Florida Marlins Fans Could End Up Paying High Ticket Prices In New Park Experts Say Team Must Keep Fans In Mind
Written by Risa Polansky on September 25, 2008
By Risa Polansky
In a new ballpark, Florida Marlins fans could end up paying above-average ticket prices to watch a team whose payroll sits at 65% to 73% of the industry’s average, at least according to 2003 projections prepared by the team.
Plans could have changed since then, but Marlins officials declined to comment for this article, citing a policy not to address questions regarding specific club finances.
The five-year-old pro-forma, though outdated, lends insight into the Marlins’ visions for a new stadium.
It’s also a rare glimpse into a Major League Baseball team’s finances. The Marlins historically have not shared their financials — even with Miami-Dade County in making the deal for the new stadium, according to court testimony from officials.
The 2003 pro-forma was drawn up and apparently shopped to investors shortly after current ownership, led by Jeffrey Loria, bought the Marlins for $159 million in 2002.
The team in 2003 had a debt of more than $141 million.
It also had hopes for a new ballpark.
Had a stadium opened in 2007, an average-priced Marlins ticket would have been $23.74, a price 9% to 32% higher than the tickets sold at the five newest stadiums at the time, the 2003 projections show.
The average ticket to a major-league game last year cost about $22.77, according to Team Marketing Report, a sports marketing publisher. The average factors in some Major League Baseball outliers: tickets to a Boston Red Sox game last year cost an average of $47.71.
Sports management experts say it’s vital to a stadium’s success to keep the average fan in mind when setting ticket prices.
"If they want to create and maintain a fan base, they have to keep it where people can actually come in and see the game and then make a decision if they’ll come back," said Jim Riordan, director of Florida Atlantic University’s MBA in Sport Management program and a former director of training and quality control for the New York Mets.
Though economic conditions could shift should a Marlins ballpark open in 2011 as planned, the team should be cognizant of today’s sluggish economy when setting ticket prices, because the state of the economy when prices are announced "will decide whether people will be buying tickets or not," he said.
Darlene Kluka, coordinator of Barry University’s sports management degree programs, offered similar advice.
"When hard economic times fall, then obviously what’s going to happen is people will not physically attend many sporting [events]," she said. "If those tickets then rise, they [the Marlins] will wind up having less people in the stands because people don’t have as much expendable cash."
She warned also against building a stadium using taxpayer money without the input of the taxpayers.
"If you don’t ask the people to literally buy into it spiritually and financially, then it’s going to be a much harder sell to get the people to attend."
Stadium deal opponent Norman Braman has fought for a public vote not for attendance reasons, but because of the amount of public money set to back the project.
More than three-fourths of the $515 million in funding is to come from local governments.
The Marlins are to pay $120 million plus $2.3 million in annual rent. The 2003 projections show team officials expected at the time that rent would sit at about $6.5 million in a new home, nearly three times more than they’ll actually end up paying through the initial agreement with the county.
Regardless of the intricacies of the deal, attendance should spike when the stadium opens, the experts said, simply because of the newness factor.
"The reality is that initially when anything is new, lots of people like to come see what it’s all about, so that will happen probably for the first few years," Ms. Kluka said. "Then after that, it ultimately comes down to how well are they doing or how strong the fan base is."
The Marlins in their 2003 projections predicted an attendance jump during the ballpark’s first year to more than 2.8 million, but expected it to fall steadily after that to about 2 million fans the fourth season in the new stadium.
A weak economy could mean lower numbers, the experts said.
Another economic concern: whether businesses will be willing or able to spend on sponsorships during hard times.
According to the 2003 projections, the Marlins expected to glean $2 million annually for naming rights.
A 20-year deal with Citigroup is to bring the New York Mets an average $20 million annually for a sponsorship package that includes naming rights to the National League club’s new stadium.
"Right now, the Mets have set the bar," Mr. Riordan said.
But in difficult economic times, the Marlins may be unable to count on landing a similar deal.
"Usually the first thing to go is marketing dollars, sponsorship dollars," he said. "That’s something the Marlins need to be aware of. I’m sure they are. They’re going to be looking for sponsorships, corporate partners, at a time when the economy is shaky."
