The Incremental Value of a Fan

The 2011 Pittsburgh Pirates are starting to stir up long-dormant feelings amongst the populace of the Pittsburgh metropolitan area.  When you walk around town, you see more people wearing Pirate hats and shirts.  People are actually talking about the Pirates in positive terms in mid-June for the first time in a long while.  The play of the Pirates, especially Andrew McCutchen, Joel Hanrahan, and the starting pitchers are starting to captivate the imaginations of people who may have become disinterested in the team during their 18 year-long odyssey through the desert.

These people are showing their approval with their paychecks, as attendance is up an average of 2,710 people in 2011 versus 2010 at the same point through 33 home dates (20,788 to 18,078).  But how much of a revenue increase is that for the Pirates based on a typical fan?

Let’s say a fan orders ahead and get a nice mid-range priced seat – the outfield reserved section 140 for $17 (the average weighted ticket price at PNC Park is $17.07).  He has one of the best seats in the house, with the city and the river at his back, and all the action of the field right in front of him.  The smell from Manny’s BBQ is emanating from just a few feet behind him, so he eventually breaks down and buys a Pulled Pork BBQ Sandwich, a bottle of water, and some Dipping Dots (let’s say $20 total).  The Pirates win, so he wants to commemorate this great night by getting a T-Shirt in the Pirate store at PNC for $15.  He then heads back to the General Robinson Parking Garage where he parked for $10.  A great night for the fan, but was it a great night for the Pirates’ coffers?

The Pirates don’t release much information publicly of course, but there are some nuggets that can be gleaned from the webosphere.  Most baseball teams keep around 90% of their ticket sales.  Additionally, the little bit of information out there estimates that teams keep between 40 to 48% of the concession and merchandise sales (the rest goes to Aramark, the Pirates’ concessionaire).  But as for parking, that is available specifically for Pittsburgh.  As per the Sports and Exhibition Authority’s website, they did not want a repeat of how Three Rivers Stadium became a “white elephant” on the North Side, so:

In order to incentivize the teams to develop the Option Area’s surface parking, unlike what occurred with Three Rivers Stadium, the teams are given only limited parking revenue. Instead, certain parking revenue is placed in a development fund that is accessed only when a parcel is developed. The teams hired Continental Real Estate Companies as developer of this land, which consists of twelve parcels. The Stadium Authority oversees this development according to the terms of the Option Agreement.

The scope of this article does not include the estimation of what the Pirates’ development rights are for the various office buildings and hotels created on these 12 parcels.  But for the purpose of this article, let’s assume that “only limited parking revenue” is 0%.

Using our newly enthused fan example:

Ticket — $17 x 90% = $15.30 to the Pirates

Food — $20 x 40% = $8.00 to the Pirates

T-Shirt — $15 x 40% = $6.00 to the Pirates

Parking — $10 x 0% = $0.00 to the Pirates

Total = $29.30 to the Pirates

If you extrapolate that out for the 2,710 additional fans per game this year, the Pirates have generated an additional $2.62 million dollars so far over the same time period as last year.  If the Pirates can finish with the same 2,710 additional fans per game over the whole 81 game schedule, that would be an increase of $6.43 million dollars.  All right, let’s buy some free agents!

Not so fast.  A couple of things to look at first.  Here’s the average home attendances per game since 2008 in the Coonelly/Huntington era:

2008 – 20,113 (28th in league)

2009 – 19,479 (28th in league)

2010 – 19,918 (27th in league)

As of right now, the Pirates have just returned back to the 2008 level of fans.  Even if you say that attendance will go up more in the summer with school out and we keep the 2,710 additional fans per game, the full season average attendance figure will be 22,628.  That will put the Pirates around 22nd in the league.

The unofficial, unspoken word about the Pirates’ payroll is that there is a $50 million dollar cap based on current revenue streams.  If we assume those numbers are based on the typical 20,000 fans/game, what would the additional revenue look like for:

25,000 fans per game (20th in league) = 5,000 fans/game x $29.30/fan x 81 games = $11.87 million additional

30,000 fans per game (15th in league) = 10,000 fans/game x $29.30/fan x 81 games = $23.73 million additional

You can start to see that the payroll cap could go from $50 million to $62 million to $74 million in a hurry with the additional attendance.

But here’s the fly in the ointment — revenue sharing.  If the Pirates’ revenues start to go up, the revenue sharing component, which is factored in to their current payroll estimates, will go down.  The business of baseball blog, It’s a Swing and a Miss, did some nice research and explanation on the current Collective Bargaining Agreement’s Revenue Sharing Plan.

If you boil it down to its most basic components, for purposes of this article, the Revenue Sharing plan is as follows:

Local Revenue = gross revenue from ticket sales, food, merchandise, parking, local TV

Central Revenue = gross revenue from national TV and radio

Actual Stadium Expense = leases, debt payments, upkeep of physical stadium

Net Local Revenue = Local Revenue – Central Revenue – Actual Stadium Expense

Then each team takes 31% of this Net Local Revenue and pays it to MLB.  This pool is totaled and then equally divided by 30 teams.  However, MLB then calculates what if each team put in 48% of their Net Local Revenue and that giant pool was split among 30 teams.  This is called the Central Fund Component.  You would think it is just the 17% difference between the two, but the wording is very difficult to understand and is not worded that way.  MLB adds in what are called Performance Factors, which assign negative values to payors (Yankees, Red Sox, and the like) and positive values to payees (Pirates, Marlins, Rays, and the like).  Oh, and by the way, it is also calculated on how each team have done versus the average revenue sharing amount over the past 3 years.  Confused yet?

