Monday, April 13, 2009
Tickets? Bring an arm, leg and nest egg
By T.J. Quinn ESPN
When Joe DiMauro finished doing the math, this was what the numbers told him: Five seats at the new Yankee Stadium at $850 a pop would cost him $344,250 for one season, more than $1 million for the three-year commitment the Yankees were asking of him.
Not for the best seat in the house -- that would be $2,500 per game for the front row between the dugouts as part of a season-ticket plan -- but for a few good seats a few rows behind the dugout.
"I was totally taken aback by it; I could not believe it," he says.
DiMauro is a man of means, the owner of an oil brokerage firm in White Plains, N.Y., and the holder of seats at the old Yankee Stadium since 1973. He had seen the price of those seats jump from $125 in 2007 to $250 in 2008, and had been able to live with it.
But $850 for one seat to one game?
The idea of spending that much stopped him cold.
You can rent this new Yankee Stadium seat for three or four hours. It'll only cost you $2,625.
"When it hit $250, it was a bad number, and I felt $850 just doesn't make any sense," he says. "At the time, we were making money and I was juggling it. But then when the crisis hit and I saw our revenues go down and I was about to lay off people, I said there was no way I could buy any of these tickets. So I made a decision to give up the Yankee tickets and keep two of my employees."
DiMauro says he passed up the five premium seats and settled for two seats in the second deck, past third base, for $75 per game. That math made sense.
"I'm gonna miss those seats, but that's life," he says.
When the Yankees and Mets did their research and envisioned ticket prices at their new ballparks, the economy was still holding strong.
Now, with the Mets opening new Citi Field on Monday night and the Yankees set for their home opener Thursday afternoon, both teams are scrambling to fill some of the best seats in the house.
The Mets say they have sold all their top-tier seats at the $495 season-ticket rate (the seat prices would have been as high as $695 if sold per-game), but are still advertising other premium seats. The Yankees have not sold out their best seats, available at $2,625 for individual games or $2,500 in a season package. (As of Friday, it was still possible to buy 10 for a weekday game in April.) And MLB officials wonder privately how the Yankees will avoid camera shots of comfortably cushioned, but empty, seats.
MLB President Bob DuPuy wouldn't comment on the prospect of empty seats, but said, "The commissioner trusts clubs to know their markets and set prices accordingly."
At the time the prices were set, more than a year ago, it looked as though the market would be there. When both teams did their market research, they saw that the New York metropolitan area could support a ticket stratosphere no other city could, with Wall Street itself and an estimated 700,000 millionaires, according to Kiplinger's Personal Finance.
"The economy was growing at a very high rate. People were spending more than they were making, so premium amenities were all the rage," says Sal Galatioto, a sports investment banker and the president of Galatioto Sports Partners. "That market imploded."
Bear Stearns and Lehman Brothers used to be ideal targets for premium seats and suites, but both went out of business. Other companies that survived, such as Morgan Stanley and the vilified AIG, have cut back. Some companies with deals at other stadiums removed their names from their suites so as not to draw the populist ire that led to protests in front of AIG executives' homes.
"What's happening now is as much social as it is economic," says Galatioto, who helped broker financing for the new Yankee Stadium. "A lot of companies, a lot of high-net-worth individuals, are having trouble psychologically. Wanting to be seen as having a luxury suite or being in the front row, it's one of those things that used to be really cool and that's what you wanted, and now it's not."
Yankees officials declined comment. But one top club executive, speaking on the condition of anonymity, said the team has sold roughly 80 percent of the premium seats, and team officials have said they have sold the equivalent of about 35,000 season tickets.
Even with the economy affecting sales, the teams do not expect to lose money. Galatioto and other experts say the teams will do just fine financially, but not as well as they had planned.
Dave Howard, the Mets' executive vice president for business affairs, says the draw of a new ballpark that is dramatically more attractive than Shea has taken some of the sting out of the recession.
"I'd be far worse off and more concerned if we were trying to sell Shea Stadium in this marketplace and this economy," Howard says.
Howard says the Mets originally thought they would have to cap season-ticket sales at about 30,000 in Citi Field because demand would be so great, and MLB requires teams to set aside a certain number of tickets for single-game sales. With the recession, however, the team has sold roughly 25,000.
Citi Field is pretty, but it takes a lot of pretty pennies to see it from one of the good seats.
"The economy actually managed our inventory for us, where we didn't have to place an artificial limit," he says. "I can't say that we planned it that way."
Even the furor over Citigroup's $400 million naming-rights deal, reached before the company received $45 billion in bailout money, has died down.
Although the Mets and Yankees recognize the backlash from fans about top prices, the teams both point out that they left large swaths of the stadium at affordable prices. The Mets are offering $11 seats in the outfield and $25 seats in the upper deck, and the Yankees are charging $12 for most bleacher seats and $5 for obstructed-view seats in right center.
And the sports finance experts and MLB officials interviewed by ESPN say the long-term contracts with season-ticket and suite holders -- some of whom signed 10-year deals -- will sustain the clubs through the recession unless the economy takes another turn for the worse that even pessimists aren't predicting.
"We'll be fine," Howard says.
DiMauro says that he is a businessman and that the Yankees and Mets have every right to charge whatever they can. People will either pay it or they won't. But look at an NBA crowd, he says: It's corporate and detached from the game. He says he saw the same thing start to happen at Yankee Stadium from 1973 to 2008 as a corporate crowd moved in. Just because the clubs can make as much as the market will allow, he says, doesn't mean they should.
"I'm starting to feel detached" as a fan, DiMauro says. "I felt detached last year, and I'm still not there right now."
T. J. Quinn is a reporter for ESPN and can be reached at email@example.com. William Weinbaum, an ESPN enterprise unit producer, contributed to this report.