White Sox break the myth

[southsider2k5]

Would you say that these numbers impacted their moves heading into this season, but that they shouldn't impact moves going forward?

 

Depends on how revenues are this year. We just saw a loss of about $20 million in revenue YoY. If we a similar or greater loss, that wipes out all of the new TV money coming in.

[Dick Allen]

Was in Seattle in 2012 when The King pitched, they did something similar and it was cool. I'm sure the logistics of selling based on Sale's day of pitching can be dealt with (if you pre-bought you're in, any unsold prior to a certain period get the deal could work).

 

I just know it wasn't a robust crowd when I went to the Mariners game but that section was packed.

Teams that lose 99 games should lose money. If you are bad in other business, you tend to lose money. $3 million isn't too bad of a hit, considering they made close to $20 million the year before.

 

Supposedly, their TV ratings were second-worst in baseball.

Edited March 27, 2014 by Dick Allen

[Marty34]

Depends on how revenues are this year. We just saw a loss of about $20 million in revenue YoY. If we a similar or greater loss, that wipes out all of the new TV money coming in.

 

$6M decline in revenues. Considering they lost 99 games and the red line was shutdown for the entire season, and ticket prices were slashed that's not bad.

Edited March 27, 2014 by Marty34

[Hawkfan]

So lower prices to get more attendance doesn't mean more profits??? shocking

[Dick Allen]

So lower prices to get more attendance doesn't mean more profits??? shocking

Attendance was down yet again. When you lose 99 games and become an uninteresting team the first week of the season, with a fanbase full of excuses not to go to games anyway, like in 2012 when the team spent most of the summer in first place, many "just knew" it wouldn't last, so they didn't go to the games, you will hit rock bottom.

[caulfield12]

Since Forbes just released their valuation of all MLB's franchises something interesting popped out to me. It's the fact that the White Sox have high payroll and relatively high revenue, and what we all know, woeful attendance. So does that mean another longtime generational standing tradition of baseball, that is, attendance & ticket sales equate to revenue & thus payroll a complete and utter myth.

 

Forbes says the White Sox are the 11th most valuable franchise in MLB, worth $692M. Their revenue last year was $216M, good for 14th in MLB, their operating Income last year was $22.9M, good for tied for 9th in MLB, yes their attendance last year was a tick below 2M and good for 24th in MLB (was 2M in 2011, good for 20th). However, their payroll was $118M, good for 7th highest in the league ($129M in '11 good for 5th).

 

So at the organizational level there must be an explanation. We know a few tidbits that help keep expenses low and thus operating income high; they pay just $1.5 million in fixed rent plus $3-7 for every ticket sold above annual attendance of 1.9 million at U.S. Cellular Field, but keep all ticket, parking, concessions, signage and merchandise revenue. Ok, so that helps, but they have to be doing something fundamentally different, something that really does break the myth that high revenue's and payroll's are dependent upon good attendance. So what is it? They have excellent marketing? They have a crazy amount of luxury suites contracted out? They get a ton of money from Radio and TV? They get the most of any team from ballpark signage? Im really just picking at straws here.

 

 

 

This is an old post I made about 3 years ago....

 

Assuming the Sox play 32 WGN games as they did in the regular season last year, 18 WCIU and 112 CSN games I have estimates the total revenue:

 

32 WGN games (@ ~$350K): $11,200,000

18 WCIU games (@$200K): $ 3,600,000

112 CSN games (@ $450K): $50,400,000

----------------

$64,800,000

 

Sox Average ticket price was $38.65 and average attendance was 27,091 giving you an estimated: $1,047,067 per game or $84,812,435 for the 81 games at home.

 

That's a total of $149, 612,435 revenue just from TV and attendance. This does not include concessions, parking, merchandise, advertising, spring training revenue and revenue form their Silver Chalice digital media firm among other things.

 

And of course it does not take into account expenses such as their lease, operating costs for the stadium and staff etc. But you could confidently say they bring in well over $200M in revenue.

 

 

 

You can also add in $14.3 million per team for national broadcast rights, shared equally (7 year agreement pays $3 billion, or $429 million per season and will at least double if not triple when it's renegotiated after the 2012 season).

 

So you have $64.8 million from local/regional and $14.3 million from national rights (ESPN/TBS/TNT), so that's $79.1 million alone.

 

The average ticket price this year is $40.67. (http://sports.espn.go.com/chicago/mlb/news/story?id=6281410)

 

Right now average season attendance is at 22,180. Even in any WORST case scenario (let's say we continue to average only 22,000 for the remainder of the season), the White Sox will STILL generate at least $72.5 million from ticket sales alone.

 

So right there, you're talking $72.5 million + $79.1-89 million=$151.6-161 million. If we average the 27,000 of 2010, it's $89 million from ticket sales alone.

For concessions/parking/merchandising or souvenirs, I'll throw out 3 numbers and try to come up with some type of average.

 

The cost to take a family of four to a Cubs game, using the Fan Cost Index formula, is $305.60, and the White Sox is $258.68, the third- and fourth-highest totals in baseball.

 

Let's say the average family of four goes to a game (father/mother/2 kids)....that's an average of $65 per person entering the stadium, essentially $25 X 4=$100 over the average ticket price of $40.67.

 

So let's say 40% of the attendance at Sox games is families, 20% are the type who may or may not pay for parking/buy food before the game or bring it in, don't buy souvenirs, maybe they buy 1-2 beers, etc. (we'll put them at $10) and the other 50% spend let's say, $17.50 on average above their ticket prices....

