Friday, April 30, 2010

A common question all sports fans hear (and ask) is, "why are athletes paid so much"? Along with this there is the related question of "why is it so expensive to go to a MLB/NFL/NBA/NHL game?"

This came up again last night when my friend Clinton linked to an article about the mega-mansion Tom Brady and Gisele Bundchen are building in California. (By the way, if you are not listening to Clinton's terrific Comedy 4cast podcast, you should be.) I answered briefly, first, that Gisele probably makes more than Tom, but that Brady is paid his enormous salary by the Patriots because he puts fannies in the seats and eyeballs on the television. I also promised a more complete answer here on my blog.

The answer to both questions is pretty simple, really. It's all about the most basic law of economics, that of supply and demand.

Sports teams generate revenue in one of two ways. Fans buy tickets to the stadium, where they also buy beer, hot dogs, popcorn, parking and souvenirs. Fans also watch the games on TV, where the teams either sell advertising on their own networks, or sell the rights to broadcast the games to others.

There are other revenue streams like sponsorships, Internet subscriptions, radio rights and others, but these pale in comparison to ticket sales and TV.

The Red Sox are a good example of how this works. The team is on a consecutive games sellout streak of well over 500 games, stretching back to May, 2003. It is not a coincidence that the Red Sox have been to the playoffs in six of those seven seasons, won two World Series and been to the ALCS two other times. People come out to see winning teams. The Red Sox, through their 80% owned subsidiary NESN, have the highest TV ratings of any team in baseball (the Bruins own the other 20% of NESN).

In order to keep winning and keep people coming through the turnstiles and watching NESN, the Red Sox have to sign good players (John Lackey is a recent example), and sign players they have developed in their farm system (Dustin Pedroia, Kevin Youkilis) to competitive contracts. There are other teams who are also trying to sign what is a limited number of good players. The limited supply drives the salaries of the good players up, with the best players receiving annual salaries in the $15-25 million range.

Why do the teams bid up player salaries to these incredible levels? Because they believe that by making their team better, they can generate more revenue at the gate and through TV rights than the amount they are paying in salary. It's no more complicated than that. The Twins signed Joe Mauer to a $184 million contract for eight years because they believe his presence on the team will help to generate more than $184 million in revenue for the team over that period.

So, are high player salaries what makes tickets so expensive? Well, not really. Teams will charge what the market will bear. The Red Sox are able to have the second highest average ticket price in baseball (the Cubs are first), because they can charge the prices you see and still sell every seat every night. In fact, it could be argued that the Red Sox are charging less than the market value of tickets - check out StubHub, eBay or Ace Ticket and you will see hundreds of tickets for Red Sox games selling for more than face value.

This isn't true everywhere. If you watch games on MLB Network, you often get the local announcers for one of the teams playing the game. You also get the local ticket promotions. Watch a game from someplace that has plenty of empty seats (Houston, Baltimore, Kansas City, among others) and you will regularly see promotions to get people to come out to the ballpark. A deal that offers tickets, hot dogs, drinks and souvenirs for a family of four that costs less than $75 is very common.

Again, it's supply and demand. The Red Sox have no need to offer these deals because they can sell out the ballpark at higher prices. The Astros are trying to generate some incremental revenue by offering inexpensive tickets to entice people out to the ballpark who won't pay higher prices. An empty seat generates no revenue, so even getting a small amount of money is preferable.

So, that's my take on it. Comments on my thesis welcome!

Wednesday, April 28, 2010

The Red Sox have had some bizzare streaks this season, and we're less than a month in. Earlier, they went 0-for-32 with runners in scoring position, and now their last six wins have been by one run. It's all just a little odd.

If the Red Sox can turn their season around, we may look back at last night as one of the turning points. The bullpen was pretty gassed after the extra inning loss to Baltimore on Sunday and Monday's marathon 13-12 win over the Blue Jays. Clay Buchholz came up huge in going 8 innings, giving up 1 run and getting the 2-1 win. The only assistance needed from the bullpen was an inning from Ramon Ramirez, who got the save. Terry Francona was able to stay away from using Papelbon, Bard and Okajima. Combined with Thursday's off day, this gives a weary bullpen a much needed break.

Taking 5 of 6 (so far) from the Orioles and Blue Jays is all well and good, but the real test of where this team is going starts next Monday, when they play seven games against the Angels and Yankees. Given that they are 2-8 against the playoff contenders they have played so far (1-2 each against the Yankees and Twins and the 4 game sweep by the Rays), we'll know a lot more about what 2010 is going to be like by a week from Sunday.

UPDATE: I wrote this at lunch today, but didn't get to post it until after Jon Lester spun his 7-inning shutout gem tonight, with Bard and Paps working the 8th and the 9th. Oh, and the Magical Mystery Tour of Darnell McDonald continues as he scored one run and drove in the other in the 2-0 win. So we sweep the Jays, get back to .500 and go into Camden Yards with a little momentum on our side. This is more like it.

