 04, 2008 at 09:28 PM | 136 comment(s) Login to Bookmark
  Tags: business, red sox, yankees

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   101. cercopithecus aethiops Posted: August 05, 2008 at 03:51 PM (#2890787)
The parallel really isn't actual history, though; it's the following two alternative histories, neither of which strains the imagination:

1. After the 1957 season, the Dodgers stay in Brooklyn, the Giants leave. Shea Stadium opens opening day 1962 and the Mets begin play on that day.

2. After the 1957 season, the Giants stay in the Polo Grounds, the Dodgers leave. Shea Stadium opens opening day 1962 and the Mets begin play on that day.

What happens to the Mets?


I think there are still some problems with your alternative histories. First off, the NL was not going to approve the move of one team without the other. Nobody was going to fly out to the west coast for one series at a time. Second, if O'Malley and/or Stoneham were going to be convinced to stay, new ballparks would most certainly have been involved. If one of them had been convinced to stay, but the other still wanted to leave, then the expansion team would have gone to California instead of New York. Or maybe Milwaukee or Atlanta if the Braves had moved west in the fifties instead of south in the sixties.
   102. cercopithecus aethiops Posted: August 05, 2008 at 03:52 PM (#2890788)
what about new jersey?

Excellent revenue source. I'd buy one, and I don't even live in Brooklyn.
   103. RB in NYC (Now with New iPhone!) Posted: August 05, 2008 at 03:57 PM (#2890795)
what about new jersey?
It has the same market issues as a team in NYC proper would, except arguably even more so because you can't push things too far south without running into Philly country.
   104. Devin has a deep burning passion for fuzzy socks Posted: August 05, 2008 at 03:58 PM (#2890797)
Over-editing, my bad. I was talking about the case where there weren't any territoral rights. That was in there at one point, but I accidentally took it out.

Of course, if the Yankees really do get astronomically ahead of everybody else, it's entirely possible that the 28 non-NYC owners get together and change the rules. Especially if it's 5 years from now and the A's already have the stadium going in Fremont (and Bud's finally retired).

Then there's always the possibility that the Yankees will react to that by getting the other large-market teams together, and create a 12-team Champions League.
   105. ights Posted: August 05, 2008 at 04:13 PM (#2890817)
New Jersey has 10 milion people, more than half of whom are in the "NY market" (vs. philly). A team somewhere in central/northern Jersey with a nice new stadium called the "New Jersey somethings" would be a novel approach. They'd get the tv revenue benefits of being in this market, and they'd be the only team for their "area". Offered the chance, I'd invest in that before trying one in Brooklyn.
   106. Chris Dial Posted: August 05, 2008 at 04:18 PM (#2890829)
New Jersey has 10 milion people, more than half of whom are in the "NY market" (vs. philly). A team somewhere in central/northern Jersey with a nice new stadium called the "New Jersey somethings" would be a novel approach. They'd get the tv revenue benefits of being in this market, and they'd be the only team for their "area". Offered the chance, I'd invest in that before trying one in Brooklyn.
This. I think it is a bit odd to think NYC couldn't support a third team (where Newark is effectively part of that area). Put it in a nicer area and it would pack them in. Do NYers go see teh Giants? Then they'd go see the Gardeners.
   107. aleskel Posted: August 05, 2008 at 04:25 PM (#2890843)
Do NYers go see teh Giants? Then they'd go see the Gardeners.

apples and oranges - they go to the Meadowlands because there's no alternative, particularly since both NY football teams play there. Plus, it's only once a week, on a day that people are free to spend 2+ hours in traffic.
   108. Danny Posted: August 05, 2008 at 04:27 PM (#2890849)
I think there's a lot of talking past each other going on.

Everyone seems to agree that a third New York team--whether in Brooklyn or NJ--would ultimately be successful. The area has a ton of people with a lot of money.

Everyone also seems to agree that it would not start out with the same revenue streams as the Yankees or Mets. Fandom dies hard.

One point that Shooty made resonates with me--the corporations would eat up season tickets to a new team. Clients and employees would love to go. New York doesn't just have a lot of foreigners, it also has a lot of out-of-staters. While these people might rather see a Yankee game, they'd be happy to go to a Brooklyn game that has available and affordable seats.
   109. Matt Clement of Alexandria Posted: August 05, 2008 at 04:30 PM (#2890855)
I had a post that I was working on, but I notice Danny said everything I was going to say.

I can see dispute over whether the Brooklyn Hipster Dooshbags would pick up huge revenue streams immediately (though the corporate money point is well taken), but I can't imagine the argument that they wouldn't be successful within a decade, given reasonable on-the-field success.
   110. The Yankee Clapper Posted: August 05, 2008 at 04:30 PM (#2890856)
IF there is to be a third team, Jersey is the only option.

