Laughing to the Bank (split from NYC's Weak Sisters, 2007)

[Farmer Ted]

Fortune says the MFYs are laughing all the way to the MLB bank.


The Yankees' stadium windfall
It's costing the team $800 million to build a new stadium, but it's going to be a gold mine.
By Jon Birger and Tim Arango, Fortune



NEW YORK (Fortune) -- Talk about the rich getting richer. Already the most valuable team in baseball, the New York Yankees will tap a whole new revenue gold mine when the team's new stadium opens in 2009.

To be sure, its $1.2 billion price tag is enormous - about $400 million more than the one the crosstown Mets are now building in Queens. The Yankees are footing the entire $800 million cost of construction. (New York State and New York City are kicking in the remaining $400 million in the form of land acquisition, infrastructure improvements, and tax breaks.) Yet as expensive as the new stadium will be, nearly everyone we interviewed believes it will dramatically improve the Yankees' value, should the team be sold. "The cash flows coming out of the new building as compared with the old one are going to be ridiculous," says one Yankees source.

How ridiculous? A window opened into the normally secretive world of Yankees finance last year when, in conjunction with New York City's Industrial Development Agency, the team sold $940 million in tax-exempt municipal bonds to finance the stadium's construction. The bond prospectus provides a rare if partial look at the Yankees' stadium revenues.

From 1997 to 2005, growth in stadium revenue far outpaced the rise in attendance. Annual attendance rose 58 percent, from 2.6 million to 4.1 million, whereas ticket and luxury-suite revenue soared 202 percent, from $52 million in 1997 to $157 million in 2005. The new stadium will boast more than three times as many luxury boxes as the old, and as a result, ticket-and-suite revenues are projected to soar to $253 million when the new ballpark opens in 2009.

They will probably be much higher. The $253 million figure in the prospectus assumes attendance in 2009 of 3.4 million, which is the equivalent of 79 percent of the new stadium's 53,000-person capacity over 81 regular-season home games. Given that the Yankees sold 90 percent of their tickets last year, 88 percent in 2005, and are on pace for another 90 percent showing in 2007, it's hard to imagine ticket sales sagging when the new stadium opens.

And the ticket-and-suite figures don't include two other sources of stadium revenue - concessions and sponsorships - that Yankees president Randy Levine expects will get a boost from the new ballpark. The Yankees' current concessionaire, Centerplate Inc., obtained 9.6 percent of its 2006 sales - the equivalent of $62 million - from its contract with the Yankees, according to SEC filings. Hal Steinbrenner, George Steinbrenner's youngest who appears to have stepped in as his father's chief lieutenant, tells Fortune that the Yankees are considering handling concessions on their own in the new stadium. Were the Yankees to go that route, the team could conceivably net $30 million annually on gross concession sales of $100 million, estimates former Yankees marketing director Joseph Perello.

As for sponsorships, Levine says the Yankees are not planning to sell traditional naming rights: "It's going to be called Yankee Stadium." Nevertheless, according to the bond prospectus, the team's lease with New York City (which will own the new stadium) stipulates that the Yankees keep "all cash and receivables" related to "naming rights" and "advertising" and specifically raises the possibility of the Yankees' selling naming rights "for parts of the stadium." In other words, fans may enter a building called Yankee Stadium but find themselves sitting in the Bank of America bleachers or purchasing snacks at the Pfizer food court. Perello, now a sports consultant, thinks the Yanks could collect $50 million to $75 million a year in sponsorship dough this way.

What will New York taxpayers get in return for all their Yankee largesse? Very little - unless you're a local pol with a hankering for hardball. The Yankees will pay a mere $10 a year in rent in the new ballpark, down from about $10 million in the old one. No, we didn't leave off some zeros; it's typical of the sweetheart deals cities make to keep teams in town. And this one comes with a cherry-on-top kicker: According to the prospectus, city officials get their own luxury box "for all regular-season team home games."

Of course, the Yankees are responsible for $51 million a year in debt service. Yet even that expense comes with a silver lining: It will help reduce the Yankees' revenue-sharing obligations. Baseball's 2002 collective-bargaining agreement permits teams to deduct stadium debt service and construction costs when calculating revenue sharing. Bottom line? Baseball's 29 other teams will effectively bear a third of the cost of the Yankees' new ballpark. "It's a classic tax shelter," one baseball insider says. "Not only do you get the benefit of added revenues, but you get a major revenue-sharing deduction as well."

