25 October 2013

Bloomberg to Earl "Breakeven" Kendrick: Club Worth $600M

Much to owner Ken Kendrick's 'dismay', the constrained small market club he deftly stewards into fiscal balance each season, earns more than one hundred million dollars above what it annually spends on major league payroll.

According to Bloomberg.com, the Diamondbacks are now worth approximately $600M,  roughly 250% more than when Kendrick assumed control in 2004, and now earns $195 million per year. Player payroll approached $90 million in 2012.

Breaking out the $195M income, up to $79 million stems from attendance driven sales, incl gate receipts ($41M), sponsorships ($23M, some of which may not be directly attendance driven), concessions ($12M) and parking ($3M).

Remaining income is derived elsewhere, primarily via media rights ($75M) and revenue sharing ($27M).  In other words, up to $116 million in income is realized before the Diamondbacks lure a single fan to Chase Field; which is also about $25-$30 million more than was expended on player salaries.  Keep that in mind the next time Mr Hall or Mr Kendrick suggest their payroll's squeezed by attendance and market constraints.

In terms of market, their $75 million in media income placed 17th among thirty mlb teams and was nearly as close to ninth place Detroit ($85m) as to 20th place Cincinnati ($66m).

But they didnt rank middle of the pack in revenue sharing. Oh, no.  Only six genuinely small market outfits, some in crumbling stadiums, were funneled more cashola by the leagues, suggesting the Diamondbacks failed to realize non-media income commensurate with their middle of the pack market and venue.  This is consistent with franchise management whose attendance and stadium revenues lag its market capacities.

Based on Bloomberg figures for gate, concessions, parking,etc. an additional 375,000 fans over this past season's 2.1M draw,  might generate $12-$15 million in additional income.  But that would also reduce the club's $27M shared revenue windfall. By how much, is unclear, yet any significant attendance spike would pull the club closer to mlb's net revenue sharing midpoint, closer to where the Phoenix market's potential - and pre-Kendrick history - suggests. This burgeoning theoretical fan base of 2.475 million attendees, would still be less than what Colangelo drew here in his worst season (2004) as owner - losing 111 games in what was then a considerably smaller market.

In nine seasons since, occupying a relatively weaker division, Kendrick's clubs have exceeded 82 wins just twice - once being outscored by twenty runs in the regular season.  The club also claims to offer the most affordable experience in all of baseball, yet just within their five team division, Bloomberg's 2012 gate receipts divided by attendance imply an average ticket cost ($19.52) closer to the glittery Dodgers ($21.89) than to the Rockies ($16.43) or Padres ($15.45). This incongruous self promotion of undelivered value has steadily worn on fans.

It's not that Diamondback prices are high, relative to mlb or other pro sports. They're not.  They're too high to draw half a million more paying fans to sit in the upper deck to watch mediocre teams in a lower income market.  This regime knows that, but instead of acknowledging their cold choice to reap shared revenues for pricing out the Valley's lower income fans, they have blamed almost a decade's worth of 'curiously' lower local attendance on fabricated market, inherited venue and fan shortcomings. They even once suggested that local fans, the same ones who came out in droves prior to Kendrick's money making mediocrity machine, dont really appreciate how baseball works.

 Well, that last part is all too true.


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