Wednesday, May 19, 2010

Tampa Bay Rays somewhat protected by MLB revenue while sizzling tv ratings profit would go to Fox Sports Florida

"For all the buzz about attendance, 5/10, St. Petersburg: "Television viewership for the sizzling Tampa Bay Rays has doubled since last April -- which any sports bar owner can confirm.

Such contractual commitments illustrate an important side of baseball finance often

  • overlooked as the community debates a new stadium and the money it might generate:

For all the buzz about attendance,

  • only about half the Rays' income depends on how many fans show up.

Ticket sales, concessions and parking fees are vital income streams. More fans mean more money. But a large chunk of the Rays' income -- something like $70 million to $80 million a year -- remains largely impervious to attendance swings or how the team performs.

  • If anything, this income depends on ticket sales in Los Angeles, TV deals in New York and baseball jersey closeouts in Dubuque department stores.

That's because Major League Baseball finance has become more socialistic in the last decade, with have-not teams sharing some of the wealth the big boys bring in.

  • "A lot of general national revenues are put in the pot," says sports economist J.C. Bradbury. "Whether you win or lose, you are going to get a lot of money."

Neither the Rays nor Major League Baseball provide details about income, expenses, profits or losses. But various reports and interviews paint a broad picture.

  • This money includes merchandising and TV revenues from the playoffs,
  • World Series and games of the week.

According to widespread reports,

Teams also share 31 percent of their locally generated revenue with each other -- including regional television and radio, ticket sales and concessions. This stems from a decade-old push to reduce income gaps between teams.

  • The Rays benefit when Milwaukee draws 3 million fans, when Seattle carves out a widespread Pacific Northwest TV territory or when Atlanta sells luxury seats at $300 a pop.

Attendance-driven revenue can vary from $30 million or $40 million up to $300 million to $400 million, says sports economist Andrew Zimbalist.

That disparity sets up a financial transfusion for low-revenue teams like the Rays.

The Rays have boosted attendance since then, so their slice of the pie may have shrunk. On the other hand, the pie is bigger.

Local television contracts can also bring in millions, but after the Rays renewed their contract with Fox Sports Florida in 2008, they are now locked in until 2016, according to Sports Business Daily.

  • Fox, which carries games all over the state on its FSN and Sun Sports channels, pays the Rays an annual fee, then collects the bulk of advertising revenue, as well as payments from cable companies that want to carry the games. The amount of the contract was not disclosed.

The Rays own rights to only a few commercial slots during a broadcast.

  • Since Fox can jack up its rates when viewership is strong, success on the field can translate pretty quickly into dollars --

According to Fox, an average of 94,000 households in the Tampa-St. Petersburg market tuned into Rays games this April, compared with 47,000 last April.

  • That compares with an average annual viewership of 31,000 households in 2007 and 62,000 in 2008, the World Series year....

With Central Florida in their pockets, the Rays enjoy a strong media market. Major League Baseball released local TV and radio income figures nine years ago. The Rays fell in the middle of the pack with about $15 million in earnings, Baseball Prospectus reported.

  • That was a gross income figure, but reportedly similar to what the team nets today.

With Forbes magazine estimating total Rays' revenue at $156 million, the combination of local media income, central fund dollars and the revenue sharing transfusion account for about half the team's take."...


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