MLB Attendance Is Down, but Revenues Continue to Rise
By Bill Felber
Forbes’ Maury Brown, one of the leading authorities on the business of baseball, reported earlier this year that MLB took in $10.3 billion in baseball-related revenues last year, setting an industry record for the 16th consecutive season. That was despite the fact that MLB attendance declined 4% from 2017 to 2018, presaging this season’s nine percent drop to date.
In 2016, Forbes’ Nick DeSantis and Mike Ozanian provided the clearest outline of how teams have come to rely less and less on traditional revenue streams in favor of monetizing more reliable assets: namely, their ballpark surroundings and their media rights. For those who are interested, a link to the full text is provided here.
But here’s the synopsis.
The 10 most valuable franchises in baseball are the New York Yankees, Los Angeles Dodgers, Boston Red Sox, San Francisco Giants, Chicago Cubs, New York Mets, St. Louis Cardinals, Los Angeles Angels, Washington Nationals, and the Philadelphia Phillies. They are providing the model for this revenue shift. Among those 10 teams, all stadium-generated revenue accounted for just 19 percent of the total franchise valuation, which for those 10 averaged about $1.98 billion.
A far, far more significant revenue stream – amounting to 45% of those teams’ pies – was market. That’s the money a team makes from the impact of its geographical situation via such outlets as media ad revenue, merchandise sales, real estate development and the like.
An additional 21% flows from the nature of the sport itself, predominantly MLB-negotiated rights and licensing fees.
As long as you keep purchasing t-shirts and MLB network packages – which, for the record, you are doing at record levels – baseball doesn’t need you to actually show up (although you’re welcome to do so if you want.)
In fact, according to the DeSantis/Ozanian data, those most successful teams induced an average of just $64.90 from each paying customer. And the number would have been lower but for the astounding demand for tickets in San Francisco, where the average per-customer contribution to the bill was $165.
How can the Giants management get away with tapping its customers to that extent? Simply put, the Giants are a phenomenal home-town draw with more than 30,000 season ticket holders. Supply and demand…it’s a beautiful thing.