My suggestion, the Jersey Barriers™.
   111. SugarBear Blanks Posted: August 05, 2008 at 04:30 PM (#2890857)
think there are still some problems with your alternative histories. First off, the NL was not going to approve the move of one team without the other. Nobody was going to fly out to the west coast for one series at a time. Second, if O'Malley and/or Stoneham were going to be convinced to stay, new ballparks would most certainly have been involved. If one of them had been convinced to stay, but the other still wanted to leave, then the expansion team would have gone to California instead of New York. Or maybe Milwaukee or Atlanta if the Braves had moved west in the fifties instead of south in the sixties.

The point, though, is that there really isn't any reason to believe that the Mets wouldn't have succeeded if they'd entered a market with two existing teams rather than one -- the parallel to the topic at hand.

While not dispositive, it's at least relevant that the other three major sports have all seen a migration of competitors to New York since roughly the time the Mets got rolling -- Jets, Nets, Devils, Islanders. The Devils got here only 25 years ago.
   112. RB in NYC (Now with New iPhone!) Posted: August 05, 2008 at 04:33 PM (#2890863)
The point, though, is that there really isn't any reason to believe that the Mets wouldn't have succeeded if they'd entered a market with two existing teams rather than one -- the parallel to the topic at hand
Well, I think there's reason to believe it wouldn't have happened as quickly as it did. It's also a false comparison on a number of levels, fan turnout was a much, much larger component of a team's revenue now then it was at the time the Mets made their debut. A team with a problem like the Nationals (attendance up, TV down) has a big issue.
   113. Sam M. Posted: August 05, 2008 at 04:39 PM (#2890874)
I'll accept this, but doesn't the LIRR terminate at Atlantic Avenue? OK, I was talking about driving and that's not driving, but wouldn't that be an excellent place to reach into Long Island, as good as Shea is?

History: That is exactly what Walter O'Malley wanted to do -- build a stadium on the corner of Atlantic and Flatbush, precisely because the LIRR terminated there and it would have been a way to bring all the Dodger fans who had moved out to the Island more conveniently back to Brooklyn for games. But Robert Moses, who was the most powerful man in New York, refused, even though O'Malley was going to pay for the stadium (which would have been a decade or so ahead of its time, as the first domed stadium. It was one of the most bitter battles in baseball history; Moses assumed O'Malley was bluffing about moving the Dodgers to L.A., and would accept his alternative: a stadium where Moses thought it should go . . . in Queens. O'Malley thought the rest of the powers-that-be would eventually realize that he meant business, and bring Moses to heel and insist he get his land in Brooklyn.

Everyone knew Ebbets Field was dying, and the Dodgers needed a new home. But as far as O'Malley was concerned, if he couldn't be in Brooklyn, where HE thought the Dodgers should be, it might as well be in L.A., where they would have a gold mine. And it turned out everyone got their way: O'Malley got his treasure, and Moses got his ballpark in Queens.

Which is why the "alternative histories" never happen. If the Dodgers had stayed, it is because they either gave in to Moses and move into the new "Dodger Stadium" in Queens -- meaning there is no stadium for the expansion Mets to move into -- or they get their way and get the new stadium in Brooklyn, in which case the city never builds Shea out in Queens.

And if the Dodgers DO stay, the Giants eventually leave, probably for Houston (since the West Coast is out of the question with only one team). Because it was the threat of a new league that forced the major league owners into the expansion of the early 1960s, and if New York hadn't been included in those plans, the threat wouldn't have been as pressing. So no expansion? No Houston Colt 45s, so Houston is there for the taking. Or maybe they beat the Senators to Minnesota, a move Stoneham had been eyeing before he moved to San Francisco instead. Either way, New York eventually becomes a one-team NL town.

I can't imagine the argument that they wouldn't be successful within a decade, given reasonable on-the-field success.

As I said upthread, I think success could come eventually. But I think given the barriers presented by two hugely popular teams (television and radio ratings would suck for a good long while, because the games would be competing directly with Mets and Yankee games), and the entry costs (stadium costs, territorial fees), I do take issue with that timeline. It's more than a decade-long project to really having a strong, viable fanbase.
   114. SugarBear Blanks Posted: August 05, 2008 at 04:40 PM (#2890875)
Well, I think there's reason to believe it wouldn't have happened as quickly as it did. It's also a false comparison on a number of levels, fan turnout was a much, much larger component of a team's revenue now then it was at the time the Mets made their debut. A team with a problem like the Nationals (attendance up, TV down) has a big issue.

