We could probably all use the promise of hope and renewal spring brings right now. Unfortunately, for me, spring is always tied to baseball.
Ahh, the national pastime evokes so many emotions.... First, there's the pure love I have for the game I grew up playing. Then, the fatality and inevitability that comes with being a Boston Red Sox fan -- our inability to win the World Series since 1918 is cloaked in sports' greatest mythology (the curse of the Bambino) and wrapped in heartbreak.
Then we fans have to endure the continual dysfunctional economics of Major League Baseball (MLB), where whining millionaires and intractable billionaires constantly fight over their slice of the pie. It would be less infuriating if I wasn't part of the problem. Every year, I go to a number of games, plunk down a few extra bucks for real-time audio broadcasts (along with a million other fans) on MLB.com, and constantly debate getting a satellite dish so my life could completely revolve around baseball. I love the sport. I'm an addict. But each year, the costs of enjoying the game, its sheer commercialism, and the squabbles between the owners and players erode that boyhood mystique to which I still try to cling.
Costs at the ballpark
Last year, the average cost for a family of four to attend a ballgame, park the car, buy two beers, four soft drinks, four hot dogs, and two game programs rose to $145.26 -- up from $85.85 in 1992. That's nearly a 70% increase, though it gets much worse in some parks.
At Yankee Stadium, it's gone from $89.17 to $178.44 (a 94% increase) over the past 10 years. In Atlanta, it's gone from $75.10 to $155.35 (a 106% increase). At Fenway Park in Boston, the cost has risen from $94.48 to $228.73 -- a 142% increase. Yes, my team is the most expensive to watch in the majors. Average ticket prices alone at Fenway grew 267% from 1992 to 2002. This year, we're again the priciest seat in the game, averaging $42.34 per ticket vs. the league average of $18.69. Find out where your favorite team stands and how much it'll cost you to take in a game this year.
What's a fan to do? Well, once I get past my poor-poor-pitiful-me attitude, my next inclination is to find a way to get a piece of the action. That's easier said than done, though. For one, MLB's owners are about as forthcoming with their financials as Enron. Most of the teams are privately owned, so they don't have to reveal their numbers. There are, however, a few public companies that play ball. Unfortunately, their baseball profits -- if they have them -- don't add much to the bottom line.
Corporate ball
Disney (NYSE:DIS) bought the Angels as part of a grander plan to make Anaheim, Calif., a larger vacation destination. Apparently, it hasn't worked out because even with the Angels winning the World Series last year, the team is up for sale. And Rupert Murdoch, whose News Corp. (NYSE:NWS) owns Fox Entertainment Group (NYSE:FOX) -- the owner of the Los Angeles Dodgers -- recently said Fox got into the baseball business to compete with Disney for local cable sports supremacy.
Now that the Disney TV threat has gone by the wayside, News Corp. is selling the Dodgers, asking for $450 million -- $100 million over its purchase price in 1998. (My beloved Red Sox, by the way, sold for $660 million in December 2001 -- one record we hold over the Yankees.)
Eventual sales are probably the only way baseball adds significantly to the bottom line of the few corporations that own teams. Struggling AOL Time Warner (NYSE:AOL) undoubtedly would like to grab the cash from a sale of its Atlanta Braves, which have steadfastly won their division over the past decade and brought regular programming to Ted Turner's cable network. Tribune Co. (NYSE:TRB) may be the only public company relatively content to keep its baseball team right now. It owns the Chicago Cubs -- those lovable losers who seem to draw big crowds no matter how poorly they play.
I have to admit, with the cost of success on the field steadily growing and attendance declining (6.3% last season), if I had a half-billion dollars to spare, I doubt I'd put it into a ball team -- if I wanted a return on my investment, that is. According to USA Today, even with MLB gross revenues of $4 billion, only three teams turned a profit last year: the San Francisco Giants, the Seattle Mariners, and the dreaded New York Yankees.
Despite an estimated $250 million in revenue-sharing to be dished out this year -- and the aberrant, small-market Minnesota Twins, who have strung together two successful seasons in a row -- the distance between the haves and have-nots continues to grow. The Yankees will have a payroll topping $167 million in 2003, while the lowly Tampa Bay Devil Rays (granted, a team that management has let self-destruct) will pay out only $25 million. Check out a full list of team payrolls for a true glimpse at the disparity.
