Can the Reds afford the Votto deal?
To provide some context for $175 million in revenue, the Reds took in $91 million in 2003. The Yankees have the league’s highest revenues, estimated at a whopping $439 million for 2012. The smallest revenue stream in baseball is Oakland’s at $160 million. The projection for the Reds’ 2012 revenue ($185m) is near the bottom of the NL Central, below the Cubs ($266m), Cardinals ($233m), Astros ($196m) and Brewers ($195m) and ahead of the Pirates ($168m).
What role can attendance growth realistically play in revenue increases?
In 2011, 2.2 million people clicked the turnstiles at GABP, generating gate receipts of $46 million. This represented a bump of 7% over the previous year, due primarily to enthusiasm in the first half of the season generated by the team’s 2010 division championship.
A relevant comparison for what the Reds might expect in the next few years is Milwaukee. According to Forbes, the Brewers are similar to the Reds in average ticket price ($22 vs. $21), metro area population (1.6 million vs. 2.2 million) and seating capacity (41,900 vs. 42,271). They moved into their new park, Miller Field, two years before GABP opened its gates.
The Brewers are also a couple years ahead of the Reds in terms of on-the-field success. After achieving a .500 record in 2007, the Brewers made the playoffs the next year for the first time in 28 seasons, where they lost to the Phillies in the NLDS. After missing in 2009 and 2010, Milwaukee returned to the post-season last year, losing to the Cardinals in the NLDS.
When Miller Park first opened in 2001, attendance spiked for a year, but quickly fell back to previous levels well below 2 million fans per year. As the club returned to respectability on the field, their numbers grew over the decade, surpassing 3 million fans in 2008, a rate they have essentially maintained. The Brewers can expect gate receipts in the area of $71 million this year.
If (a big if) the Reds raise their regular season attendance to 3 million fans, it would generate additional annual revenue in the neighborhood of $17 million. To do that, attendance would have to increase about 10,000 people per game. While a jump of that magnitude is a pretty ambitious goal, an increase of even half that amount would provide important new cash.
Playoff Game Attendance
Sold-out playoff series would also significantly boost attendance revenues. Beside the direct financial benefits – ticket sales, concessions, parking, playoff swag sales – the Reds would benefit from national media exposure that would let them charge more for sponsors and advertisers in the ballpark. Playoff games would also increase the value of the local broadcasting contract.
A large percentage of playoff gate receipts do go directly to the players, particularly from the early games in a playoff series. The way the collective bargaining agreement is structured, the clubs do much better financially when the series goes beyond the minimum number of games.
In summary, can the Reds realistically look toward attendance growth as a meaningful source of increased revenues? With continued success on the field, the answer is definitely ‘yes’ — in the range of $10-20 million.