Someone said it already above, but the Hipster Doofuses would be on MSG/MSG+ on day one, at very competitive dollars. There's excess capacity here with the advent of YES and SNY.
   115. RB in NYC (Now with New iPhone!) Posted: August 05, 2008 at 04:46 PM (#2890883)
Someone said it already above, but the Hipster Doofuses would be on MSG/MSG+ on day one, at very competitive dollars. There's excess capacity here with the advent of YES and SNY.
Well, except, they wouldn't. They'd be on "YESNY," making a pittance compared to what MSG/MSG+ would bring in order to appease the Steinbrenner/Wilpon clans.
   116. SugarBear Blanks Posted: August 05, 2008 at 04:49 PM (#2890890)
Well, except, they wouldn't. They'd be on "YESNY," making a pittance compared to what MSG/MSG+ would bring in order to appease the Steinbrenner/Wilpon clans.

That's speculation. The Angelos case isn't necessarily precedent.
   117. Long John McCaine Mutiny on the Bounty (scott) Posted: August 05, 2008 at 04:57 PM (#2890896)

That's speculation. The Angelos case isn't necessarily precedent


in terms of what the Wilpons and Steinbrenners would want to let another team into their cash cow, it is.
   118. RB in NYC (Now with New iPhone!) Posted: August 05, 2008 at 04:58 PM (#2890898)
That's speculation. The Angelos case isn't necessarily precedent.
Well, ok, we all agree that a third team would cut into the Yankee/Met revenues, that's the point of putting this theortical team there. So clearly the Steinbrenners and Wilpons are going to have to be compensated somehow, or the whole thing will end up spending so much time in court that my grandkids might not get to see a game played by this mythic third NY team. (EDIT: Dammit, I should've said "so much time in court that by the time the team is playing you'll be able to take the 2nd Avenue Subway to their games." That's way better.)

Besides TV revenue, what substantial source of income do the Brooklyn/NJ Hipster/Suburbans have to offer in order to compensate the current baseball ownership in the city? 2 free bleacher seats every August? A team-signed bat?

Once Angelos got that deal, it became the precedent. No team owner in his right mind would ever settle for anything less, barring a major change in revenue streams, because that's the Golden Goose.
   119. Sam M. Posted: August 05, 2008 at 05:04 PM (#2890910)
Once Angelos got that deal, it became the precedent. No team owner in his right mind would ever settle for anything less, barring a major change in revenue streams, because that's the Golden Goose.

The ONLY way it happens otherwise is if the feds force MLB's hand. Sufficient pressure from Congress regarding antitrust could put enough dollars at risk to compel a different deal, but that is what it would take. Otherwise, the only way the Mets and Yankees would agree to this is on the presumption that a third team would actually create a bigger pie, and that they would be able to skim a share of those greater revenues off the top.

Of course, we can have the hypothetical discussion about a third team in the N.Y. market without necessarily having to be realistic about it. I mean, it isn't going to happen anyway, so the whole discussion is, by definition, unrealistic. Why quibble about what the Mets and Yankees would demand in terms of a TV deal?
   120. Shooty: Applying to be Fearless Leader Posted: August 05, 2008 at 05:06 PM (#2890912)
(EDIT: Dammit, I should've said "so much time in court that by the time the team is playing you'll be able to take the 2nd Avenue Subway to their games." That's way better.)

Ah yes. The mythical 2nd avenue line. The Maltese Falcon of the UES.
   121. cercopithecus aethiops Posted: August 05, 2008 at 05:06 PM (#2890913)
Do NYers go see teh Giants? Then they'd go see the Gardeners.

Is there a town in North Jersey called Chauncey?
   122. Matt Clement of Alexandria Posted: August 05, 2008 at 05:17 PM (#2890929)
To step back a second:

This whole debate followed from a bunch of arguments by "Yankee_Redneck" that revenue sharing was evil, a way for a gang of cheapskates to steal money from the successful owners. It was then pointed out that these "successful" owners return huge value from holding exclusive claims to their markets, and the revenue sharing is, in part, a way of evening out those disparities without introducing risk to the system for either party. Other people, Mahnken in particular, disputed that market exclusivity mattered, because somehow there wasn't really a market for a new team.

If the argument about the success of the Brooklyn Girl Talks now turns on what sort of compensation the Wilpons and Steinbrenners would extract from the American Apparel clerks ownership group, we've left the original argument altogether. The Brooklyn team, in this telling, is not held back by anything about the NY market itself, but by the exclusive market agreement that the owners agreed upon, and which the Wilpons and the Steinbrenners would be exploiting to limit possible tv revenues and publicity for the new team.
   123. villainx Posted: August 05, 2008 at 05:17 PM (#2890930)
what about new jersey?

