Why does the organization still appear to be clueless as to the causes?
I've already written a few articles for this site in regards to this subject matter in the past. The last one was back in June, and at that point I thought that the Yankee organization had finally come to grips with their trend in declining attendance. After some fairly delusional attempts at blaming the cause of the declines on things like secondary market pricing from StubHub, the Yankees attempted to get the gate receipts up by adjusting their pricing. They even went as far as to use Groupon to offer heavy discounts on some tickets. I assumed this meant they finally understood the primary cause of their difficulties, but their recent announcement regarding 2014 ticket prices says otherwise.
Site mate, Craig Edwards, penned this piece that sums up the year end attendance figures for the Yankees and league overall. To review quickly, the Yankees attendance was down 7.4% in 2013 and was the third straight year of declining attendance figures. The Yankees still are one of the top draws in the game, but the declines from their peak in 2010 now are significant. The 2010 season was the second year in their new stadium, and just after their last championship, when most teams usually see a pick-up in attendance figures. The average game in 2010 saw 46,491 tickets sold. Last year that figure had dropped to 40,488. That is nearly a 13% decline in per game attendance in just three years.
How important is that declining trend for the Yankees? Most fans and baseball media folk seem to assume that money is almost irrelevant when it comes to the Yankees. The truth is we can't really know what the Yankees total revenue and cost structure looks like. Between the team and their media holdings, I'm simply not going to trust anyone from baseball to give a complete depiction of what the Yankees finances are in a given year. There are too many conduits to hide revenues, or adjust expenses, in order to present whichever view they want.
We can answer one question though, and that has to deal with the actual impact the Yankees are feeling from their declining attendance figures. So we know that in the last three years they have suffered a nearly 13% decline in per game attendance. The actual figure is 6,003 fewer tickets sold per game. From my last article we were able to establish that the average gate receipt for 2012 was $83.28 per ticket. If we stick to that assumption then we can see how much less revenue the Yankees are generating now versus 3 years ago: $40,494,317.
So what does nearly $40.5 million buy these days on the free agent market? Well if Fangraphs' crowd sourced estimate is about right, then you could have Robinson Cano and Shin-Soo Choo for that tidy sum. If Choo isn't your pick, then Cano and Brian McCann could be yours with a little pocket change to boot. Best of all, this analysis assumes that the Yankees ticket declines have been symmetrical across all available ticket options equally.
I'm using the average ticket price, but do you really think those 6,003 fewer tickets being sold are distributed evenly? We'll have to wait for Forbes to give us the Yankees gate receipts next year to see if there's been a steeper decline in average ticket receipts, but anecdotally, when I saw a game this year, it looked a lot thinner in the most expensive seats than in the bleachers.
My assumption would seem to be backed up by the little the Yankees decided to do on pricing for next year. The basics around their 2014 plan are as follows: 1.) 39,000 ticket prices stay the same, 2.) 9,000 tickets will have a decrease, 3.) 2,000 tickets will increase in price. The 18% of tickets that are scheduled to decline are in the following sections: 305, 306, 307, 332B, 333, 334, 313, 314, 326, 327, 210, 299, 216, 217, 223, 224, 230, 116-124, 114A-126. Among the four percent of ticket prices increasing next year are obstructed view Bleacher tickets in sections 201 and 239. So we're seeing declining pricing in a lot of Main and Field level seating, but increasing the cheapest tickets in the ballpark. That looks like pretty good anecdotal evidence that their revenue hit is likely a lot more than that $40.5 million I estimated.
I think at a minimum we've established here that this hurts. Maybe the Yankees do still have plenty of room left in the annual budget to do whatever they want, luxury tax be damned. Still, if they were making that extra coin each year, then I'm sure we'd be hearing a lot less about the $189 million budget target for 2014. Also, none of this analysis even makes any sort of an estimate for concession sales lost from those no-shows. This is really big money the Yankees are missing now.
Last year they blamed the problem on StubHub, but clearly changing the after-market provider didn't alter the dynamics. I can't figure out why they went toward discounted prices to address the issue last year, but didn't carry through with that strategy when they came up with 2014 plans. Could the Yankees really still be delusional about the problem here? If so, then I'm going to give you guys one more quantified argument for why price is the issue.
Attendance Figures | Home Avg. | Road Avg. | Home % Chng | Road % Chng | MLB % Chng |
NY Yankees 2013 | 40,488 | 33,632 | (7.4%) | (1.5%) | (1.1%) |
NY Yankees 2012 | 43,733 | 34,154 | (3.0%) | 2.8% | 1.9% |
Looking at the Yankees percentage change in average road attendance, we can see a discernible difference between the changes for home games. The road game attendances also correlate well with the rate of change in total MLB attendance figures. I think this makes any argument that the decline in attendance figures has to do with the quality of the team on the field, or the star power of the lineup, one backed with limited support.
Generally, teams that saw attendance declines due to poor performance versus the previous year also saw their road attendance figures decline to a greater degree than the league average. The Chicago White Sox saw their team go from playoff contender to dead last in 2013. Their average attendance figures declined by 8.9% at home, and 8.8% on the road.
Another popular argument some might wish to make is the lack of star power in the daily lineup. The Texas Rangers might be the best argument for that in 2013. They lost Josh Hamilton to free agency last offseason and this year their attendance at home fell 9.3% per game. Similar to the Yankees, the Rangers missed the playoffs last year, but were competitive until the very end of the season. The Rangers' average attendance at road games was actually down less than the league average at only 0.3% per game.
So can the Yankees' declines last year be blamed on lack of star power in the lineup? I don't think so. The difference between the Yankees and Rangers is that the recent trend for Texas has been straight up in attendance. In fact, their average game attendance from 2010 is up 25.3%, including last year's figure. That compares to the Yankees' overall decline of 13%. So I don't think the star-power argument holds water.
That can leave only one real answer, and so that Hal Steinbrenner can read it, I'm going to do the proverbial yell: IT'S THE MONEY! There's an old saying that three in a row makes a trend. Yankees, you've got a bad trend in attendance, and it's because you've miscalculated the pricing of your tickets. The fact that your road attendance figures have been following the overall league trend shows that the problem isn't an issue with the product on the field.
The declines in attendance at home are another matter. The demand is not as inelastic as you thought. If you want to maximize your revenue potential, then you should lower your ticket prices. I'm not talking about 5% reductions either. You can see how much tickets are going for in the aftermarket. It likely means that you need to start with 15-25% reductions across the board. If you're still seeing aftermarket prices well below the printed cost, then you're still too high.
I haven't even mentioned how much you are alienating your fan base with your current policy. You'll get more tickets sold this way and those people will buy some more absurdly priced beverage or hot dog. Some dollars are better than empty seats. You might not get all of the $40 million+ you've lost this way, but more would seem better than less if I was running your business. Having Cano and Choo in the lineup would also seem better than other alternatives.