For Top Income Marlins Fans Fannies Arent Bottom Line
Written by Michael Lewis on May 20, 2010
By Michael Lewis
The Marlins stadium, as we report this week, is on target to hand the team a bonanza — but maybe not raise dismal attendance.
The team, with baseball’s best operating income though selling almost the fewest tickets, is on track to open a stadium in 2012 and add income from advertising, luxury suites, naming rights, parking and concessions that a landlord now gets.
Even though Miami-Dade will nominally own the stadium rising on the Orange Bowl site, it won’t get a penny from those revenue streams — or rent, since that goes to construction along with $3 billion in taxes.
But while baseball’s most-profitable team will boost its bottom line, it may not add bottoms in seats — an aim cited when the county bled us for a retractable-roof stadium.
In that, the Marlins won’t be alone. A New York Times report last week notes the New York Mets, who got an $800 million stadium last year and have the big leagues’ most home victories, also have the largest attendance drop.
The Mets’ average has fallen 18%, from 38,941 a game in 2009 to 31,891 in their second year in the ballpark. In 2008, last year in an old home, the team averaged 51,165.
Since Miami-Dade commissioners agreed to encumber us about $3 billion over 30-plus years based on adding attendance, what happens after a stadium opens is vital.
This year, when a rising ballpark should energize Marlins fans, average ticket sales have actually fallen 6.4% to 17,564 from 18,770 last year. Even if they rise the first year in a new home, experience of cities with new ballparks suggests stadium-induced gains quickly vanish.
Any Marlins long-term fan gain requires loyalty — which twice has been rewarded with dismantled championship teams. The team’s financial success is built on low payrolls. That doesn’t add fans.
But attendance stagnation may not trouble owners. Their $46.1 million operating income last year, according to Forbes, was highest in baseball. The Marlins exceeded the $40 million of the second-ranked Boston Red Sox, who have sold out every game for years.
The Red Sox, it seems, spend to win championships. The Marlins win in the most important column, operating income, by not spending.
The stadium rising in Little Havana is also raising the value of the Marlins franchise. Forbes evaluates it at $317 million, up 15% from last year.
That $42 million gain leads baseball and is based, Forbes says, on a stadium the public is funding. Expect even higher gains by opening day 2012, based on all those new revenue streams that the team will get at taxpayer expense.
The Marlins will then rise from having the lowest revenues in baseball that turn into the highest operating income to far higher levels in both categories — even if no more fans than today attend after the stadium’s first year.
Don’t be fooled by the Marlins’ rising payroll this year. Even $45 million to $50 million is a far cry from the $91 million in 2006. The difference between pay then and now accounts for almost every penny of the leagues-leading operating income.
But the biggest bottom-line boost will be the stadium. Besides the new income steams cited above, the hidden benefit may be one more handout.
No, it’s not the $35 million interest-free county loan to owners so they could hand it back as their only share of construction — since, as every CEO knows, rent is no contribution.
The biggest handout may be that team owners will control the stadium almost 365 days.
Baseball lasts 81 days a year, plus at best 11 days of playoffs. After a few government events, that leaves over 260 days for owners to program concerts and events in the heart of Little Havana and, other than a few days a year, keep every penny of revenues.
Properly managed, the public’s stadium could outpace the team as a revenue steam to the owners.
The Marlins may wind up with far smaller baseball than event attendance, cementing their status atop baseball’s income standings at public expense.
Now, doesn’t that make you feel better about the county directing $3 billion to a stadium it doesn’t control instead of some frivolity like our failing public hospital system?