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The economic consequences of an empty ballpark

Posted April 30, 2015

Steven Kutz - Market Watch -

 

The Baltimore Orioles and Chicago White Sox played a game in front of an empty stadium on Wednesday — a first for Major League Baseball. MarketWatch looked into how much money the home team stood to lose.

Baseball’s commissioner made the decision to keep fans out because of security concerns after recent unrest in the city. See: Baltimore Orioles to play in empty stadium

Ticket sales account for a lot less revenue than they used to for professional sports teams; according to Forbes, tickets accounted for only 23% of the roughly $8 billion that MLB made last season, while local and national media deals made up 43%. But the money made off fans at each game is not chump change. Last season, the Orioles made $60 million in ticket sales alone.

To estimate how much revenue the Orioles could miss out on, we looked at average attendance at the Orioles’ home park — Camden Yards — which is 33,288 this season, and the average ticket price, which is $24.95. And we added a conservative estimate of what fans might have spent on concessions (fans spent an average of $6 a game at Camden Yards in 2013). If you add those numbers up, it comes to a loss of $1,031,928.

But as Andrew Zimbalist, Robert A. Woods Professor of Economics at Smith College, points out, the figure will be less than that if the Orioles don’t have to reimburse season ticket holders for the game. “I suspect that half of sales are season ticket sales that have already been sold,” he says. The team’s owner, Peter Angelos, will probably offer them something free — either a seat to a game for people who bought a partial-season package of tickets, or something like a free hot dog and beer to the others, Zimbalist adds.

Regardless of what the game cost the team, though, “It’s also a public relations coup. They’re doing the right thing and not worrying about the extra dollars,” Zimbalist says.

The Orioles were not able to provide a comment for this story, but in fairness, we did reach out to them close to game time.

For a glimpse at how much money baseball teams are making these days, consider that the Orioles rank No.15 on Forbes’ team valuation list. The team valued at No. 1, the New York Yankees, made $269 million in ticket sales in 2014, and $508 million in total revenue, compared with the Orioles’ $245 million.

And thanks in large part to TV deals with national networks Fox FOX, -1.67%  , ESPNDIS, -1.58%  and TBS, Major League Baseball has seen its revenues rise from $1.4 billion in 1995 to over $8 billion in 2014. Those three networks pay the league nearly $800 million a year combined.

Though as Irwin Raij, a sports attorney with the firm Foley & Lardner, says, sometimes sports are about more than feats of athleticism and huge dollar amounts.

“This is really a difficult situation for the community and for the league. Sports so often help communities heal. It’s unfortunate that in this instance the challenges the community is facing were too difficult to overcome to allow the event to go forward.”