[Guest Edgy DC]

Unless nobody shows.

[stevejrogers]

Edgy DC wrote: Unless nobody shows.

I really don't see that happening anytime soon. YS has been a major tourist trap during since 1998 and I don't see the Yankees ever taking too much of a step backwards that could see late 80s-early 90s levels of attendance.

Especially with the "newness" of the park.

The Mets though, they need to careful. Citi Field could become like Shea because it doesn't have the YS "Tourist Trap" cache. Because of it's acclaim as one of the most historic venues around (even with the knowledge that the current structure really is 31 years old, not 84) Yankee Stadium now will always be full.

So if the Mets ever did go through a 2002-2004 tailspin (Because of the economics of the game, the dark times of 1974-1983 will never happen again to this franchise, so if anything I can see just a three year cycle of 2nd division-dom), I could see fans staying away from CF in droves like many of the new ballparks like PNC, Great American Ballpark, ect where the bloom is off the rose because of a lousy team.

[Guest Edgy DC]

SteveJRogers wrote: ="Edgy DC"]Unless nobody shows. I really don't see that happening anytime soon.

Well, baseball is dying.

[Guest Rockin' Doc]

Edgy - "Well, baseball is dying."

Or so I've heard it argued in the past.

[stevejrogers]

Edgy DC wrote: ="SteveJRogers"] Edgy DC wrote: Unless nobody shows. I really don't see that happening anytime soon. Well, baseball is dying.

Well, New York is one huge exception to baseball's lack of a fanbase across the country. Ditto Boston, Chicago, ect.

Make a wise crack about baseball dying again when Philly gets themselves back into the race and doesn't sell out its NLDS games because a big Eagle game is that weekend.

Give me that wise crack everytime Royal fans stage walkouts during Yankee games.

Give me that wise crack when new stadiums like the ones in Pittsburgh, and Cincy do not have that "new ballpark" spike in attendance because they can't field a team.

Healthier than ever? More like a house of cards because its still only popular in the biggest markets, or markets where baseball has become so damned ingrained that fans truely don't realize or care that they are watching a sport that is slowly devolving because of the economics and the greed of all sides.

[nymr83]

blah, blah, blah.

[metirish]

] Healthier than ever? More like a house of cards because its still only popular in the biggest markets, or markets where baseball has become so damned ingrained that fans truely don't realize or care that they are watching a sport that is slowly devolving because of the economics and the greed of all sides.

Steve I can see you as a future feature writer for a major daily.

[Guest Iubitul]

SteveJRogers wrote: Healthier than ever? More like a house of cards because its still only popular in the biggest markets, or markets where baseball has become so damned ingrained that fans truely don't realize or care that they are watching a sport that is slowly devolving because of the economics and the greed of all sides.

hmmmm only in the biggest markets.... So tell me, how has minor league attendance been over the last 25 years? Just askin'...

[Benjamin Grimm]

Economics and greed have been part of the game forever.

When we're eight years old it's easy to be unaware of it. As we get older, if we're still paying attention, it becomes more and more obvious. But just because we each make this discovery on our own, doesn't mean it's anything new.

Greed isn't going to kill baseball. It would be nice if the game was completely unspoiled by the realities of the business world, but that never will happen and it never was the case.

That's why I don't like that HBO title "When it Was a Game." It's still a game, no more or less than it ever was.

[metsmarathon]

yeah, baseball's doing terrible in small markets like milwaukee, oakland, minnesota, and cleveland...

the primary reason for the struggles of baseball in such small market teams as pittsburgh and kansas city is ineptitude and incompetence moreso than greed and financial inequity.

[Benjamin Grimm]

Minnesota, Cleveland, etc. must be the "so damned ingrained" markets.

[metirish]

Yancy with the wise crack.......

[stevejrogers]

="Yancy Street Gang"]Economics and greed have been part of the game forever. When we're eight years old it's easy to be unaware of it. As we get older, if we're still paying attention, it becomes more and more obvious. But just because we each make this discovery on our own, doesn't mean it's anything new. Greed isn't going to kill baseball. It would be nice if the game was completely unspoiled by the realities of the business world, but that never will happen and it never was the case. That's why I don't like that HBO title "When it Was a Game." It's still a game, no more or less than it ever was.

