With two walk off wins, the Bronx Bombers provided plenty of fireworks this holiday weekend, but the team’s results off the field were not as impressive. On July 1, the Yankees released an unaudited statement of 2014 cash receipts that showed a decline in ticket sales and suite licenses. According to the report, the Bronx Bombers took in $16 million less from these two revenue streams, a 5% decline from the previous year.
Yankees’ Ticket Sales and Suite License Revenue
Note: Does not include post season refunds issued from 2009-2012.
Source: Unaudited statements from MRB filings pursuant to continuing disclosure requirements.
A 5% decline in ticket/suite revenue isn’t that significant, and is made even less so when you consider the net effect of post season refunds. After returning collected monies for October games, the Yankees ticket/suite sales declined by only $5 million. That suggests stability, but belies the 1,500 per game increase in attendance that occurred last year. Thanks to price cuts for various seat locations, the Yankees wound up making less money from higher attendance. Although having more fans in the seats has the potential to boost other income, such as concessions and merchandising, the overall trend isn’t encouraging. In the new Yankee Stadium’s inaugural season, the team raked in nearly $400 million in ticket and suite sales, or nearly 50% more than last year’s total. And, with prices stagnant and attendance on the decline again in 2015 (down nearly 2,000 fans per game year-over-year), the drop off could be much greater when financials are reported next year.
New Yankee Stadium Attendance, 2009-2015 (as of 7/5/15)
Note: Dotted line is a two-year moving average.
Source: Baseball-reference.com
Not only have the Yankees taken a hit at the turnstile, but fewer fans have been tuning to YES. As of June, ratings for the Yankees were down 20% year-over-year and 16% from last year’s full season number. Once again, the decline reflects a larger movement from peaks in 2007-2009 to the lowest level recorded during the YES Network era. However, more concerning to the Yankees might be the fact the Mets are starting to make up ground in the battle between SNY and YES.
Yankees Ratings on YES, 2003-2015 (as of June)
Note: 2003 is first year that YES was carried on the Cablevision system. Rating is based on viewing households compared to Nielsen estimates for total New York market size. 2004 Household number not available. 2008 rating is estimated based on 2009 total New York market households and may differ from the actual rating.
Source: YES Network, Nielsen, New York Times, TV By the Numbers
It’s probably not a coincidence that fan interest in the Yankees has waned along with the team’s success on the field. So, why has Hal Steinbrenner remained committed to his strategy of cost control? The most obvious answer is the Yankees are due to earn $6 billion over the next 30 years from the team’s rights agreement with the YES Network, which is now majority owned by FOX. By having such a lucrative long-term deal in place and a more limited equity stake in YES, the Yankees don’t have to be as concerned with ratings as they may have been in the past.
Yankees’ Payroll/Luxury Tax as a Percentage of Team Revenue, 2001 to 2014
Note: Revenue is net of revenue sharing and stadium debt service. Payroll is based on final figures for each year released by MLB, and may not necessarily equal the amount upon which the luxury tax is based. 2014 revenue is based on estimated growth rates over 2013 revenue.
Source: bizofbaseball.com and MLB releases published by AP (final payroll), MLB releases published by AP (luxury tax) and Forbes (revenue)
Yankees Expected Rights Fee Payments from FOX, 2013 to 2042
Note: Amortized upfront payment is based on $584 million payment from FOX to the Yankees pursuant to initial equity investment.
Another reason why Hal Steinbrenner may not be fretting over declining ticket/suite revenue is because the amount that is pre-paid has increased substantially. Whether that’s because of an expanded high-end season base or upselling, the Yankees have been able to bank more ticket revenue in advance. That might suggest a declining elasticity in ticket demand, especially if the value proposition of high-end seats and suites becomes increasingly more defined by amenities and experience (all you can eat gourmet dining for Legends seats, for example) than the team’s success and star power.
Yankees Pre-Paid Ticket Sales and Luxury License Revenue
Note: Includes ticket and suite revenue collected in a year prior (e.g., 2014 season ticket fees paid in 2013).
Source: Unaudited statements from MRB filings pursuant to continuing disclosure requirements.
The combination of cutting payroll, escalating TV rights fees, and a more high-end, pre-paid season ticket base has seemingly weaned the Yankees’ business model off of winning…at least for now. Although well insulated on the TV side, a large percentage of team revenue is still derived from gate receipts. Also, the team’s other business ventures undoubtedly benefit from the strength of the Yankee brand. So, even though the Yankees have weathered three mediocre seasons from a financial standpoint, a sustained period without success and star power could eventually have a greater impact on the bottom line.
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