Brooklyn via Staten Island and Verrazano could tap some of the Jersey market.
   124. RB in NYC (Now with New iPhone!) Posted: August 05, 2008 at 05:24 PM (#2890940)
If the argument about the success of the Brooklyn Girl Talks now turns on what sort of compensation the Wilpons and Steinbrenners would extract...we've left the original argument altogether. The Brooklyn team...is not held back by anything about the NY market itself, but by the exclusive market agreement...which the Wilpons and the Steinbrenners would be exploiting to limit possible tv revenues and publicity for the new team.
I don't think it's quite that cut-and-dried. The cut of the pie that the current NYC baseball ownership would take is an additional mark aganist the Brooklyn Gentrifiers.

There's probably no one single factor (lack of full TV revenue, lack of fan base, etc.) that could make them an ineffective barrier to the Yankees--at least in the short term--but all these things add up to make that true.
   125. BeanoCook Posted: August 05, 2008 at 08:19 PM (#2891399)
Okay, so I wanted to come back and clarify my data point that can help offer some insight into the Brooklyn market. Earlier on this thread it was suggested 50% of Brooklyn was foreign born and 50% of residents in NYC were not here 3 years ago.

This was established to be not true by another poster. ~37% of Brooklyn residents are foreign born. 43% of those moved to Brooklyn over 10 years ago.

63% of Brooklyn can be considered "native born". I was trying to make the point, and failed, as it was very late, to show that "the percentage of native born population born in state of residence" in Brooklyn was very high. In otherwords, this is not a transient place, like Phoenix or DC or even Manhattan. The US average is about 65% of native born population born in the state of their residence.

New York is #1 in the US in this measure. As 82.5% of US natives, and state residents were born in New York. It is not a transient state.

Of course NYC is different from NY State. Brooklyn is 80.8% Very high
Cook Co Ill is 77% and Fairfield Co CT is in the mid 50's. Queens interestingly is 86.3%, an extraordinary number.

My greater point is this. Brooklyn has ~2.5mm residents. 37% are foreign born. 1.575 million of which were native born. Of this, 80.8% were born in New York state. Leaving 1.27 million residents in Brooklyn that were born in New York and currently live in Brooklyn. This is a huge poplulation and certainly large enough to provide a solid base of attendance for MLB games.

I once read this data at the city level about 5-6 years ago. Instead of state born in, I saw city born in. New York city is at the top of the list on in this measure, even with Manhattan. Manhattan is closer to the US average, 62.5%.

I'm in the camp a 3rd team would thrive in New York metro. Northern Jersey or Brooklyn, I think both locations would work very well.

*Link for census data is not working, too long. Google: M0601 percentage of native born population born in state of residence
   126. Flynn Posted: August 05, 2008 at 08:39 PM (#2891514)
Can they be called the Brooklyn Kramers?
   127. David Nieporent (now, with children) Posted: August 05, 2008 at 09:39 PM (#2891660)
what about new jersey?

It has the same market issues as a team in NYC proper would, except arguably even more so because you can't push things too far south without running into Philly country.
Yes; NJ has three teams objecting instead of two. The other problem with New Jersey is, where the hell do you put the team? New Jersey is a big state, but entirely suburban; there's no central "there" to the state. The Meadowlands is sort of the "obvious" answer, except, well, the infrastructure won't support it. It's bad enough trying to deal with the traffic for football games, but those are almost all on Sundays. Baseball is all week long. Getting there during rush hour is an insane idea. Not to mention that an awful lot of New Jerseyians work in the city; you can't realistically get to the Meadowlands from the city for 7 o'clock games. The other choice is Newark, I suppose. Not ideal for many reasons.

It's even worse for media purposes than Brooklyn. You've got to convince NY media outlets -- television, radio, and newspapers -- to cover a NJ team. The third team in the market, but not precisely in the market at all.

I'd love a team here, but even if the Yankees and Mets allowed it, would never happen. It would draw a zillion fans (and TV ratings) when the Yankees played them, and none the rest of the time.
   128. David Nieporent (now, with children) Posted: August 05, 2008 at 09:50 PM (#2891668)
My greater point is this. Brooklyn has ~2.5mm residents. 37% are foreign born. 1.575 million of which were native born. Of this, 80.8% were born in New York state. Leaving 1.27 million residents in Brooklyn that were born in New York and currently live in Brooklyn. This is a huge poplulation and certainly large enough to provide a solid base of attendance for MLB games.
That's a small population, not a huge one. The Milwaukee metro area has a bigger population. Of course, it doesn't make sense to exclude all foreign born people, but even if we include most of them, let's say that we're talking 2 million people -- the same as Kansas City's metro area. Not exactly big markets.

