How the Pittsburgh Pirates Playoff Run Will Make Them Millions

If you took a 7 p.m. stroll last Tuesday across Pittsburgh's Roberto Clemente Bridge, the structure attaching downtown Pittsburgh to its baseball stadium, you probably noticed a rare sight for October -- people.

"The fans brought us energy," said Pittsburgh Pirates catcher Russell Martin, referring to the 40,487 standing-room-only crowd that showed up as early as 3 p.m. to root on the Bucs.

But it turns out the fans will bring the Pirates far more than energy in their first playoff games since 1992: fans are also a key source of cold hard cash.

Show me the money

Pittsburgh baseball and profits have long enjoyed a stable relationship. Despite having fallen into a disparate playoff glut that is the longest of any team in any professional sport, the Pirates have been able to turn a profit, and a nice one at that.

According to documents leaked in 2010, the Pirates turned profits of $14.4 million and $15.0 million in 2008 and 2007, respectively (largely due to $69.3 million in revenue sharing checks over both years), while also pouring $44.3 million into player development at the same time, according to bizofbaseball.com. The result: profits then and more talented players now.

According to the leaked data, however, it became obvious that baseball teams can rake in millions more from a single playoff berth. Take the Los Angeles Angels, for example. The club grew far richer in 2008, a year in which it earned baseball's best in-season record, and even more so in 2009.

Los Angeles Angels

 

2008 Playoffs

 

Revenue

 $4,374

Expenses

 $1,142

Profit Before Tax

 $3,232

Pre-Tax Profit Margin

74%

   

2009 Playoffs

 

Revenue

 $12,122

Expenses

 $2,727

Profit Before Tax

 $9,395

Pre-Tax Profit Margin

78%

*Numbers in millions; Source: Deadspin.com

In 2008 the Tampa Bay Rays hit their way into the World Series and posted even better results: $17.7 million in post-season revenues.

Tampa Bay Rays

 

2008 Playoffs

 

Revenue

 $17,674

Expenses

 $6,222

Profit Before Tax

 $11,452

Pre-Tax Profit Margin

65%

*Numbers in millions; Source: Deadspin.com 

How much could the Pirates earn?

Just like companies can pull in extra earnings by adding new products, the Pirates should pocket a wave of new income, likely to the tune of millions, by tacking on post-season games.

However, since Major League teams keep their financial data under lock and key (the exception being the 2010 leakage), estimating earnings numbers can be tricky.

For a quick, back-of-the-envelope estimate, take revenues divided by the number of home playoff games in the post-season. Here is what the numbers look like for the Angels and the Rays.

2008 Post-Season

   
 

L.A. Angels

Tampa Bay Rays

Post-Season Revenue

 $4,374

 $17,674

Total Games

4

16

Home Games

2

8

Revenue / Home Game

 $2,187

 $2,209

*Note that teams split gate receipts after MLB takes a 15% bite and for some games 60% goes into a player pool. 

So, $2.2 million in revenue per home game is not an unreasonable assumption. It is even more reasonable considering that those two teams have a somewhat similar seating capacity as the Pirates -- 40,473 for the Rays and 45,050 for the Angels.

Now, for the sake of curiosity, let's take a stab at estimating the Pirates revenues for the home playoff game against the Cincinnati Reds.

2013 Wild Card Game

 
   

Ticket Sales

 

Attendance / Home Game

40,487

Average Ticket Price

 $45

 

 $1,821,915

Food Revenue

 

Food Purchased per Person*

 $5.15

Revenue Sharing

100%

Food Revenue

 $208,508

   

Total

 $2,030,423

   

*Based on food sales data from 2008 season

*Pirates ticket prices obtained from MLB website; average price estimated

While a good starting point, this estimate undershoots actual revenue: it doesn't include revenues from advertising at the stadium nor from TV and radio broadcasting, where the wildcard win against the Reds pulled in a 33.7 TV rating. The rating was the highest baseball rating ever in the Pittsburgh market. Thus, an additional $250,000-$1,000,000 is not unreasonable, considering that the Pirates' TV and broadcasting revenue in the 2008 season averaged roughly $250,000 per game.

In addition, concession sales for the 2013 playoffs are likely far higher than the 2008 data suggest. It's possible that concession sales could top $10 per person, effectively doubling food revenue.   

Pierogie profits

During the third inning break at Pirates home playoff games, four runners -- all wearing pierogie suits -- line up as Jalapeno Hannah, Cheese Chester, Sauerkraut Saul, and Oliver Onion to outsprint the other three to the finish. A new string of playoff games gives pierogies more games to race and more opportunities to pocket working hours. The Pirates are in the same situation.

The question is what the Pirates will do with the new source of income. If 2007 and 2008 are any indicators, the Pirates might perhaps invest that money by pouring it into player development, raising the odds of additional playoff berths in the future.

But then again, perhaps it's time for the owners to take a well-deserved dividend. Either way, the talented Pirates might just be here to stay, and with them, many more crowded Tuesdays on the Roberto Clemente Bridge.

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