MLB Off-season Happenings

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MrCrowesGarden
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Re: MLB Off-season Happenings

Post by MrCrowesGarden »

Ticket and concessions sales have never mattered less.

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Popeye_Card
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Re: MLB Off-season Happenings

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pioneer98 wrote:
December 30 20, 10:44 am
Popeye_Card wrote:
December 30 20, 8:06 am
Magneto2.0 wrote:
December 30 20, 7:52 am
With the lack of willingness to spend by owners it leads me to believe there will 100% be a work stoppage at the end of this season. I don't see things changing within the next 12 months to prevent it. It's only getting worse.
I agree. While I of course think all of the owners are looking to still turn a profit, I think the current situation does highlight just how much revenue clubs depend on to come from ticket sales and other spending by fans at the ballpark for 81 home games per year. Sure seems like teams are expecting that income to be significantly down not only this season, but for a few seasons to come. And they are likely right. This is going to be a cold war all winter long.
This isn't exactly how it works. We can say the Cubs were sold for a billion dollars or whatever but that amount never changed hands. What it seems like is teams leverage all those ticket and concession sales and call them "revenue streams" which Wall Street will turn into an investment instrument. It's the same way monthly mortgage payments got turned into CDOs and other garbage. So what I'm saying is that it's even more flimsy than you are describing. If teams took ticket and concession sales and used it directly to pay players, they'd be in better shape and you could expect a faster rebound. Once rumblings of labor unrest starts, suddenly there will be like a dozen teams that claim they are bankrupt. And technically on paper they will be correct because their revenue streams will be already slotted to pay Wall Street who wants their damn money since they took a bath on those investments this year.
I think you are over-complicating it. Teams are not publicly traded, and do not have institutional shareholders. They are almost all financed though, and there are of course obligations to the banks you have loans with.

It is simple accounting. Ticket sales and other butts-in-seats related revenue all go back to income from operations. Depending on how the 2021 season is structured with fans (0%, 25% capacity, 50% capacity?) you can remove some amount of operational expenses for what you are paying the staff who works the games, which is of course paltry compared to player payroll. Almost all of your other operational expense is held constant (upkeep of the stadium and field, utilities, etc.). TV revenue should be constant.

Now reduce your butts-in-seats revenue. Using nice round numbers, say the Cardinals average a $25 profit per fan per game (probably low). Reduce attendance by 1,000,000 fans. That's $25MM in reduced IFO that you have no way of making up elsewhere. The numbers at least for 2021 will likely be larger. 50% capacity for the Cardinals is more like a reduction of >$40 million. If it is only 25% capacity, >$60MM.

One of the big problems right now is that teams don't really know what the plan is for 2021, to have an idea of the true impact of the reduction in revenue. If the Cardinals' traditional profit margin is ~$20MM-50MM per season, they are looking at breaking even to taking a pretty significant loss. A $25MM loss is a lot, even to billionaires. A Wong type decision where you can save ~$10-12MM hedging against that loss looks very attractive to teams.

This is just the reality of where the league is at right now. We can complain about it until we are blue in the face, that they should prioritize winning over breaking even - but most teams are going to prioritize not taking a bath. Most of these billionaires have other businesses that aren't faring overly well right now either.
MrCrowesGarden wrote:
December 30 20, 11:23 am
Ticket and concessions sales have never mattered less.
In this current offseason, you are delusional if you think this way.

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Re: MLB Off-season Happenings

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It’s truer than it’s ever been. In person revenue has never mattered less. 🤷🏻‍♂️

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Re: MLB Off-season Happenings

Post by AWvsCBsteeeerike3 »

I don't know how forbes gets their values and what exactly they entail, but for 2019 the Cardinals revenue was listed as 383M with gate receipts listed as 138M. Even if inexact, seems pretty significant and believable.

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Re: MLB Off-season Happenings

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MrCrowesGarden wrote:
December 30 20, 1:22 pm
It’s truer than it’s ever been. In person revenue has never mattered less. 🤷🏻‍♂️
For the 2021 season, it matters more than it has for the past 25+ years.

How teams react to that drop in revenue and the subsequent impact on negotiations with the players union has gigantic implications on the health of the sport going forward.

It is all connected, and it is all not good. If you want to bury your head in the sand about it then go ahead.
AWvsCBsteeeerike3 wrote:
December 30 20, 2:36 pm
I don't know how forbes gets their values and what exactly they entail, but for 2019 the Cardinals revenue was listed as 383M with gate receipts listed as 138M. Even if inexact, seems pretty significant and believable.
That equals approximately $40 per fan, which seems about right for tickets plus "convenience fees". Concessions and in-stadium merchandise are likely not in that number, but the Cardinals' portion of that is likely only about $5-10 per fan on average as a high estimate (~$15-30MM per season).

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Re: MLB Off-season Happenings

Post by MrCrowesGarden »

MLB revenues keep increasing as attendance keeps declining because the money is in TV and corporate partnerships. I'm not burying my head in the sand about anything. The pandemic is providing sufficient cover for what the owners have always wanted to do and might have done anyway even if COVID hadn't happened.

If Bill Dewitt or any other MLB owner for that matter would care to open their books to prove me wrong, I would welcome it.

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Re: MLB Off-season Happenings

Post by AWvsCBsteeeerike3 »

Would you agree in person attendance has never mattered less, but it still significantly matters?

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Re: MLB Off-season Happenings

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AWvsCBsteeeerike3 wrote:
December 30 20, 3:49 pm
Would you agree in person attendance has never mattered less, but it still significantly matters?
In the macro environment, yes. However for this offseason it is driving every decision.

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Re: MLB Off-season Happenings

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Let me also frame it up this way.

Yes, it is clear that MLB revenues are climbing while attendance is declining, and that is primarily due to the rise in TV, streaming, and corporate sponsorship revenues. That doesn't mean that in-person revenue isn't a gigantic chunk of the revenue pie.

From 2009 to 2019, attendance has dropped from 73.4 million per season to 68.5 million per season (~7% drop). Meanwhile the average ticket price has risen from $26.64 to $34.04 (~28% increase). The revenue from just ticket sales equates to $376MM in additional revenue per season.

Even if we are at 50% capacity this season, that's a revenue drop of nearly $1.2 billion across the league.

It is also worth noting that the largest expense (player payroll) has increased across the league, from ~$2.7 billion in 2009 to ~$4 billion in 2019 (~48% increase). The players are riding the rise in revenue across the league too.

All the standard caveats still apply - yes the owners are greedy and prioritize profits over winning, yadda yadda yadda. No excuses here - but the uncertainty around attendance in 2021 has everything to do with the offseason going from cold in recent seasons to a deep freeze.

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Re: MLB Off-season Happenings

Post by AWvsCBsteeeerike3 »

Agreed.

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