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Baseball hopes economy doesn’t throw a curve

Major League Baseball is hoping that 2010 will see a larger number of fans in stadiums ordering more hot dogs and nachos.
Image: Fenway Park
Fresh stands await fans at Fenway Park in Boston. Those involved in the sport — from league executives and owners to sponsors and concessionaires — are cautiously optimistic for the new season that begins Sunday there.Elise Amendola / AP
/ Source: Reuters

Major League Baseball is hoping that 2010 will see a larger number of fans in stadiums ordering more hot dogs and nachos.

While the U.S. unemployment rate remains high, those involved in the sport — from league executives and owners to sponsors and concessionaires — are cautiously optimistic for the new season that begins Sunday in Boston.

"I'm hopeful that attendance is at worst flat and maybe up a little," MLB Deputy Commissioner Bob DuPuy said. "We are projecting a slight increase in revenues for the year and our clubs tend to be fairly conservative."

Rick Abramson's firm handles concessions for nine baseball parks, many of which were hit hard last season by the recession. He expects attendance and spending at the parks to increase in the low single-digit percentage range this season.

"The average American limped through last year and I wouldn't say that they're going out buying second homes, but they're going to start to spend some money," said Abramson, president of Delaware North Cos' sports business.

Others are less confident. Marc Ganis, president of sports consulting firm Sportscorp Ltd, expects teams to offer more discounts, giveaways and group sales, and for the league to see flat revenue.

"When you have a lowered attendance and a lowered average ticket price, that's a double whammy," he said. "On a macro level, with very few exceptions, baseball will likely be treading water this year."

Like many sports leagues, baseball suffered last year as fans dialed back spending and companies slashed sports marketing budgets and purchases of pricey seats and suites.

Regular-season attendance slid 6.6 percent to 73.4 million and clubs offered discount tickets and packages to lure recession-weary fans to the park.

No $9 beers for the unemployed
With unemployment expected to hover around the current 9.7 percent mark for some time, doubts have been raised about baseball's prospects heading into opening day this Sunday.

"These aren't essential services here, so there obviously are a lot of concerns when you look at unemployment numbers," Fitch Ratings analyst Chad Lewis said.

While league revenue actually rose in 2009 to $6.7 billion from $6.5 billion the previous year, officials acknowledged that ticket receipts were a struggle, especially in such markets as Detroit, Cincinnati, San Diego, Oakland and Miami.

"With the economic slowdown, fans couldn't really justify paying that sort of money on attendance and parking and $9 beers and $10 programs," IBISWorld analyst Dmitry Kopylovsky said. However, he expects attendance this year to rise 3.5 percent and revenue to hit $6.9 billion.

In a good early sign, ticket prices in the secondary market entering the season as tracked by are up 22.5 percent from the second half of last year to almost $75.

"Baseball is like comfort food," Chicago Cubs owner Tom Ricketts said. "People will cut out expensive vacations, but they won't cut out their baseball season."

Ricketts' family bought the Cubs from bankrupt media company Tribune Co last fall for $845 million. He said the corporate sponsorship environment is tough but things have improved, marked by his team's new deals with Toyota Motor Corp and PNC Financial Services Group Inc.

New sponsors for spring
The MLB also signed two new sponsors during the off-season in ScottsMiracle-Gro Co and Bridgestone Corp's Firestone brand, as some companies see an improving trend line.

"As the economy recovers, people feel like their wallets might have more money in them," said Charles Greenstein, head of Bank of America Corp's baseball sponsorship business.

Bank of America, the official bank of baseball, just signed an extension of its sponsorship agreement with the New York Yankees under which the logo for its Merrill Lynch Wealth Management brand will adorn the club's outfield wall.

However, most clubs remain conservative.

"Everybody's sensitive to the reduction in the use of discretionary income," said Oakland A's owner Lew Wolff, whose club saw attendance drop 15 percent last year. "We're thinking of more packages this year." He believes the team can maintain or even grow attendance this year.

In Phoenix, a city hurt by the housing market slump, the Arizona Diamondbacks saw their renewal rate on season tickets for 2010 fall to 77 percent from 83 percent last year.

"Maybe we should be thankful and grateful, but that's tough," Chief Executive Derrick Hall said. The team still hopes to boost attendance slightly to 2.1 million this year from over 2 million last season.

Diamondback fans who canceled season tickets are telling club officials they can't afford their seats, while many others who remain are trading down for less costly tickets, and Hall expects them to spend less at the games. To make matters worse, companies are not buying as they have in the past.

Any rebound in corporate spending may also be small, said Marc Bruno, head of the sports business for Aramark, which handles food and beverage concessions for 12 clubs. "It's not a one-and-done and now we're back to normal. That's going to be several years before we get back to where we were in '08."