LIANE HANSEN, host:
This past week, executives and managers of Major League Baseball were in Las Vegas for their annual winter meetings. From the setting, the swank Bellagio Hotel, to the numbers being thrown around, there seemed to be no signs of recessionary restraint. The Yankees secured ace relief pitcher C.C. Sabathia with a record-breaking contract for $161 million. The Mets signed another ace reliever, Francisco Rodriguez, for $37 million.
So here's the question. Where is all this money coming from? And there's another question. Will cash-strapped baseball fans stay at home or go to the games? Well, we've asked Bill King to help answer these questions. He's a senior writer for Street & Smith's SportsBusiness Journal, and he joins us from member station WFAE in Charlotte, North Carolina. Hi, Bill. Nice to talk to you.
Mr. BILL KING (Senior Writer, Street & Smith's SportsBusiness Journal): And good to speak with you.
HANSEN: All right, what do you think? I mean, given the current recession, do you think baseball can really afford these big deals like Sabathia's?
Mr. KING: Afford is a very gray word. People are generally in agreement that, at the high end of the market, players are going to get their money. You look at the Yankees, for example, about to open a new ballpark - expensive luxury suites, expensive premium seats, all kinds of new revenue moving in. So they, yes, can afford C.C. Sabathia. It's actually not the year of, but the year after that the teams feel it the most because it takes a while for people to sort of decide to lock up the wallet.
HANSEN: What about the fans, though? I mean, those who can't afford the luxury accommodations and the boxes and even season tickets, given this is kind of what could be considered ostentatious spending, how are they going to react?
Mr. KING: I think that people, emotionally, immediately, their response is going to be, oh my god, there goes my ticket price. They've already seen there goes the ticket price. That happened already. They sort of already signed on, and they're paying for that.
What we've seen in the past is, sports is generally recession-resistant. But we've never seen anything like this before. You see a lot more people buying a ticket block, six games, something like that, and deciding before the season, these are the games they're going to go to. So it's probably going to take a while before sports really feels it.
HANSEN: Corporate America is facing this downturn, too, and so with the Yankees, with their new stadium, the Mets have a new stadium, some seats are going to cost something like $2,500. Who do they think are going to buy those seats?
Mr. KING: If you're at the top of the food chain, even at those prices, we find over the years that - companies willing to spend that extra money to get that premium experience. My client wants to go to the Yankee game, and I can close a deal that's worth X amount of dollars, and that's far in excess. Still, it makes sense to do it.
HANSEN: How do baseball executives calculate the price of a ticket?
Mr. KING: They set their prices the same as anyone else does, based on demand, pure and simple. And so, what they like to do is to turn around and say, it's well we could afford to get this player because you are willing to pay this ticket price.
HANSEN: Do you know of any teams that have actually rolled back prices?
Mr. KING: You see less of rolling back than you do packaging. So that, you know, for certain gold games, the price for the ticket is 14, and then for a silver game, it's 12, and, you know, and then for a bronze game, it's 10. They create ways to reduce the expense without necessarily reducing the ticket price because it's then harder to price it up at that higher level again.
HANSEN: What about the future, though? I mean, if you have young people that can't even afford bleacher seats anymore, what does that say about the future of baseball's fan base?
Mr. KING: Yeah, I don't think it's even the future; I think it's here already. For one game or one game every three weeks, it's still fairly affordable. You know, it's affordable upstairs. It's not affordable downstairs. So I think you've sort of created this chasm and this real class distinction in sports right now. So, you can't exactly say that it's killing the game, but I think,at some level, it has to be hurting it.
HANSEN: Bill King is the senior writer for Street & Smith's SportsBusiness Journal, and he joins us from member station WFAE in Charlotte, North Carolina. Bill, thanks a lot.
Mr. KING: Thank you very much.
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