The moral of the story is that just because the Pirates increase their Net Local Revenue, they may actually be decreasing the amount of Revenue Sharing they receive, which may cancel out (or worse) the gains made from the increased attendance.  It is a very tricky and complicated process.

None of that should matter to the fans, though.  If you like the team, go out and support it.  Increasing attendance should never be considered a bad thing.  Let the bean counters in Central Office and Federal Street figure out the rest.

Enjoy this story? Pirates Prospects will be switching to a subscription site on 4/13, so that we can continue bringing you the best Pirates coverage there is. For a very small monthly price, you can continue getting articles like this, along with coverage from every minor league city. Get more information here, and subscribe today!

Share This Article

Prospect Trends — Mid-Season Edition, Part 1

Next Story »

Lineups: State College vs Auburn

  • http://twitter.com/BuccoMike Mike

    Pirates need to quit wasting money on the bums – 2 catchers on the roster at like 9.2 mil, matt 0 homer diaz over 3 mil, 1 ish next year, Joe Beimel 975k, even maholm is a risk at over 6 mil a year.

  • http://pulse.yahoo.com/_OZG2IYY4UIJEND5745XPPUOSHY steve-O K

    TV/Radio revenue must be up.

  • http://pulse.yahoo.com/_OGCKUSO5MA5VUCJHW2YSJ2K3TM Bob

    So that’s why the FO doesn’t care about putting a quality product on the field…it’s all starting to make sense.  Instead on investing money in buying better players to increase attendance they would just rather collect the revenue sharing money, thanks for nothing Nutting.  

    • Anonymous

      That wasn’t the point of the article at all.  I did want to present the counterweight to increased attendance, though.  It’s not like the front office is shooing people away to prevent sellouts.

      • http://pulse.yahoo.com/_OGCKUSO5MA5VUCJHW2YSJ2K3TM Bob

        But they certainly aren’t spending any money to get them in…

  • Anonymous

    What Kevin left out in his evaluation (very good evaluation by the way) was the fact that the 17$ ticket is not anywhere near what you will pay for the same seat if they become a winner, that ticket in some cities is more than double what the Pirates are charging.

Latest Analysis

  • Keller Supak Hinsz

    Even With the New Draft Rules, the Pirates Are Still Loading Up on Projectable Pitchers

    1 day ago

    From 2008-2011, the Pittsburgh Pirates spent a lot of resources on projectable pitchers out of high school. So far, this approach has led to breakout performances from ...

    Read More
  • Josh Bell made the move to first base over the off-season. (Photo credit: David Hague)

    Why Should You Care About Prospects?

    2 days ago

    Yesterday I had a shorter day than usual. The Pirates had cuts at the MLB level, and a road game. The day was shortened at Pirate City, ...

    Read More
  • Gregory Polanco

    Q&A: Trading Prospects For Rentals, Polanco Concerns, Meadows vs Appel

    3 days ago

    I missed the Q&A last week due to a common problem in Spring Training: I forgot what day it was. It was around 6:00 that I was ...

    Read More
  • Nick Kingham f

    Improving His Two-Seam Fastball will Make Nick Kingham a More Effective Pitcher

    4 days ago

    With Jameson Taillon returning from Tommy John surgery, and unlikely to make an impact at the Major League level early in the year, the top prospect to ...

    Read More
  • Arquimedes Caminero 3

    The Roster Situations That Could Impact the Makeup of the Pirates Bullpen

    6 days ago

    There are less than two weeks remaining in Spring Training, and the one area where the Pittsburgh Pirates had actual position battles is heating up. There were ...

    Read More
  • Jordan Luplow

    How the Pirates are Trying to Stay Ahead of the Curve With the New Draft Rules

    1 week ago

    The 2011 Collective Bargaining Agreement brought a lot of changes to Major League Baseball. The biggest change for the Pittsburgh Pirates came in the draft. From 2008-2011, ...

    Read More
  • Alen Hanson

    The Key For Alen Hanson to Help the Pirates in the Majors This Year

    1 week ago

    When the Pittsburgh Pirates moved Alen Hanson to second base last year, part of the plan was to get him to the majors faster by putting him at ...

    Read More
  • Tyler Glasnow 2

    What the Stats Don’t Tell You About Tyler Glasnow

    1 week ago

    The stat line for Tyler Glasnow’s start at Pirate City yesterday looked great: 3 IP, 0 H, 1 R, 1 ER, 1 BB, 1 K. The lone run ...

    Read More
  • JaCoby Jones Josh Bell

    JaCoby Jones Did Fine in the Move to Shortstop, But Needs to Cut Down on Strikeouts

    2 weeks ago

    The Pittsburgh Pirates drafted JaCoby Jones as an outfielder in the third round of the 2013 draft, then surprised everyone the following year when they moved him ...

    Read More
  • Cody Dickson is a lefty with the upside of a middle of the rotation starter. (Photo Credit: Mark Olson)

    The Mental Adjustment that Led to Cody Dickson’s Dominant 2014 Second Half

    2 weeks ago

    Trusting his stuff and not trying to do too much — that has been the key for left-handed pitcher Cody Dickson so far in his professional baseball ...

    Read More
  • Browse More Articles

    More