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How Economy Affects Baseball Business

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How Economy Affects Baseball Business

Sports

How Economy Affects Baseball Business

How Economy Affects Baseball Business

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Forbes magazine recently released its annual survey on the value of major league teams. And while that list sets records for team value and revenue, it reflects the state of baseball in 2008. Times have changed and so has the business of baseball. Sportswriter Stefan Fatsis explains how the economy has changed baseball's outlook.

ROBERT SIEGEL, host:

Now to the business of baseball. Forbes magazine just released its annual survey on the value of the major league teams. On the surface, the findings look pretty good. The average value is at a record high, revenue is at a record high and so are profits.

The numbers, though, reflect where baseball stood in 2008. Times have changed, and here to tell us how is sportswriter Stefan Fatsis, who joins us most Fridays. Hi, Stefan.

STEFAN FATSIS: Hey, Robert.

SIEGEL: Fair to assume that next year, Forbes won't be listing any new record highs?

FATSIS: Yeah, I think that's a fair assumption. The magazine does note that 10 teams saw their estimated value drop from 2008 to now, and that teams are having trouble selling sponsorships and their priciest tickets and that some franchises are having trouble meeting debt payments.

The holding company of the Texas Rangers' owner Tom Hicks, last week, defaulted on more than half-a-billion dollars in loans.

SIEGEL: Yeah, Forbes says the average value of a major league baseball team is $482 million. Where do most teams on the list land relative to that number?

FATSIS: Below that number. The average is really skewed by five franchises that have big cable TV contracts and other local revenue streams: The New York Yankees and Mets, the Boston Red Sox, the Los Angeles Dodgers and the Chicago Cubs.

They're all at $700 million or more. The Yankees are at $1.5 billion, everybody else, $500 million or less. And whatever the number is, though, until somebody shows up with the money, pricing a team is really just an exercise in fun, and in this climate there are hurdles even if you find a buyer.

The Tribune Company is trying to sell the Chicago Cubs. They announced a buyer recently, a local investment banker named Tom Ricketts. He's reportedly been having trouble securing bank financing, and now he's looking for investors to put up at least $25 million apiece for preferred stock in the team.

SIEGEL: But there do seem to be some positive signs for baseball, given the economic circumstances. Attendance seems to be pretty good, unless it's a Yankee game, where on television it's easy to see there's a lot of open space behind home plate.

FATSIS: Yeah overall in baseball, things look pretty good. The number of tickets sold is up about three percent compared to last year. That was for April. ESPN reports a dozen teams actually have shown higher attendance, seven are about even, and 11 have shown declines.

Now, this indicates that some teams are doing a good job of responding to the economy by offering affordable ticket packages. The Yankees, though, not so much on the affordability. This week, they slashed the cost of their priciest tickets. Those went for an astonishing $500 to $2,625 per game, and they cut them by as much as a half. They gave some ticketholders free extra seats to help fill up those empties that were showing up on television right behind home plate and behind the dugouts, but no break for fans in the non-premium seats, whose ticket prices had gone up 76 percent from the old Yankee Stadium across the street.

SIEGEL: Wow, the Yankees came back from a road trip last night, played at home against the Los Angeles Angels, a big-draw team, you would think, not to a full house, though, I saw.

FATSIS: No, 83 percent, which is lower than last year's average. The Associated Press actually did a hand count during the game of the priciest seats in the ballpark, and there were still a bunch of a empties there. And the AP also reported that tickets on the secondary market are going for way less than face value. Last night, you could have gotten an $850 seat for just $225, Robert.

SIEGEL: The secondary market. The scalpers are losing money on Yankee Stadium.

FATSIS: The scalpers are losing money.

SIEGEL: Okay, short-answer question here. How is it that on that Forbes list, the Yankees, valued at $1.5 billion, lost $3.7 million last year, whereas the hapless Washington National Nationals and Florida Marlins each made more than $40 million last season. They're more-profitable franchises, according to that.

FATSIS: You know, it's revenue-sharing, Robert. The Yankees handed out about $100 million to less-wealthy teams last year. Clearly not all of those teams spend the money on player payroll to improve their clubs. Washington and Florida are in the bottom four in payroll this year, but if we've learned on thing recently, you don't need to spend to win. Tampa Bay, the Rays, in the World Series last season. They're 25th out of 32 teams in payroll now, Florida dead last in player spending, first place in the National League, East Division so far.

SIEGEL: Sportswriter Stefan Fatsis, who talks with us Fridays about sports and the business of sports. Thanks, Stefan.

FATSIS: Thanks, Robert.

(Soundbite of music)

SIEGEL: You're listening to ALL THINGS CONSIDERED from NPR News.

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