 

 

40%=$25/person above ticket prices

20%=$10/person

40%=$17.5/person

 

That's another $35-40 million booked in revenue (based on 2010 attendance).

 

So you're looking at somewhere between $185-195 milllion for total revenues.

 

Minus $129 million payroll, of course you've also got insurance (for example, Peavy's contract), running the minor league system, draft/scouting, front office/admin, security for games, the stadium lease (pretty negligible), etc.

 

Then there's $68 million/20 years for US Cellular naming rights, or $3.4 million per season (about one stupid Manny Ramirez contract).

 

That doesn't even take into account a litany of corporate sponsorships, promotional events and tie-ins, stadium signage/billboards, executive suite rentals, etc.

 

As cws05champs guessed, the overall revenues have to be in the $200-220 million + range.

 

Are the White Sox capable of spending $70-80 million in other areas??? How? We certainly know it's on not the draft or our Dominican and Venezuelan operations, since they and Jerry Krause seemingly haven't produced any results yet. Ozzie and KW don't make THAT much. Although Ozzie would like to, I'm sure. He keeps reminding us that he has a new house to pay for and his twitter feed to maintain.

 

http://www.forbes.com/lists/2011/33/baseba...Sox_334758.html

Forbes has us at $26-28 million for EBITDA and overall revenue of $210 million.

Edited March 27, 2014 by caulfield12

[Big Hurtin]

Forbes' latest valuations are out. Club now ranked 14th in value at $695M, and showed an Operating LOSS of $2.7M.

 

But Jerry and company are just greedy, money-grubbing carpet baggers.

 

 

 

 

Creative accounting?

 

[witesoxfan]

Teams that lose 99 games should lose money. If you are bad in other business, you tend to lose money. $3 million isn't too bad of a hit, considering they made close to $20 million the year before.

 

Supposedly, their TV ratings were second-worst in baseball.

 

A lot of this makes sense, and frankly, even if the team loses 90 games, because it's new faces and younger players with actual talent, I think you are going to see more people show some interest.

[caulfield12]

We used to be 8th in total value as recently as two or three years ago.

 

Besides the Angels/Dodgers, Giants, Rangers, Cubs, Mets/Yankees, Red Sox, Phillies and Cardinals....who else has passed the Sox?

 

A lot of this has to do with those regional sports broadcasting networks, and the fact that ours isn't going to change again until 2019.

 

 

 

The Braves, Mariners and Nationals. I can understand the Braves, sort of, but the Mariners, based on the last decade? WHAT? They just took on a huge amount of future obligations in the Cano contract, legitimately, the White Sox should be 12th or 13th.

 

 

http://www.forbes.com/sites/kurtbadenhause...on-goes-global/

How the Red Sox are changing the future of the business/marketing of team sports.

Edited March 27, 2014 by caulfield12

[LittleHurt05]

A lot of this makes sense, and frankly, even if the team loses 90 games, because it's new faces and younger players with actual talent, I think you are going to see more people show some interest.

 

Recent Sox history tells us differently. Win games and make the playoffs or be ignored

[ScottyDo]

Recent Sox history tells us differently. Win games and make the playoffs or be ignored

I don't think we've been in a position like this since the 90s

[caulfield12]

The last time we were in this position was White Flag trade through April, 2000.

 

The 1998 and 1999 seasons, even with Albert Belle/Thomas/Ordonez/C-Lee/Durham around, didn't do much for attendance, particularly after Ventura left.

Edited March 28, 2014 by caulfield12

[witesoxfan]

Recent Sox history tells us differently. Win games and make the playoffs or be ignored

 

I'm not saying they're going to draw 2.25 mill this year, but I think fans will be more interested this year than they were last year. Last year was awful.

 

To that point though, you're right - if they go out and play like a team that's not going to win 70 games, fans won't watch. I know I will be tuning in a lot more this year and might even get the MLB.TV package.

[Balta1701]

I'm not saying they're going to draw 2.25 mill this year, but I think fans will be more interested this year than they were last year. Last year was awful.

 

To that point though, you're right - if they go out and play like a team that's not going to win 70 games, fans won't watch. I know I will be tuning in a lot more this year and might even get the MLB.TV package.

Just to note my side...I'm the opposite. I'm expecting to tune in less than I did last year. First year since 2005 I didn't get the Extra Innings package.

 

I'll watch some of the WGN weekend games but I'm not excited to see this type of setup, and I'm not motivated at all to head towards Chicago for a game (I have done that in a few previous years).

[caulfield12]

Anything is better than last year.

 

Just to see Eaton and Abreu, maybe Semien, Erik Johnson...maybe it will be a weight off everyone's shoulders when Dunn is gone as well as Konerko and it really feels like a completely fresh start?

[Balta1701]

Anything is better than last year.

 

Just to see Eaton and Abreu, maybe Semien, Erik Johnson...maybe it will be a weight off everyone's shoulders when Dunn is gone as well as Konerko and it really feels like a completely fresh start?

It's not just the "fresh start", it was the "we're not going to care about winning ballgames this season" message. That was the message when they kept Konerko, that was the message when they brought a guy up from A-ball so as to keep him around after the rule 5 draft, that was the message when they traded their closer for a person not on the roster.

 

It's a tryout and practice year. The team needs it, but it's not going to be pleasant to watch most parts of it. The Benny Hill theme could well be a good fit for these guys this year.