Monday, July 4, 2005
Nationals winning big with fans
By Darren Rovell
On May 19, the Washington Nationals were wrapping up a four-game homestand with the Milwaukee Brewers. For that Thursday night game, the team sold 30,968 tickets. It's worth noting because the only game at which the Montreal Expos sold more tickets last year was the team's final appearance in Olympic Stadium.
Major League Baseball has owned the team since purchasing it from Jeffrey Loria almost 29 months ago. And it has only recently become clear that the decision to buy the struggling franchise, relocate it and resell it, could turn out to be the most brilliant move in commissioner Bud Selig's 13-year reign.
Despite the initial buy-in price of $120 million and estimates of losses totaling at least $100 million, a winning bid of $400 million would yield a net profit of about $6 million per team on the sale. The $400 million mark could be reached, especially given the fact that the only payment the owners will have to worry about on the new stadium, which is expected to open in 2008 and could cost more than $600 million, is an annual lease payment.
While the league solicits bids from eight groups, what has become clear is that the losses are now behind them.
In less than a half of a season of home games (39), the Nationals have drawn 1,267,640 fans, which surpasses the total attendance the Expos drew in Montreal in each of the last seven seasons. The team is on pace to top 2.6 million in attendance, something the Expos never accomplished in their 36-year history and more than the combined total of fans that attended games in Montreal and San Juan during the past three seasons.
"We knew there would be a lot of excitement here after not having a team for 40 years," said Kevin Uhlich, the team's executive vice president. "But the team has played such an integral part in the fan support. It's always easy to get behind a team that just wins."
Uhlich said a key part of the success also has to do with the extensive transportation system. Although more than 75 percent of fans don't live in Washington, D.C., the Metro is able to bring fans from Virginia and Maryland to within a block of RFK Stadium.
The team's payroll-ticket sales ratio is also outstanding. The world champion Boston Red Sox are projected to sell approximately 215,000 more seats than the Nationals this year, which at $20 more per seat, will generate about $65 million more than the Nationals at the gate. But the Nationals payroll is $50 million, $70 million less than the guys that play in Fenway Park. In their first year in Washington, the team is projected to earn a $20 million profit, according to projections made by the Washington Post.
Part of the reason for the great attendance is the unexpected start. At 50-31, the Nationals have the third-best record in baseball and have become the hardest team to beat at home. Given their performance, the Nationals currently have the lowest cost-per-win ratio at $1 million per win. Compare that to the New York Yankees, who have paid five times that for each victory.
The Nationals have also been impressive on the merchandise front. Although not one Washington player ranks in the top 25 most popular jerseys purchased, according to officials at Majestic Athletic, the team is in the top third of teams in league merchandise rank.
"Each day was costing the owners more money, but they did their homework and really did get the right marketplace," said Howard Smith, senior vice president of licensing for Major League Baseball. "You can tell by the number of fans at the game and the amount of product they are buying."
Smith said that the difference between lackluster Expos sales and impressive Nationals numbers is projected to impact the league's merchandise business by 4 percent.
"Everyone is behind this team," Uhlich said. "The local news report opens with our win, then comes weather and they refer to it as 'Your Nationals Forecast,' and then comes sports."
The Nationals' success could come at the expense of the Baltimore Orioles, whose attendance is down about six percent from last season, despite leading the AL East for most of the first half.
With RFK Stadium only about 40 miles away from Camden Yards, Orioles owner Peter Angelos was compensated with a 90 percent ownership stake in the local regional sports network that would show both of the team's games. Angelos will receive $70 million from the Nationals for their stake in the network, which starts at 10 percent and will gradually increase to 33 percent. The network is not expected to be profitable this year due to start-up costs and limited cable distribution.
"The region is a great place and a great market," said Kevin Uhlich, the Nationals' executive vice president who battled the Dodgers as an executive with the Angels for 27 years. "If both teams play well, this will no doubt be good for us and good for baseball in general."
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com.