Of course, I'm comparing metro areas (in the case of Milwaukee/KC) to just Brooklyn itself, but that doesn't really help your argument, since the whole point of this exercise was to appeal to Brooklyn chauvinism. Why would that attract people outside of Brooklyn, rather than the established teams?
   129. Flynn Posted: August 05, 2008 at 10:14 PM (#2891689)
Well, a lot of people in Long Island are probably the children or grandchildren of Brooklynites. And Brooklyn has that social cachet. A Brooklyn team will probably never have the raw wealth of the Yankees, but on the other hand winning will help any Brooklyn team, and what's pertinent is how much will a Brooklyn team retard the growth of the Yankees.

Something that troubles me about a Jersey franchise is even though there are more people in Jersey than in Brooklyn, the location issues are massive, and I would be troubled about the ability of MLB to do well there considering the poor support the Nets and Devils have gotten. I know the Meadowlands sucks, and maybe the arena in Newark will improve things, but you're talking about two of the better franchises in their leagues the last ten years, and both teams have struggled to sell out playoff games.

Of course, if you want to really think big - how about a team in Manhattan. The West Side development still possible?
   130. rLr Is King Of The Romans And Above Grammar Posted: August 05, 2008 at 10:51 PM (#2891714)
The West Side development still possible?

Nope, those rights have been sold (twice, actually, as the initial deal fell through). I believe it's the Related Companies at this point.
   131. Flynn Posted: August 05, 2008 at 10:57 PM (#2891722)
Shame. Now that would be a team that would take a big bite out of Yankee revenues.
   132. rLr Is King Of The Romans And Above Grammar Posted: August 05, 2008 at 11:30 PM (#2891780)
Shame. Now that would be a team that would take a big bite out of Yankee revenues.

Nuts to that. Putting up buildings that will be occupied and functional year-round is a much better idea. I'd prefer a little less office space, though.
   133. Swoboda is freedom Posted: August 06, 2008 at 12:18 AM (#2891862)
Can they be called the Brooklyn Kramers?

How about the Brooklyn Cosmos, thereby attracting both the Seinfeld fans and the Sex in the City Fans.
   134. BeanoCook Posted: August 06, 2008 at 04:36 AM (#2892384)
That's a small population, not a huge one. The Milwaukee metro area has a bigger population. Of course, it doesn't make sense to exclude all foreign born people, but even if we include most of them, let's say that we're talking 2 million people -- the same as Kansas City's metro area. Not exactly big markets.


Brooklyn has 2.5 million. How is that small?

As far as the foreign born population, I agree with you, but you have to read the entire thread where Mister New York City threw a temper tantrum over us not "understanding" Brooklyn and made the case that because of so many foreign born people, nobody would care about baseball. I proved that Brooklyn has an incredibly high percentage of native residents that were born in NY and basically never left. It is not a transient place, as was argued earlier in the thread.

Brooklyn is located in a market with 20 million, that obviously is the largest in the US. The fact that 2.5 million people call Brooklyn home makes that the 4th largest "city" in the US. Obviously not small.
   135. David Nieporent (now, with children) Posted: August 06, 2008 at 04:36 PM (#2892711)
Brooklyn has 2.5 million. How is that small?

[...]

Brooklyn is located in a market with 20 million, that obviously is the largest in the US. The fact that 2.5 million people call Brooklyn home makes that the 4th largest "city" in the US. Obviously not small.
2.5 million makes a large city, but a small market. That would be towards the low end of metropolitan areas among baseball teams. Of course the NY market as a whole is large, but as I said, I thought the whole pro-Brooklyn argument was that it would be set to appeal to Brooklynites themselves. You can't market the team as a team for all of NY and a team targeted for Brooklyn at the same time.

If it's just another NY team, then there's no reason why Brooklynites should switch their existing allegiances from the Mets/Yankees. If it's a Brooklyn team, then there's no reason why non-Brooklynites would become fans.
   136. SugarBear Blanks Posted: August 06, 2008 at 04:45 PM (#2892720)
How about the Brooklyn Cosmos, thereby attracting both the Seinfeld fans and the Sex in the City Fans.

Not to mention the residual glory of the glamour boys of the late and lamented NASL, who packed the Meadowlands in the Studio 54 era.

Trademark the name. It's perfect.
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