The Atlanta Braves are movin’ up uptown… to southern Cobb County… in an effort to get closer to their core ticket-buying fan base. Good on them. Beginning in 2017, they will rid themselves of a geographically-challenged, transportationally-stifled facility that simply does not help the team make money.
Ah, money. Lest you have any stray thoughts to the contrary, this is the number one reason for partnering with Cobb County to build a $672 million stadium.
QUICK UPDATE VIA TWITTER:
— Grant McAuley (@grantmcauley) November 11, 2013
Ooooookay… well, we will press on regardless. The mayor indicated in a press release earlier that he would not press the point – or spend the money – in an attempt to keep the Braves where they are. Frankly, it makes way too much sense for the organization to move – as we will see below. Stay tuned – we’ll keep reporting as the news comes out.
Let’s go through the numbers
Josh gave us these figures earlier today from the announcement story, but I’ll repeat them here, as the cost of staying was clearly getting prohibitive:
- $150 million in current renovations needed (example: the seats have a 20-year life; somewhere around 20% of them were getting replaced every year)
- $200 million in future area upgrades for the general “fan experience” (i.e., non-baseball nightlife)
- The Braves had been linked as partners to new projects around Turner Field – including a mag-lev style train line that was slated to run from the Georgia State MARTA station to the existing park. The degree of investment was unknown, but clearly would have been at least in the tens of millions.
In terms of the new park, Cobb County is apparently into it for $450 million of the $672 million. The Braves’ contribution was not announced, but simple math makes me say “no more than $222 million”… which still would appear to be a relative bargain, given the numbers above. It is likely that the team saves money by moving.
The following shows the game attendance over the past ten years, along with the rank of total tickets sold vs. the other 29 major league teams:
- 2013: Rank 13. 2,548,679 tickets (31,465 per game; 81 dates)
- 2012: Rank 15. 2,420,171 tickets (29,878 per game; 81 dates)
- 2011: Rank 15. 2,372,940 tickets (30,037 per game; 81 dates)
- 2010: Rank 13. 2,510,119 tickets (30,989 per game; 79 dates)
- 2009: Rank 15. 2,373,631 tickets (29,304 per game; 81 dates)
- 2008: Rank 14. 2,532,834 tickets (31,269 per game; 81 dates)
- 2007: Rank 14. 2,745,210 tickets (33,891 per game; 81 dates)
- 2006: Rank 14. 2,550,524 tickets (31,881 per game; 80 dates)
- 2005: Rank 16. 2,521,167 tickets (31,514 per game; 80 dates)
- 2004: Rank 16. 2,322,565 tickets (29,399 per game; 80 dates)
2013 saw the best attendance since the peak year of 2007 – likely due to the new faces, new optimism, and fast start last April. The Braves have consistently ranked between 13th and 16th overall.
The new stadium is expected to have just 41-42 thousand seats, according to news reports. Record attendance at Turner Field is 54,357. Current seating capacity is 49.586, and Standing Room Only tickets generally raise that to ~51,000 for special events (opening day, playoff games). Thus, the new park will not have the revenue capability of the existing stadium.
But will that translate to lower revenue? Not likely. Here’s why:
- I will ignore transitional effects – these include the tendency for ticket-buyers to avoid an old stadium during its final year and flock to a new one during its inaugural year.
- It will cost less for the average fan to travel to a game
- (If they do things right) It should be less hassle to travel to a game. This is particular is a problem for many fans. We’re frankly in a “convenience” society these days – if it isn’t easy, it isn’t worth the effort. Speaking as an out-of-towner, MARTA was a poor option given that there’s no direct train line, a long walk through the Underground, and finally a bus ride to get to the stadium. The only good reasons to go that route are (a) it gets you out of the downtown traffic core as you leave town; and (b) my kids love trains.
- When you make it easier/cheaper to attend, you get more repeat customers.
- When you make it easier/cheaper to attend, you can charge a bit more.
- When you have fewer seats, the laws of supply and demand tend to kick in: the ‘premium’ games will command even higher prices… and will likely get them.
- The Braves rank fairly low in ticket prices around the league, so there’s a reason to think that there is room for some inflation.
- A smaller stadium should have lower maintenance costs overall. Not by a lot, but it will add up.
Adding it all up
There are various sources on this, but for the sake of this analysis, I’ll take $17 as the average ticket price in 2013. That’s a raw revenue value of $43.3 million, based on the numbers above.
An increase in pricing of 17.6% is necessary to raise that figure to $20 on average… which I would expect by 2017. But I would also expect no fewer than 32,000 per game… possibly up to 36,000 per game on average – simply due to the access factors mentioned above. Let’s split the difference and suggest 34,000 per date at $20 on average: that works out to $55 million in revenue – just from ticket sales. That’s nearly $12 million more (21%).
Stadium naming revenues. The Braves never did sell naming rights at Turner Field. That clearly left them behind nearly every other club in the majors. Rates seem to run from around $2 million annually (multiple stadiums, though Coors Field only yields $1.1m) to $21 million (Citi Field). In this case, the Braves would be in a good position, since they can point to the deals other teams have made, their own large ‘draw’ of regional fans, and their positive team image. I would estimate that a $5 million per year naming right deal should be easily obtainable.
None of this includes interests that the Braves have in concessions, luxury suites, parking, or possible new nightlife enterprises. So there is good reason to believe that an extra $20 million per year in raw revenue could be available to the club via a new stadium. Even a “bad” estimate would surely net half of that.
Overall, I would have to think that the Braves are treating this new stadium deal in the same manner they would a cast-off waiver wire reliever: there’s a great deal to be had, and they are all about trying to make the most of the opportunities they find. Finding new revenue sources is difficult: this is a blockbuster of an announcement that we heard today, and the financials seem to make great sense for Atlanta – a move that could pay great dividends in the future… including having future opportunities to retain players and compete well against the better funded teams in this league.
Can’t wait for 2017.