Tough Sledding Ahead

The annual gathering of the baseball industry at the Winter Meetings has been a cause for celebration in recent years.

And for good reason.

Minor league baseball has been on a record rise in the post-Bull Durham era, as the sport’s popularity has sparked five straight seasons of attendance records that have also seen soaring franchise values and record merchandise sales. More than 43 million people attended minor league games in 2008, as 78 of the sport’s 160 teams saw an increase at the gate from the previous season.

This year’s gathering will be accompanied with something unfamiliar in recent years: reason for concern.

Certainly the setting of Las Vegas will do little to damper the revelry of the Winter Meetings. However the main topic among operators likely will not center around the latest promotions or dazzling new scoreboards, but rather the slumping economy and how it is going to affect teams next year. Already a subject for debate around the sport, few suggest that minor league baseball is a recession-free industry.

“We’re not going to be immune, and we would be naive to think that we would be,” Minor League Baseball president Pat O’Conner said. “I think there are sectors prone to falling off the radar: banking, car dealers, some staples. I think we will feel it, no question. But I do think that we stand to be less impacted at the gate simply because we are grassroots, hometown, affordable entertainment.”

And it is for that reason that front office executives and league presidents around the game believe they can weather the storm of a down economy. But few are predicting that the high times enjoyed in recent years will continue in 2009.

“The businesses that are running their business the right way may see a downswing, but will survive,” Lake Elsinore president Dave Oster said. “But those that aren’t will be pushed aside. It’s survival of the fittest.”

Desperately Seeking Sponsors

Teams are counting on the business model that has made the minors so successful in the past to keep fans seeking an affordable entertainment option coming out to the park. However much of the sport’s recent growth has come through partnerships with local business communities, who not only sponsor promotional events but help fill group-seating areas that have become key components of stadiums around the country.

Many of those businesses will likely have fewer dollars to spend on baseball as they tighten budgets, leaving executives with an offseason to ponder a very significant question: What trickle-down effect will teams feel in 2009?

“I would like to think that we are not going to see (an impact) in attendance because we are well positioned from a price structure,” International League president Randy Mobley said. “People are still going to seek out entertainment if it is reasonably priced and I don’t think there is any question that we are. So I think attendance will hold. I think on the sponsorship and advertising, it will be a challenging season.”

Durham general manager Mike Birling found a trend hard to miss as reports from his sales staff seeking sponsorship renewals came in this fall. Though few businesses were dropping the Bulls as a partner altogether, most were cutting back on the money they were willing to commit.

“We’re not seeing our partners just drop out,” Birling said. “We’re seeing whatever their sponsorship dollar may have been drop by $500 or $1,000. Not many are going up in terms of sponsorships. They’re just cutting back a bit—which is somewhat of a positive considering how grim the media has been making everything sound.”

But it’s not a season to give up on—even from a sponsorship standpoint, some say. The answer is relying on the creativity that has made the minors so successful in the past.

Appalachian League president Lee Landers is not one to give up. After the Blue Jays pulled out of Pulaski following the 2006 season (leaving the Appy League with an undesirable nine-team schedule), Landers spent consecutive Winter Meetings talking to any major league official who would listen about setting up an affiliate there. The result: Meet the 2008 Pulaski Mariners.

Landers insists a similar persistent strategy will end in financial success even in a tough economy.

“Something is always wrong,” said Landers, who is entering his 14th season running the Appalachian League. “We can always find a crutch. Last year it was the cost of fuel. If we market the way we should be marketing, affordable family entertainment, we’ll lose some revenue in sponsorships but we can make up for it in group sales. We can turn that negative into a positive.”

Double-A Huntsville general manager Buck Rogers also believes a creative, if not a charitable, approach could be key to long-term longevity during a down period. He likens it back to when he was running a Florida State League affiliate and a long-time season-ticket holder could not afford to renew because of a medical emergency.

“I threw in season tickets free of charge. I’ve done that with a couple of teams,” Rogers said. “When a business is struggling, you’ve got to say ‘You’ve been a good partner for 10 years and I’m going to throw in 1,000 tickets a year.’ Teams are going to get creative with how they embrace their clients. They will look globally down the road.”

They’ll also be creative in ways they cut back. Rogers said that he enters this Winter Meetings with no budget to add staff and, as a result, plans to add a bigger corps of interns from the job fair. The Bulls are looking into various ways to save instead of skimping on fireworks and other promotions. For example, the team will power wash the ballpark once a week instead of after each home game.

“It’s important not to cut back on things that make people want to come out to Bulls games,” he said.

Having a flexible major league affiliate is helpful as well. More than once this past season the Rays waived the PBA rule requiring Triple-A teams to travel by airplane on trips over 500 miles, allowing the Bulls to bus on some extended road trips to cut costs.

In Lake Elsinore, the team’s concerted effort to implement environmentally friendly alternatives in the ballpark has paid off in unexpected revenue opportunities. Beyond cutting costs in house—the team’s many water-conserving measures saved over 20,000 gallons of water and $90,000 in the past two seasons—the Storm has found other conservation companies looking to advertise and set up sponsorships.

“It’s a new fusion of dollars and promotions,” Oster said.

They’ll Be Back

The theory teams are counting on for continued success is simple: Even in hard times people are not going to abandon entertainment altogether, and there are few more affordable options than minor league baseball.

“In the summer we provide a pretty affordable way for people to get out and entertain themselves,” said Double-A San Antonio general manager David Gassaway, whose team boosted attendance by over 23,000 in 2008 to surpass the 300,000 mark. “We saw walk-up and day-of-game sales increase as we did different dollar nights, and those are becoming our biggest nights of the year. People are still going to entertain themselves and we don’t have the $15-plus tickets.”

However despite another attendance record that speaks to the overall health of the sport, some of the steadiest clubs saw a decrease at the gate in 2008 for the first time in several years.

Both the Bulls and Storm saw attendance figures dip as the season wore on due to differing circumstances. Group sales held strong in Durham but a decrease in walk-up and individual sales led to an attendance drop of over 17,000.

“It came from the individual fan, the individual family,” Birling said, noting that he thinks teams will become more concerned with ticket sales as they begin to focus on them after the new year. “That means the middle class is hurting. You had $4 gas and a lot of reasons for that. But now all of a sudden businesses are taking a turn for the worse too.”

Group sales has long been the bread-and-butter of Lake Elsinore’s business, particularly attracting Little League teams to the park. However that is where the drop occurred last season, contributing to an overall decline of just under 7,000.

“They may come out to the game,” Oster said, “but they won’t spend the $15 on the food.”

Tough times may be ahead for a sport that has had few in recent years. But there is also hope that teams will persevere by implementing what has worked so well in the past while adjusting to tomorrow’s economic climate.

“I’m not willing to concede 2009,” said O’Conner, who has had an eventful first year as president. “I don’t think anyone needs to concede 2009. Over the years we have done so well in downturns because of the way we operate. There is something for us being that three hours a day where (fans) don’t have to worry about their mortgage or their jobs. For five bucks you don’t have to worry about it. That has been a major selling point of minor league baseball in good times and bad.”

Minors | #2008 #Business Beat

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