The team must also keep in mind the importance of paying players enough to stay competitive, the experts advised.
Marlins officials in 2003 projected a $56.6 million payroll the year the new stadium opens, which they expected at the time to be in 2007. It would grow to $65 million in 2010, the projections show.
The Marlins’ payroll this year is about $21.8 million, according to media reports.
An average Major League Baseball payroll today is about $80 million, said Andrew Zimbalist, a noted sports economist and author of books such as "May the Best Team Win: Baseball Economics and Public Policy."
Mr. Zimbalist, also an economics professor at Smith College in Massachusetts, said the team should be able to snag at least one marquee or a few quality players even in increasing their current payroll only $20 million or $30 million.
Mr. Riordan said Florida’s intrinsic quality-of-life appeal may be enough to draw better players once a stadium is built.
"I think it’s very attractive for people to want to come here and play here," he said, though, with the projected payroll, "I think what will happen is that they will rely very heavily on the farm system, on a draft, on young players coming in."
That may not be enough, Mr. Zimbalist said.
"Down the road, it seems to me they’re going to have to be more aggressive. They’re not going to be able to rely on their farm system forever and ever."
He questioned whether the ownership will step up to lure topnotch players.
"The team has been somewhat cheap in collecting the players they need to be competitive. One would hope that the prospect for generating more revenue in the new stadium will change their philosophy."
The quality of the team — and loyalty of the fans — will affect the success of a new ballpark, the experts agreed.
After building a new facility, "what the real piece is is the quality of the organization’s management and leadership, the other players that are recruited, the win/loss record of the team, the overall perception of the community," Barry University’s Ms. Kluka said. "Facilities are important, but in no time, that facility will become not new. When the tinsel and the glitz in a sense wears off, what’s there in substance?"
Said FAU’s Mr. Riordan, "In the end, winning or competitiveness is big."
Though a new stadium alone may not be enough to attract fans or players, one thing building a stadium is sure to do: add to a team’s value.
The preliminary contract between the city and local governments establishes a base worth of the team of $250 million at the opening of the stadium.
Generally, a new facility will add $40 million to $50 million to a team’s value, Mr. Zimbalist said.
Because the Marlins "have a terrible lease… the worst lease in baseball" at Dolphin Stadium now, a brand-new, retractable roof ballpark of their own could add $75 million to the team’s value, he said.
And after expenses, "at the end of the day, they ought to be able to, if they do it correctly, add somewhere in the neighborhood of $30 million to their bottom line."
The added value a stadium would bring to the team has left some wary of a potential sale once the ballpark is built.
"If the owner sells the team, basically two years after the construction is finished, they retain all the earnings, and we the people of Miami-Dade County who contributed a lot of money so the value of the team would go up, would get nothing," County Commissioner Carlos Gimenez said last week.
The initial deal with the Marlins specifies the team would pay the county and city 10% of net revenues of any sale above the $250 million base worth the first year after the 37,000-seat stadium opens. The percentage would drop each year over five years, ending with the Marlins subject to paying the county 5% of net revenues from any sale that occurs at the end of five years.
A sale after the first five years would net the county nothing.
But "the shelf-life of these kinds of facilities is much longer than five years," said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida. The stadium would "still be close to the cutting edge" should owners try to sell even five years after the opening.
The Marlins in 2003 were $141.1 million in debt with equity low and projected to fall until the team gets a new stadium, the financials show.
Team officials have said publicly the Marlins need a new stadium to stay competitive.
In professional sports, now is "the generation of getting new facilities," Ms. Kluka said. "The rationale for having new stadia is that it will help with the competitive edge."
It may or may not.
"Perception becomes reality, and so there isn’t any hardcore proof to say that in the long run this is going to be a beneficial addition," she said. "Although facilities are wonderful, that isn’t really what they’re selling. They’re selling the sport as entertainment."
Because they share a home with a football team, and because of Dolphin Stadium’s location, the Marlins "always needed a new stadium," Mr. Zimbalist said. "Now the question is, when they get their stadium, if they’re going to handle it right."
The opportunity is there, he said.
"I think it’s a decent market. With a new ballpark, they ought to be able to become a competitive team."