I hear you Yance, but the point I'm saying is that the economic structure of the game right now is hurting baseball more so then when it did back then.

The reason why, even if the new owner is Michael Burke reincarnated, the Yankees will never spend more than a year or two outside of postseason play from now on (ditto the Mets) is because of the revenue streams that are at their dissposal now that never existed before. Back when the Yankees were the Evil Empire that made deals only with the KC A's, the streams were just the ballpark, radio & over the air TV (which all NY teams were slow to pick up on, but thats another tale). Now there is cable deals, exclusive deals with sporting goods, internet sales, video sales, and on and on.

Unless the next owner of the Yankees is a David Glass/Tribune type who would rather keep the revenue streams for their own profit margin rather than put it back onto the field, the Yankees (and Mets) are never going to be second division teams for more than a year or two again.

KC, Pittsburgh, Cincy, even Philly can not compete with the mega franchises that the Mets, Yankees, Red Sox, Cubs, Dodgers, Angels, ect have become. Unless there is more equity among all teams, and yes I am talking about things like a real hard salary cap and even a floor, then this cycle is going to continue and yes MLB will in fact be considered a lesser sport (if its not already) in the eyes of mainstream America.

And I'm not even getting into the points about how baseball is a slow sport, not readily accessible to be played in the cities, and that it just isn't bringing in the youth of this country (not just African-Americans) like it once did

[stevejrogers]

metsmarathon wrote: yeah, baseball's doing terrible in small markets like milwaukee, oakland, minnesota, and cleveland... the primary reason for the struggles of baseball in such small market teams as pittsburgh and kansas city is ineptitude and incompetence moreso than greed and financial inequity.

Then why are Jason Giambi, Johnny Damon, Miguel Tejada, Barry Zito, Tim Hudson, and Mark Mulder playing elsewhere? Why are New York media members licking their chops for Johan Santana's debut on the free agent market?

Why do we have Luis Castillio, Paul LoDuca and Carlos Delgado right now?

[Willets Point]

SteveJRogers wrote: Why do we have Luis Castillio, Paul LoDuca and Carlos Delgado right now?

Because Omar made some stupid deals for old players who can't hit anymore.

[metsmarathon]

are the a's better off this year with haren, blanton and gaudin, with dick harden looking in from the clubhouse, than they would've been with hudson, mulder & zito?

do you really think they still wish they had jason giambi?

are there many players out there more overpaid than johnny damon?

baltimore has had ridiculous amounts of money to throw around, and, gosh, how well have they done with it all?

and who cares what gives a hardon to sports journalists? last year, the big free agent pitcher went to solidly mid-market san francisco, and, gosh, isn't that nice for them?

giving away big money contracts is just as good a means of destroying a team as it is building a dynasty.

i forgot to look - is atlanta a big market?

[metsmarathon]

since 2000, the mega-huge market new york mets have exactly nine more wins than the super-small market, can't keep a damned player and are always rebuilding florida marlins.

well, in the regular season. in the post season, they've got exactly one more world's championship trophy.

[Guest metsguyinmichigan]

Steve,

I see where you are coming from. The extra money allows you to take some expensive gambles and not crash and burn if they are mistakes (See: Pavano, Carl)

But, on the other hand, look at the World Series winners since 2000, when Bleeping Timo gave one to the bastards:

2001: Arizona
2002: Angels
2003: Marlins
2004: Red Sox
2005: White Sox
2006: Cardinals

Only the Red Sox are a mega club, though I grant you that run well, the White Sox and the Angels should be.

The teams that are constantly bad -- Pirates, Royals, Devil Rays, Nationals -- are the way they are not because of a revenue problem, but because they are mismanaged. Meanwhile, the Athletics, Twins, Braves and others we are used to seeing in October are smaller markets that are run by people who know what the heck they are doing.

I'm not saying the Vile Empire doesn't have massive leg up on everybody else, but it's not the ticket straight to the Series.

[Guest Edgy DC]

SteveJRogers wrote: Well, New York is one huge exception to baseball's lack of a fanbase across the country. Ditto Boston, Chicago, ect.

I thought the Mets had to be careful.

