The Washington Redskins have been one of the NFL's worst teams in 2013, and this past Sunday, the franchise hit yet another low. During a 45-10 home loss to the Kansas City Chiefs, nearly everyone left at halftime. The 85,000-seat FedEx Field, sponsored by FedEx (NYSE:FDX) for more than a decade, appeared to be no more than 10% full judging by CBS' (NYSE:CBS) broadcast. Even worse, attendance was the lowest in Redskins history.
In what was my favorite description of the game, Sports Illustrated's Peter King called it "a church-fart performance in...desolate pews." Ouch.
Many issues at play
Now, this is hardly the first time the Redskins have been the laughingstock of the football world. Earlier in the weekend, news broke that head coach Mike Shanahan almost quit last season. In Week 12, the team made headlines for hypocritically honoring Navajo code talkers while retaining a racially charged, stereotypical mascot that's been under protest for more than two decades.
Each of these issues circle back to one man: Dan Snyder.
Snyder became the majority owner of the Redskins in 1999, when he bought the team and its stadium for $800 million.
Since then, the franchise has doubled in value, partially by upping ticket, parking, and concession prices, but fan support has fallen. A new Harris poll shows the Redskins are the NFL's 14th most popular team, down from sixth in 2003.
As the Wall Street Journal points out, "many fans say they've grown weary of what they see as an endless drive for profits."
Where else has this hurt the Redskins?
Attendance figures. According to ESPN, Washington averaged just over 88,000 fans per home game in 2007. This year, that number is down to about 76,000.
A dangerous trade-off
As this graph shows, Snyder appears to be trading fans for dollars.
A decline in Redskins attendance is particularly alarming at a time when NFL ticket sales are expanding. League wide revenue is also growing at a solid clip, so despite what Snyder may think, a fans-for-dollars trade-off isn't acceptable. In fact, it's downright dangerous.
From a historical standpoint, football teams with falling fan interest almost always eventually see a drop in value. Sometimes it just takes a few years. The Arizona Cardinals' attendance, for example, began to decline in 2008, and was followed by a fairly large fall on Forbes' NFL valuation rankings by 2011. The Jacksonville Jaguars experienced a similar phenomenon, as did the St. Louis Rams at the end of last decade.
A $200 million problem
Let's use a basic regression analysis to explain this further. The Cardinals, Jaguars, and Rams are our sample. Judging by this data, a 1% annual decline in attendance for four straight years led to a 4% loss in value over the next two years.
Now, the Redskins' attendance has fallen by 3% per year since 2008. This implies the franchise's value should decline by 12% to fit the trend. If past figures are to be believed, the fair value of the Redskins, then, is about $1.5 billion. This is 12% below Forbes' estimated value of $1.7 billion, a difference of $200 million.
How can it be fixed?
Obviously, there's no guarantee that the value of the Washington Redskins will correct itself, but the risk remains high. Criticism of Dan Snyder and upper management isn't likely to go away anytime soon, especially with the team set to record its fourth double-digit loss season in the past five years.
No matter what changes are made this offseason, the Redskins need to address their attendance problems before they eat away at overall revenues. If recent reports are to be believed, Snyder is thinking about axing head coach Mike Shanahan for Baylor's Art Briles. Such a move would reunite quarterback Robert Griffin III with his college mentor, but it may not be enough to bring fans back to FedEx Field.
Aside from improving in the win department next year, Snyder can do a couple other things to boost popularity. First, he must change the Redskins' name to something that does not offend any potential fans. The "Warriors," "Redtails," "Renegades," and "Generals" have been submitted in the past. Heck, even the "Skins" would be a better option.
Next, Snyder must reduce Washington's ticket prices, which were hiked significantly this season. Regardless of what ownership believes is a fair rate for fan experience, the team risks even lower attendance in 2014 if changes aren't made. Concession prices—particularly on beer—are also some of the highest in the NFL, so a discount here couldn't hurt either. If the team experiences any more blowouts like it did this past Sunday, fans may have to be a bit drunk to stomach the action anyway.
Fool contributor Jake Mann has no position in any stocks mentioned. The Motley Fool recommends FedEx. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.