The Yankees organization gets its comeuppance

Was it ever really there at all? - Jim McIsaac

The trickle turns into a stream, as fans decide to stay home or pay less to go to the ballpark.

The very first article I wrote for this site had a lot to do with how the Yankee organization treated its fans. It was also the piece that I wrote that caught Steven Goldman’s attention when he asked me to try my hand at writing some more for this site. In consideration of Steven’s recent announcement, I thought I’d write a follow up to some of the points I addressed in that first article.

Recently, there’s been some attention paid to the fact that average attendance is down considerably this year versus last year in the Major Leagues. According to ESPN attendance figures, the average league amount was down about (4.0%) versus last year. Clearly the Florida Marlins, (who may be the single worst organization I’ve witnessed in my lifetime in all of professional sports), are a big part of that number. Their average attendance is down a whopping (36.7%) versus last year’s figure. If they weren’t making so much money from revenue sharing, then you could almost feel good about that fact. However, if we remove the Marlins from the equation, then the decline is only down (3.0%).

Weather is obviously a major factor this year. There have already been more game postponements this year than all of last year. I’d normally say that comparing attendance figures in June to previous years that include the peak summer months is clearly a problem of comparing apples to oranges. Down (4.0%), or (3.0%), is too big a figure to ignore though. So, before I wail on the Yankees, let’s be clear: lower attendance figures are a league-wide problem this year.

The Yankees’ attendance figures, however, are a different story. Overall, the league had been showing gains the last couple of years. That’s not the case for the Yankees. Their average game figure in the new stadium topped out in 2010 at 46,491. They led the league that year in average attendance despite the smaller capacity venue. So far this year they’re averaging 39,103. Just to give you an idea of how long it has been since the Yankees' average was below 40,000, the lowest figure on ESPN’s website is for 2001 when they averaged 40,809. 2001 was a pretty crappy year economically, to put it mildly. Two of the four quarters produced negative GDP in the United States. If they had been consecutive, then we’d be calling it a recession. Right now the Yankees look to be drawing something similar to a period when the country was in recession. Here’s the list of this year’s average attendance by team ranked from worst to first in terms of the rate of change year over year:

2013

RK

TEAM

AVG

YoY

30

Miami

17,337

(36.7%)

6

Philadelphia

38,486

(12.6%)

14

Milwaukee

30,888

(11.6%)

10

Boston

33,331

(11.3%)

22

Pittsburgh

23,203

(11.3%)

15

Minnesota

30,517

(11.0%)

4

NY Yankees

39,103

(10.6%)

12

Chicago Cubs

32,104

(9.8%)

24

Chicago White Sox

21,929

(9.6%)

5

Texas

38,749

(9.3%)

28

Cleveland

17,987

(9.1%)

27

Houston

18,247

(8.1%)

29

Tampa Bay

17,909

(7.0%)

20

NY Mets

26,363

(6.0%)

21

San Diego

25,230

(3.8%)

8

Detroit

35,995

(3.7%)

7

LA Angels

36,805

(2.6%)

26

Seattle

20,758

(2.4%)

25

Kansas City

21,458

(1.3%)

2

San Francisco

41,662

(0.1%)

3

St. Louis

41,050

1.9%

11

Colorado

33,202

2.2%

19

Arizona

27,935

3.9%

16

Cincinnati

30,365

4.8%

13

Atlanta

31,334

4.9%

1

LA Dodgers

43,074

5.0%

23

Oakland

21,983

6.1%

18

Baltimore

28,818

8.3%

9

Washington

33,689

12.3%

17

Toronto

30,198

16.5%

Like I said before, this is clearly not a Yankees only issue. Unlike the rest of the league, though, the Yankees do have a trend. In 2012, the Yankees' average attendance was down (3.0%) from the previous year. That matched the previous year’s decline of (3.0%) in 2011. You can pin some of that trend on a natural regression from the new stadium affect, but I think there’s something more than just that going on here. Most baseball writers like to talk about the lack of star power in the current lineup. There’s also some that view the fan base as spoiled or tired of the constant success. While I’m sure there are some individuals out there who probably apply to one or both of those explanations, those are both subjective suppositions that really can’t be confirmed or denied by anything tangible. In other words, I don’t know if those really get to the heart of the matter. What I do know is that real pricing of Yankee tickets in the secondary markets have been declining for a few years, and that negative trend had accelerated materially last year.

It was this article that caught my eye about a month ago for two reasons. First, it gave data about Yankee resale value of tickets over the last few years. The picture isn’t pretty for the organization. According to TiqIQ, the average resale ticket was $85 in 2010. That declined to $79 in 2011, and then dropped precipitously to $58 last year. The Yankees blamed StubHub during the off-season, and decided to opt out of the service while forming their own market supported by Ticketmaster. This was supposed to stop the last minute discounting of tickets in on-line secondary markets, which the organization argued would lead to increased attendance. To be fair, their argument never made any logical sense at all, if taken literally. So we shouldn’t have expected an increase in attendance due to this strategy. However, I’m guessing that they weren’t expecting a 10.6% decline in attendance as a result either, and that is a very big figure indeed.

To put that decline in perspective, let’s do a little simulation of how big an impact to the organization’s revenue that is. According to Forbes, the Yankees' gate receipts last year were $295 million. Using the average attendance figure for last year, and assuming that over an 81 game regular season, that equates to about $83.28 per ticket sold. Remember what the average ticket price was last year in the secondary market? A 5% hit to season ticket holders who can’t make every game is one thing in 2011 to stomach, but a 30% shellacking last year has got to have made more people question what they’re doing taking these ticket plans. I think the Yankees finally realize they’re in trouble. That’s what the second item in the article was all about: the Yankee comeuppance. At least, if the Yankees stooping to using Groupon to sell half price tickets isn’t a form of comeuppance, then I must have missed the moral of George Minafer’s character in The Magnificent Ambersons.

This story is actually about the top line. The Yankees saw the frenzied prices people were paying in the secondary markets during the height of the financial boom. New York City benefited from that more than any other city in the country, but the collapse in 2008 changed all of that. The Yankees didn’t understand what was driving the demand for their product. The Investment Bankers with their unchecked entertainment accounts have been severely curtailed. There is still a surprising amount of vacant commercial real estate in midtown, and it’s due to the continued loss of financial related employment. Those high prices that the Yankees were determined to grab their share of with the new stadium have suddenly vanished. Now they’re starting to scramble. I thought they might reduce ticket prices last year in response to the secondary market. Instead they blamed the service provider and set up their own shop. Now they’re in real trouble. You think the offense is what they’re worried about right now? Try coming in over $30 million short in revenue from last year, and that’s just assuming the same average price earned per ticket! This could get out of hand quickly. No one’s worried about the Steinbrenner’s welfare, but business is business. If total revenues decline by double digits for the whole year, then it won’t be just about winning and losing on the field anymore.

Reality sucks sometimes, Yankees, but honestly you’re getting what you deserved. You were callous in the way you treated the fans when you moved across the street. It’s going to hurt for a while. My suggestion to you is to admit to your reality now, and match your prices to the current market. To Steven Goldman I wish you all the best. Good luck Sir, and good luck to the Yankees on the field. I can’t say the same for the Yankees in the offices.

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