[Frayed Knot]

"... but the point I'm saying is that the economic structure of the game right now is hurting baseball more so then when it did back then. "

No it isn't.


"Give me that wise crack when new stadiums like the ones in Pittsburgh, and Cincy do not have that "new ballpark" spike in attendance because they can't field a team. "

Pitt attendence:
1979 WS winner = 1.436 mil
1992 3rd consectutive NL winner - 1.829 mil
2006 14th consecutive losing season and in market that's losing population both in the city intself and the surrounding areas = 1.861 mil



the good old days weren't always so good and tomorrow ain't as bad as it seems - B. Joel







Someone split this discussion off please

[stevejrogers]

Edgy DC wrote: ="SteveJRogers"]Well, New York is one huge exception to baseball's lack of a fanbase across the country. Ditto Boston, Chicago, ect. I thought the Mets had to be careful.

I meant in terms of thinking Citi Field will be the automatic cash cow that Yankee Stadium III will be. Even last year Shea wasn't quite filling the turnstilles like they where back in the Big 80s.

Shea doesn't and Citi won't have the same historic, tourist trap feel that the second YS has and the third will, and therefore the seats won't be filled to capacity if the Mets have a down year. They'll bounce back the next year and the fans will come back, but the Mets are fooling themselves if they share the Yankee belief that their new ballpark is guaranteed to be a cash cow, even if the team is playing lousy.

[Frayed Knot]

"Even last year Shea wasn't quite filling the turnstilles like they where back in the Big 80s. "

1986 = 2.768 mil
2006 = 3.380 mil



please stop before you mis-state again

[stevejrogers]

="Frayed Knot"]"Even last year Shea wasn't quite filling the turnstilles like they where back in the Big 80s. " 1986 = 2.768 mil 2006 = 3.380 mil please stop before you mis-state again

Those are totals, what was the average attendance for both years? Other than shoehorning more luxury boxes don't you think there is a reason why there are going to be 45,000 seats at Citi? Because the Mets just aren't drawing 50+ as consistantly as they once did.

[metirish]

[Guest Johnny Dickshot]

="SteveJRogers"] ="Frayed Knot"]"Even last year Shea wasn't quite filling the turnstilles like they where back in the Big 80s. " 1986 = 2.768 mil 2006 = 3.380 mil please stop before you mis-state again Those are totals, what was the average attendance for both years? Other than shoehorning more luxury boxes don't you think there is a reason why there are going to be 45,000 seats at Citi? Because the Mets just aren't drawing 50+ as consistantly as they once did.

Wrong again, Steve J.

[Benjamin Grimm]

So you're saying that, even though the 2006 Mets had a higher total attendance over 81 home dates, the 1986 team had a higher average attendance per game?

[metsmarathon]

="SteveJRogers"] ="Frayed Knot"]"Even last year Shea wasn't quite filling the turnstilles like they where back in the Big 80s. " 1986 = 2.768 mil 2006 = 3.380 mil please stop before you mis-state again Those are totals, what was the average attendance for both years? Other than shoehorning more luxury boxes don't you think there is a reason why there are going to be 45,000 seats at Citi? Because the Mets just aren't drawing 50+ as consistantly as they once did.

....um....i know i was young back then and wasn't paying close enough attention.... but....

were.... there... fewer games played.... in '86? 1986, that is...

cos i'm thinkin' 2.768M : 3.380M :: (2.768M /81 games) : (3.380M / 81 games)

[Frayed Knot]

"Those are totals, what was the average attendance for both years?"

Umm, off the top of my head I'd say the avgs would be higher in the year where the total attendence was higher than it was for the year when the total was lower. At least math tended to work that way when I was in school although admittedly that was a while ago. There may have been a few fewer dates in the '80s (although DH's were rare then too) but not enough to make up for the 22% increase in the total.



"Other than shoehorning more luxury boxes don't you think there is a reason why there are going to be 45,000 seats at Citi?"

Yes, as has been discussed, it's to create a supply/demand ratio that better suits them making money.



"Because the Mets just aren't drawing 50+ as consistantly as they once did."

Show your work.
If they were drawing more 50K+ dates then they must also have been drawing more under-15K dates to balance it off, no?

[metsmarathon]

the '86 mets would've had to've played 66 or fewer home games in order to've had a higher average attendance than the '06 mets did in 81 home games.