20 January 2011

Ball Back, Spring Ahead

Reservations and what amount to advance cover charges to Casino Lounge West are reportedly disappearing as fast as a $20 bill down the street, but betting on baseball fans to attend actual Diamondback games downtown, remains more of a long shot. This surmised from snips of Derrick Hall's painstakingly leading statements, and neither comes as much surprise.

The Cactus League's latest bauble, wedged just west of its benefactor's gambling palace and east of Paradise Valley, is bound to draw its target clientele; Derrick Hall's wealthy neighbors.


Hall, who resides a brisk walk from his $100M split-level club, boasted $2M in package revenue as well as 30,000 single sales during the first box office day. (see video, courtesy of our good friend, Jim McLennan)



$2M represents a likely mimimum of 6000 season tickets sold, based on package pricing. 30,000 singles amounts to 1750 additional sales per game across a 17 game schedule. That's already 7750 total sales per exhibition, on average.

In a stadium with 7000 seats.

Well, ok, there are supposedly four thousand squares of inclined sod they're charging ten dollars apiece for online, as well. Surely, some of Hall's sales squat on that assy knoll. It's hard to say how many, though. We can derive from Hall's remarks that roughly 100 of 130K seats sold to date were package deals, and those buyers, especially in the spring, generally want the nicest seats.

Yet surprisingly, Ticketmaster just spit out four together in row 4, behind home plate, for a weekday game in late March. (Just browsing.) The significance is that prime location wasnt blocked (ie previously purchased) as a season ticket. If Hall indeed moved $2M in packages, without the benefit of selling out the priciest sections, it means he sold more packages. Quite a bit more. That 6000 estimate quickly rises towards 7K, if $425 boxes behind the plate currently sit vacant.

Do I believe Hall's numbers? I dont know. At this point, I'm predisposed to think they are misleading. I certainly believe there's interest in the new park and expect inaugural weekend games, along with Cubs' and perhaps other visits, to sell out. But if you've transacted 70-80%(7750-8750 / 11000) of ballpark capacity by the close of the general public's first box office day, and still have a good five or six weeks of spring fever runup to exploit, it strains reason to think you wouldnt sell out the entire schedule.

Maybe they will. We'll see. But if they dont, we need look no further for the reason than to question Hall's predictably cheery figures.

************

Downtown, Hall offered that the package renewal rate neared 80 percent.

Eighty percent of 12000 is 9600, which means they hemorraghed 2400 seats - from what was already a paltry, declining base. Despite MLB's fattest carrot: All Star Weekend.

“It’s a little lower than we would have hoped, but that’s obviously the economy and the way we played,” Hall said.
Mr Hall blames two factors, neither considered within his purview (ie external economy and poor play was primarily a baseball ops responsibility). He doesnt volunteer that, on the heels of two miserable seasons, he increased season ticket prices in ten of the stadium's seventeen pricepoints. I'm sure that had nooooooo effect on sales. Nor did our CEO / President's role in a range of alienating executive decisions, from the AJ Hinch fiasco to asinine ballpark and broadcast initiatives.

“Ticket revenues are up from last year..."
So revenue's "up" and they're slashing payroll? With a positional core in its prime? Sweet. Perhaps being an investor is more rewarding than being a fan, despite FO insistence to the contrary.

“...which tells you people are more willing to spend more money in the premium areas.”
From this, one might assume he raised prices in premium areas (ie the affluent)to 'palatably' increase revenue in tough times. But that didnt happen. Rates in premium areas were virtually flat. The four highest price points in the park, for example, incurred no increase at all. All the largest hikes were levied in the upper deck and bleachers - not only in % terms - but in real dollars.

When Hall claims revenues are up and numerical sales are down, he's really saying the average transaction price increased. But we know hikes (the largest of which are only $2 per seat) werent large enough to offset lost revenue from 1400 fewer net accounts. The average sold ticket would need to increase $216, seasonally, to offset that, assuming a $20 ave ticket. But the average sold ticket increased by less than half that.

The only way revenues rose was if seat composition dramatically shifted, implying much higher attrition rates upstairs and tangibly higher net sales in the $100 boxes. But such a shift seems curious. Would the spectrum of folks who just want "in" on the All Star Game almost exclusively invest in the most expensive packages? To suffer through six months of rebuilding? Wouldnt a more modest investment to guarantee ASG priority make more sense?

Second, it's unclear how much of these most expensive areas (the ones that drive Chase's mean seat price) are even available. If $85-$120 boxes around the dugouts werent completely sold out, historically they were pretty close to it. Could you even fit 200 additional net sales down there?

If this migration is true, however, it heralds an even sadder state of affairs than if Hall is juggling his familiar rainbow of incompatible impressions. It means attrition was very high among regular folk (ie cheaper packages), even on the cusp of an ASG. Hall can justify a pricing model that continues pushing 'regular people' away from his product, because overall revenues are "up".

Regardless of revenue claims, there can be no denying that fewer and fewer fans believe the Dbacks are worth Derrick Hall's various prices of admission.

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