Mets lost millions (of $) in collapse
Franchise could have seen $15 million or more in postseason revenue if it had made it to series. Now it has to worry about next year's ticket sales.
NEW YORK (CNNMoney.com) -- The New York Mets lost more than a playoff spot, their pride and probably some of their fan base this past week. The franchise lost millions of dollars, while the players themselves lost at least $20,000 apiece, if not hundreds of thousands of dollars.
The Mets capped one of the worst collapses in baseball history, having led the National League's Eastern Division by 7 games with 17 to go, by falling Sunday to the last-place Florida Marlins, 8-1.
They lost six of seven games in a final home stand against teams with losing records, and missed out on not only the division title but even the wild card spot in the baseball playoffs, which goes to the second place team in each league with the best record.
The exact price of that collapse is impossible to say, because there's no way of knowing how far into the playoffs the team would have gone. But even if the Mets had been swept in the first round of the playoffs, they likely would have seen about $1.5 million to $2 million in additional profits from its share of ticket sales, concessions and the like.
And if the team had played the maximum number of games in each round of the postseason all the way through to the World Series, it likely could have seen about $15 million or more in additional revenue, said Marc Ganis, a sports marketing consultant.
But Ganis said the real financial problem for the team isn't the lost revenue from this October. It's the impact on ticket sales in 2008.
"It creates an off-season discussing disappointment rather than hope, and that almost always has an adverse impact on marketing," said Ganis.
Ganis said that one of the other National League teams that fell just short of the playoffs this weekend, the Milwaukee Brewers, won't have the same kind of marketing problems, even if their fans are also disappointed. That's because the Brewers, while they were in first place for much of the season, came into this year with few expectations of being competitive.
It's also possible that the San Diego Padres will have legions of disappointed fans if they don't make it to the playoffs. After being one out away from a win Saturday that would have eliminated division rival Colorado in the wild card race, the team lost, and lost again Sunday, while the Rockies won to force a one-game playoff between the two in Colorado on Monday.
Ganis said that the Padres don't risk as much of a fan backlash, even if they lose that tie-breaker game, because they never had as large a lead in the wild card that the Mets did in their division race. And the Rockies don't have to worry about fan backlash if they lose the playoff because they weren't considered to even be in the race a couple of weeks ago until an 11-game winning streak late in the season gave them a last chance at a playoff spot.
"Sports are a lot like politics. Spin plays a big role. You can tell a very good story this off-season for the Rockies and Brewers. The Brewers have a lot of up and coming players. But with the Mets' collapse, there's no way to put a positive spin on it, especially in a market like New York."
Still, the Mets are more protected from a drop in sales than most teams in this position, since next year will be its last playing in Shea Stadium, the franchise's home since 1964, its third season of existence.
Even if some fans are reluctant to buy tickets next year, their place might be taken by other fans who want to visit the stadium of their youth one last time. The Mets sold a franchise record 3.8 million tickets this year.
Another problem for the team's future revenue comes because it is part owner of Sportsnet New York, its own regional sports network, or RSN, that carries its games. It could see ad revenue dented next year if ratings are down, said Lee Berke, a sports broadcast consultant with LHB Sports. But he said that the damage done to its revenue base is limited.
"If the hurt is there, and they don't do anything to solve it, that will hurt them from an ad sales standpoint, maybe 5 to 10 percent," But he said ad sales are no more than a third of the network's overall revenue, with most of the rest being subscriber fees from cable operators, which are locked in with long-term contracts.
So even a 10 percent drop in ad sales only trims overall revenue about 3 percent. And Berke said having the revenue from the network might allow the team to make off season moves to mitigate the fan disappointment.
"I think you'll find them compelled to make a big splashy move," he said. "That's the saving grace of the RSN, because you have the steady cash flow, you can get rid of that cast (of players) and bring in a new one."
The Mets are not sole owner of their RSN. It is also partly owned by Time Warner Cable. Time Warner Cable is majority owned by media conglomerate Time Warner (Charts, Fortune 500), the owner of CNNMoney.com.
The lost sales of division, league and world championship merchandise that the Mets might have been able to sell if the team had advanced is also limited, because licensed merchandise revenue is split evenly among all 30 teams. The teams in the playoffs get some additional revenue for merchandise sold at their stadiums during the game, but for the most part the Mets will get almost the same merchandise revenue as if they had avoided the collapse.
Experts in the field believe that a World Series victory by the Cubs will produce the greatest licensed merchandise sales. The previous merchandise sales record came in 2004, when the Boston Red Sox, which like the Cubs have a large national fan base, won their first series in 86 years. The Cubs haven't won the World Series in 99 years going into this postseason.
One sports investment banker who has clients who may consider bidding for the team says that a Cubs World Series victory probably won't do much to raise the sales price. He points out that the Angels, who were sold by Walt Disney Co. (Charts, Fortune 500) after that team won the 2002, did not see the sales price there rise.
"That's an instance where the Angels weren't a great brand at the time of the sale," said the investment banker. "It's a different story with the Cubs, it's a great brand. The price is going to be so high, I don't think a World Series victory would move the needle. If you're buying the Cubs because you think you're buying a winner, you haven't been looking at history very carefully."
The Cubs have a relatively small stadium, with Wrigley Field having just over a 41,000-seat capacity. Only the Red Sox's Fenway Park is smaller among playoff teams. But that lack of seats won't significantly hurt the team's revenues if it does advance to World Series. That's because postseason ticket sales, like the licensed merchandise sales, are shared between players and the clubs.
While the Rockies will get to keep all the revenue from ticket sales for their one- game playoff with San Diego Monday, many of those seats will be given to season ticket holders as part of their packages. And the seats that are sold to the general public aren't likely to be much more expensive than regular season seats.
The revenue from the sales of the expensive postseason tickets, as much as $250 for some of the World Series tickets, does not go straight to the clubs.
Under the sport's labor agreement, a pool of money is set aside for the players, equal to 60 percent of the ticket revenue from the first three games of the first round of the playoffs, and the first four games from the two league championship series, as well as the first four games of the World Series. It is only the remaining ticket money that is split evenly between the two teams playing in the game.
The money in the players' pool is then split between the players on the eight playoff teams, as well as the four second-place teams that did not make the playoffs.
The Mets, as one of those teams, will split 1 percent of that pool between them. Last year that came to $556,000 for the team, or about $10,000 per player share. The players who have been on the roster for the full season vote to determine shares granted to players on the team for only part of the year, along with support staff such as bullpen catchers and bat boys.
The teams that lose in the first round of the playoffs get to split 3 percent of the pool, thus a loss of about $20,000 for the Mets. That might not hurt their best-paid player, Carlos Delgado, who earned $14.5 million this year, but it probably will be felt by players like John Maine, who nearly pitched a no-hitter Saturday to keep the team's hopes alive. He only earned $391,000 this season.
And that $20,000 is what the team lost compared to those teams that will go out in the first round. If the Mets had been able to go on and win the World Series, the team would have split 36 percent of the money in the pool.