« Archive for March, 2009

From the WSJ:

No team has hitched its star more closely to the corporate market than the Cowboys. The $1.1 billion Cowboys stadium will hold up to 100,000 fans, the most in the NFL. Fans will enter and exit through 120-foot-tall retractable glass doors at either end zone. The scoreboard alone — a mammoth, 160-foot-long high-definition screen — cost more than $35 million, as much as the entire Texas Stadium, the team’s former home.

Paying for it all are the more than 15,000 premium seats, costing as much as $340 per seat, per game. When the team broke ground in April, 2006, the stadium was designed to have 200 luxury suites; Mr. Jones added another 100 during construction.

The article ropes in the Yankees’ and Mets’ new stadiums, which may actually be fair; neither has gone quite as over the top as the Cowboys, but baseball teams inherently have several times as much inventory as football teams. The Cowboys have to sell 100,000 tickets to eight games (ten if you include the preseason), but the Yankees will be trying to sell 52,000 to eighty-one games.

But Jeff Wilpon makes one big point here, that the article mentions only in passing: “I’d rather be opening up a new stadium in this economy than trying to sell seats in the old Shea.” Exactly. If the prices have to come down on some unsold ticket inventory, so be it. All three of these teams will be making much more than they did last season, even if it’s not quite what it could have been. And as far as the investment, these things tend to pay for themselves very quickly (from the team’s perspective, if not for the governments that helped build them).

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My latest on BP is up, discussing what baseball coverage will look like once we’re past this funny era of getting big stacks of paper sent to us every morning. If you have a strong emotional attachment to newspapers, you should probably turn away.

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MLB could take this as good news or bad news (they are in the cable business, after all), but long-term it will be a huge positive. From Bits:

For most New Yorkers, moving into a new home means calling Con Edison, Verizon and the cable company. But some younger New Yorkers are no longer paying for cable television and instead watching their favorite shows, movies and videos online and from on-demand delivery services like Netflix.

These early adopters are taking advantage of a growing number of Web sites like Hulu and software including Boxee, which stream many programs available on Cablevision, Time Warner Cable and Comcast, often at no charge.

Cost-benefit analyses aside, this is going to be a slow process. People still pay for landline phones and AOL dialup service; when something becomes engrained, most people don’t even realize that letting it go is an option.

But cable is so expensive, and internet video is so cheap, that at some point this was inevitable. The real question is whether this becomes a popular move amongst people that aren’t making much money, or young people that don’t see the need for 800 channels when most of what they want is on the web anyway.

Three things probably need to happen to make IPTV fully viable: 1) broadband speeds need to increase, at least to 4G standards; 2) all live sports games need to be streamed; 3) videos need to be easily accessible on a television, and not just on a PC. If certain cable channels were available online on an a la carte basis (i.e. ESPN, CNBC, TBS, Comedy Central, etc), that’s icing on the cake.

As each of these steps become reality, we should see people defecting from cable at an accelerating pace. That is, unless the cable providers change their model (i.e. making it a la carte), or drastically cut prices. But even then, cable might just end up being a niche player (for HDTV shows, etc.) if broadband speeds improve enough.

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John Heyman’s source-less story notwithstanding, contraction wasn’t a realistic option when the sport was losing money back in 2001, and certainly isn’t realistic now when the sport is rolling in cash.

Consider how it was designed, back when it was in vogue: twenty-eight teams buy out the other two for a ‘market price,’ leaving all remaining contracts with vendors, suppliers, sponsors, and maybe even players unfulfilled. The remaining owners get a larger piece of the national media revenues, while the two that were bought out receive way more than they could have on the open market. If this sounds like some kind of MLB-generated Ponzi Bankruptcy Court, you’re not far off.

The reality is that MLB would have been hit with dozens of lawsuits that would have made it virtually impossible to actually pull off. Yes, a team can go bankrupt; if we really are looking at a decade-long depression, it’s possible (if entirely unlikely) that a Major League team could fail. But the owner wouldn’t then be able to sell his bankrupt team for hundreds of millions of dollars, like he would if his team was preemptively ‘contracted.’

MLB knows all this. Contraction was a bargaining chip in 2001-02, and maybe it will be again. But it’s not at all realistic, and the Players Association shouldn’t have a problem calling MLB’s bluff.

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John Coppolella is in his third season as the Director of Baseball Administration for the Atlanta Braves.  He previously spent seven years with the New York Yankees as the Assistant Director of Pro Scouting and a Baseball Operations Assistant.  A graduate of the University of Notre Dame and a former Student Manager for the Fightin’ Irish football team (editor’s note: Go Blue), he took some time to answer some questions about the salary arbitration process:

Walk us through how the team decides what number to offer in arbitration. How do you put a value on a player, and how do you factor in his service time?

Each player is his own individual case. Within that case and for that player, there is no set formula in terms of how we arrive at a number. Typically, we will look at relevant and recent comparable players with similar statistical performance and service time who ideally would play the same position.

We just settled a case with Jeff Francoeur, and it was difficult, both for our club and his agents, to identify comparable players. Everybody knows it was a difficult 2008 season for Jeff, but he was still a player who had historic bulk statistics (games played/started, plate appearances, hits, runs, RBI, etc) as a first-time arbitration-eligible player. He had also achieved some awards and remains one of our club’s more popular players. Jeff ended up getting paid more than some players who had a better 2008 season but less than some players who had worse career bulk statistics.

How much do you weigh past precedent in formulating the team’s offer?

Past precedent definitely plays a role, but as any agent will tell you, the most relevant contracts signed are the most recent. According to a study by the Associated Press, this year’s group of arbitration-eligible players reportedly earned a record increase of 172 percent. There’s no doubt that salaries escalate more in arbitration than free agency. There are many reasons for this – beyond it being a flawed process – but the biggest, in my opinion, is once you tender a contract to an arbitration-eligible player the power shifts completely to that player and his agent. In free agency, until a player signs, clubs, to a degree, can still determine a player’s salary.


This is a no-brainer. The only surprise is that it took this long.

Teams leave a lot of money on the table with status quo pricing. On one end, there’s a massive secondary market that only exists because teams tend to underprice hot tickets. On the other end, seats are often left empty because of factors the team couldn’t have accounted for when they set prices over the winter (i.e. their record, their opponent’s record, the weather, etc.).

Differential pricing isn’t entirely new; it’ll cost you more to see the Red Sox at Yankee Stadium than to see the Royals. But even here, the prices are usually only a few dollars apart, whereas the demand for Boston tickets might be twice that of Kansas City tickets. And why stick with February’s pricing plan come hell or high water, when the relevant factors could be completely different by August?

The variable pricing method should help with all this. Gennaro’s not unveiling his model, but this shouldn’t be such a complicated procedure. The factors he mentions are pretty obvious: weather, promotions, the team’s record, the opponent’s record, the school calendar, etc. They’re also analyzing the secondary market, which will often give a more accurate read of total demand than the team’s actual sales.

The Indians aren’t going to double their gate revenue from this project, but they should get a very solid ROI. Just like opponent-based differential pricing took off after a couple teams experimented with it, don’t be surprised to see this type of model become the norm very quickly.

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