Maury has a great recap of MLB’s 2008 attendance figures. The basic numbers that you need to know: overall attendance was 78,624,324, 1.14% less than last year’s 79,502,524. It was the first time since 2003 that baseball did not set a total attendance record.
That isn’t exactly great news, and it no doubt will be blamed on the current financial crisis in the U.S. And considering how unlikely it is that the economy will recover before mid-2009 at the earliest, it’s a pretty good bet that attendance will fall even further next season. Bud Selig even warned teams about raising ticket prices.
Grim as it may sound, this isn’t the death knell it used to be for MLB. Despite the slight dip in attendance, revenues still grew a decent enough 5.3% in 2008. And I’d actually be willing to bet that MLB grows closer to 8-10% in 2009.
Two main reasons jump out at me:
- Less emphasis on total volume of sales
- Diversification in the industry
In regards to the former, just about every new stadium that has been built in recent years has actually housed a lower total capacity than its predecessor. Add in that many of the new seats are only sold through premium season ticket plans, and the general supply of tickets significantly decreases. This, of course, increases demand for the seats that actually are available, creating much higher prices across the board.
While this shift has certainly been important, it’s the second point that has been the sport’s real growth engine. Not so long ago, nearly all of baseball’s income came from consumers who would buy tickets, concessions, and maybe even merchandise.
In the past two decades, though, MLB has broadened its scope. Media revenue has ballooned well into ten figures, all things included. MLB Advanced Media, the sport’s internet arm, will bring in upwards of $500 million this year. And even ticket sales have been diversified, as most teams sell a great deal of premium boxes and luxury suites to corporations.
Both of these trends will be expanded on in 2009. The Yankees and Mets will open new stadiums, both of which should be tremendous cash cows. Both teams are limiting capacity somewhat, but, even more importantly, they will both feature brand, new high-end ticketing options. The Yankees, in particular, are catering to corporations, offering luxury packages that will surely run in the high six-figures. While neither team may break the attendance records set this year at the old stadiums, both should see a huge revenue boost.
In terms of diversification, MLB is adding what could be its next great revenue source: MLB Network. As part of its incredibly clever negotiations with cable operators prior to last season, the channel will be on the basic cable tier in 45 million homes, making it the biggest launch in the history of the medium. This also means that MLB will see hundreds of millions of dollars in subscriber fees, before it sells a single block of airtime to advertisers.
Needless to say, it’s pretty easy to be bullish on baseball in 2009. The consumer may struggle, and MLBAM’s growth could certainly slow a bit, but the industry as a whole should see its top line take a big jump next season.
Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com
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