Thursday, April 22, 2010

It's Darnell McDonald's world, and we're all just living in it.

One of the great things about baseball is the ability for a player to transcend his talents, even if just for a day. A sub-.500 pitcher like Don Larsen can pitch a perfect game in the World Series. Bernie Carbo, who had only 96 career home runs, can come up and slug a pinch-hit homer that became the stuff of legend.

So it is with McDonald. Pretty much a career minor leaguer, he has had a couple of cups of coffee with the Orioles, Twins and Reds. Tuesday morning, he was with the Pawsox and wasn't even on the 40-man roster until Mike Cameron and Jacoby Ellsbury went on the DL. He didn't start Tuesday night's game, but ended up hitting the game-tying homer against Texas, following that up with a game winning single off the Monster in the bottom of the 9th. This led to one of the great pig-piles of all time, as McDonald's new teammates celebrated a desperately needed victory.

Last night, the merry-go-round ride continued as McDonald bashed another home run and threw out Julio Borbon at the plate (although Varitek's brilliant block of the plate gives him more than 50% of the credit for that play). The Sox won in another walkoff, this one taking 12 innings with Youk getting the big hit.

So, Darnell McDonald has gone from being a guy best known for running a race against a horse for a minor league promotion to being a New England folk hero. He's one of those guys who, although he may not make a huge contribution to the team in the overall scheme of things, will always put a smile on your face when his name comes up in conversation.

Monday, April 19, 2010

Yikes. John Henry can't feel like he's getting his $170 million worth two weeks into the season.

The Red Sox are 4-9 after getting swept by the Rays in this mornings Patriots Day game. They are 0-6 at Fenway since the glorious Opening Night win against the Yankees. The 1-6 Fenway start is the worst since 1932, when the team finished 43-111, 64 games behind the pennant winning Yankees. They are, unbelievably, 0 for their last 30 with runners in scoring position.

Now, it's too early to panic, but there are some worrisome things about this team. The offense, which was the big concern in the offseason, hasn't delivered at all. The starting pitching has been inconsistent, especially one of the co-aces Jon Lester. And the supposedly stellar defense has been anything but, although Ellbury's rib injury and Cameron's kidney stones haven't been helping matters. Bill Hall has had to play center field, a place he hasn't played since 2007 and he didn't take a single fly ball out there in Spring Training.

Meanwhile, the Yankees and Rays are both playing well and the Red Sox have dug themselves a 6-game hole from which they are looking up at first place in the AL East.

Again, there's a long way to go, but the Sox are going to have to get their act together pretty soon or it's going to be a long summer in Boston.

Sunday, April 04, 2010

Welcome to the 2010 baseball season!

Opening Night at Fenway is tonight against the Yankees, and I'll be there with The Hey way up in the bleachers somewhere. So, of course, it's time for my 2010 predictions.

First, we'll recap last years picks. In the NL, I picked the Mets (really?), Cubs (what was I thinking?), Dodgers and Phillies as the Wild Card. I had the Mets beating the Cubs in the NLCS, David Wright as the MVP and Cole Hamels as the Cy Young Award winner. Not so good, eh?

In the American League, the Sox, Indians and Angels were my division winners, with the Yankees as the Wild Card. The Sox beat the Yankees in the ALCS, then beat the Mets in the World Series. My MVP was Grady Sizemore and my Cy Young was C.C. Sabathia. So, except for grossly overestimating the Tribe, I didn't do too badly.

Here we go with the 2010 picks:

AL East: Red Sox - pitching and defense rule the day
AL Central: White Sox - If Peavy can stay healthy, Chicago has the best pitching in the division. Loss of Joe Nathan is a huge blow to the Twins.
AL West: Mariners - King Felix, Cliff Lee and very good defense enable Seattle to knock the Angels off the top of the division.
Wild Card: Rays - maybe I'm just being perverse by not picking the Yankees, but I think this is going to be a bounce back year for a lot of the Rays players who took a step back in 2009 after their surprise pennant the year before.

ALDS: Red Sox over White Sox, Rays over Mariners
ALCS: Red Sox over Rays
MVP: Evan Longoria
Cy Young: Felix Hernandez

NL East: Phillies - Roy Halladay might win 25 games with this team in the NL
NL Central: Cardinals - Pujols, Holliday, Carpenter and Wainwright are too much for the rest of this division.
NL West: Rockies - if Brandon Webb is healthy, this could be a four team race with everyone except the Padres competing down to the end. Rockies win by a nose.
Wild Card: Giants - Lincecum and Cain lead the Giants back into the postseason, but they don't have quite enough offense to take first place. Is Barry Bonds still looking for a job?

NLDS: Phillies over Giants, Cardinals over Rockies
NLCS: Cardinals over Phillies in an epic series
MVP: Troy Tulowitzki
Cy Young: Roy Halladay

World Series: Red Sox over Cardinals in a 2004 rematch, but the Sox actually lose a game this time.

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