Accounting like Wall Street's?
One thing is certain: The players are making money, even if last fall's free-agent market was on the decline. The owners? Well, the smoke-clouded picture of their finances makes the murky accounting shenanigans we've seen in the stock market the past few years look clear as spring water.
Forbes did an excellent piece on baseball's finances for Opening Day last year. Despite MLB Commissioner Bud Selig's congressional testimony that MLB sustained an operating loss of $200 million in 2001, Forbes -- through a lot of independent digging -- calculated that the league had earnings before interest, taxes, and depreciation of $75 million.
Why the discrepancy? While too many public companies use pro forma earnings to paint a rosier picture of their finances, MLB does the opposite. It takes charges to make its earnings look worse than they otherwise might be. For example, MLB counts "non-cash" charges like ballpark depreciation expenses in its cash flow numbers.
Ballpark branding
Speaking of corporate shiftiness and the convergence of the stock market and major league baseball, plenty of public companies shell out huge bucks to serve as corporate sponsors in baseball. Since Cincinnati's Riverfront Stadium was renamed Cinergy Field (NYSE:CIN) in a $6 million, five-year deal in 1996, more than half the ballparks in the majors have taken on a corporate moniker. It's a natural fit -- corporations love being associated with America's pastime. It's great for branding, as well as direct sales, if concessions are involved.
Or course, baseball puts itself at some risk in these branding barrages -- even beyond the rampant commercialism of the game. The most infamous example of a multimillion-dollar naming campaign gone wrong was, of course, the 30-year, $100 million deal Enron struck with the Houston Astros to put its name on a new ballpark in 1999. After Enron's implosion, the Astros paid nearly $2 million to end their association with what will always be one of the largest examples of corporate malfeasance in U.S. history.
There are other sponsorship deals MLB probably should watch closely. According to CFO.com, insurer Safeco (NASDAQ:SAFC), which lends its name to Safeco Field in Seattle, was named in an Enron-related lawsuit. PNC Financial (NYSE:PNC), the sponsor for the new ballpark in Pittsburgh, was caught up in a controversy over accounting practices. Detroit's ballpark is sponsored by Comerica (NYSE:CMA), which, along with UnionBanCal Corp. (NYSE:UB), was named in a lawsuit that claims the two banks aided Internet service provider Earthlink's co-founder in a Ponzi scheme.
Fear not. There are still plenty of good, clean corporations pressing their marketing dominance in ballparks across the country. Coca-Cola's (NYSE:KO) Minute Maid Park replaced Enron in Houston with a $100 million, 28-year naming deal. Thank goodness because they couldn't just let PepsiCo (NYSE:PEP) have Tropicana Field, home to the Tampa Bay Devil Rays, all by itself. And I'd be remiss if I didn't mention St. Louis' longstanding Busch Stadium, filled with Anheuser-Busch (NYSE:BUD) products, Coors (NYSE:RKY) Field in Denver, and the relatively new Miller Park in Milwaukee. Click here to see if a corporation in your neighborhood has its name on a ballpark.
You'll note, Boston's Fenway Park still doesn't have a corporate sponsor. I'm trying to change that, though. On Opening Day, I wear my Red Sox uniform to our offices here at the Fool -- I like to think of myself as the third-base coach, always sending people around the corner, only to get them gunned down at the plate. I stand proudly in my cleats every year and make the same proposal to my superiors: Motley Fool Field. It has a great ring to it, no? Imagine our jester logo painted across Fenway's Green Monster with our mission "to educate, amuse, and enrich" the financial lives of individuals everywhere for all the world to see.
All we need is a cash hoard of $100 million to make it happen, Fools. Renew your The Motley Fool Select subscription to keep those stock ideas coming. Sign up for personal financial advice with TMF Money Advisor. Or just send your spare change to me, and I'll earmark it for our ballpark branding campaign. Won't you please help? Does anyone know if Sally Struthers is available for a fundraising campaign?
OK, so sometimes my baseball neurosis gets the better of me. I could go on complaining about baseball's ills and mocking its flaws. But in the end, there's ball to be watched. Let the games begin, and go, Nomar!
Bob Bobala is the third-base coach, er, managing editor of The Motley Fool. He really is wearing cleats right now. The Motley Fool helps people make better decisions with their money. It has a complete disclosure policy.
