How the Mets Could Afford Yoenis Cespedes

New York Mets ownership has come under increased scrutiny over the past few years. Lowering payroll in a gigantic media market and getting entwined in the Bernie Madoff Ponzi scheme will bring that kind of attention. Back at the trading deadline, there were many, including myself, wondering why the Mets were acting like a small-market team in New York. The team quieted many doubters by bringing Yoenis Cespedes at the trade deadline and making the World Series, but due to insurance for David Wright‘s injury and the PED suspension for Jenrry Mejia, the payroll increase was not significant. As a result, calls for the Mets to spend were heard again during the offseason, and again, the Mets have silenced their critics with Yoenis Cespedes.

The Mets’ revenues are driven by many factors, including the massive New York market that affords them a fantastic television deal that nets them around $100 million per year. However, nothing drives revenue like success, and the Mets, despite significant ownership debts and upcoming payments totaling over $60 million related to the Madoff scandal, the Mets were able to raise payroll due to their on-field success in 2015 and the fan response to that success. Team sources have pegged the revenue due to the Mets World Series run at around $45 million, per the New York Post. Fortunately for Mets fans, it appears almost all of that amount is being invested back on the field.

Let’s break it down.

Regular Season Revenue from 2015

Additional revenue from the regular season was not included in the $45 million estimate, but it is helpful to note that, due to the increased number of fans, the Mets did substantially better at the gate in their competitive 2015 season than they did the prior year. In 2014, the Mets drew 2.15 million fans and had an Opening Day payroll below $85 million — both figures down more than 30% from when Citi Field opened in 2009, but within a few-hundred thousand fans of the previous three seasons as the payrolls dropped beginning in 2011.

In 2015, the Mets drew 2.57 million fans in the regular season, an increase of nearly 20% as 420,000 more fans showed up to watch the Mets play. Given a >75-25 split >between regular tickets and premium tickets at Citi Field, the ticket revenue alone increased nearly $17 million from 2014 to last year. The New York Post reported the Mets were not going to turn a profit before the playoffs, but exactly what costs were included relative to revenues is not clear.

Postseason Revenue

While the Mets played in 14 postseason games, serving as the home team in seven of those games, the team does not get to keep all gate receipts. As >Wendy Thurm explained a little over a year ago, 15% goes to the Commissioner’s office, and 60% of the gate for all mandatory games — i.e. the first three games of a five-game series and the first four games of a seven-game series — goes to the players’ pool. The teams playing against each other split the remaining revenue.

As a result, the Mets receives 12.5% of the gate for the first three games against the Dodgers in the National League Division Series and 42.5% for the final two games of the series. They receives 12.5% of the gate for the four games against the Cubs as well as the first four games of the World Series, and then 42.5% for Game 5 of the World Series. This year’s player pool was nearly $70 million dollars. With that knowledge, estimating the ticket prices with a 50% increase for the NLCS and then a 100% increase for the World Series, we can estimate the average Division Series games at $3 million, the Championship Series games at $4.6 million and the World Series games at $9.2 million for revenue. Using the percentages above, we come up with around $15 million. That the Mets played against the Dodgers, Cubs, and then in the World Series, it is reasonable to surmise that the Mets were involved in more expensive games than average. Add in concessions, and we are right around the $20 million mark that was reported in the New York Post.

Regular Season Revenue from 2016

The Mets’ gains do not end with last year, as the goodwill carries over to this season. This is not a situation unique to the Mets. Attendance surges when a team gets competitive, but the surge lasts longer than the single year. Over the last 15 years, 32 teams have made the playoffs after a drought of at least three years. Attendance increases, on average, 12.7% during the season (11% combined) in which the team makes the playoffs. The next season, those same teams historically add another 8.8% on top of the gains from the previous season (7.9% combined).

The chart below shows all the teams meeting the above criteria.

Attendance Increases After Ending Playoff Drought
Season Year before Attendance (In M) Year of Attendance (In M) % Increase Year After Attendance (In M) % Increase
Royals 2014 1.75 1.96 12.0% 2.71 38.3%
Angels 2002 2.00 2.30 15.0% 3.06 33.0%
Marlins 2003 0.81 1.30 60.5% 1.72 32.3%
White Sox 2005 1.93 2.34 21.2% 2.96 26.5%
Rangers 2010 2.16 2.51 16.2% 2.95 17.5%
Tigers 2006 2.00 2.60 30.0% 3.00 15.4%
Mets 2006 2.83 3.38 19.4% 3.85 13.9%
Tigers 2011 2.46 2.64 7.3% 3.00 13.6%
Orioles 2012 1.76 2.10 19.3% 2.36 12.4%
Nationals 2012 1.94 2.37 22.2% 2.65 11.8%
Giants 2010 2.86 3.04 6.3% 3.39 11.5%
Rockies 2007 2.10 2.38 13.3% 2.65 11.3%
Phillies 2007 2.70 3.11 15.2% 3.42 10.0%
Dbacks 2007 2.09 2.32 11.0% 2.51 8.2%
Pirates 2013 2.09 2.26 8.1% 2.44 8.0%
A’s 2012 1.47 1.68 14.3% 1.81 7.7%
Reds 2010 1.75 2.06 17.7% 2.21 7.3%
Cubs 2003 2.69 2.96 10.0% 3.17 7.1%
Red Sox 2013 3.04 2.83 -6.9% 3.00 6.0%
Red Sox 2003 2.65 2.72 2.6% 2.84 4.4%
Dbacks 2011 2.06 2.11 2.4% 2.18 3.3%
Rays 2008 1.39 1.81 30.2% 1.87 3.3%
Dodgers 2004 3.14 3.49 11.1% 3.60 3.2%
Twins 2002 1.78 1.92 7.9% 1.95 1.6%
Cubs 2007 3.12 3.25 4.2% 3.30 1.5%
Dodgers 2013 3.32 3.74 12.7% 3.78 1.1%
Brewers 2008 2.87 3.07 7.0% 3.04 -1.0%
Angels 2014 3.02 3.10 2.6% 3.01 -2.9%
Indians 2007 2.00 2.28 14.0% 2.17 -4.8%
Braves 2010 2.37 2.51 5.9% 2.37 -5.6%
Padres 2005 3.02 2.87 -5.0% 2.66 -7.3%
Indians 2013 1.60 1.57 -1.9% 1.44 -8.3%
AVERAGE 2.27 M 2.52 M 12.7% 2.72 M 8.8%

The top six teams on that list all made the World Series like the Mets did last year, and the seventh team should be familiar to Mets fans, as they have been through this before. Back in 2006, when the team was still at Shea Stadium, the team made the NLCS and increased their attendance by nearly 20%, just like they did this season. The next year, the team’s draw increased by another 14%, to over 3.8 million fans. While the new stadium is going to limit attendance to closer to 3.5 million people, the Mets are expecting similar gains next season.

By the middle of last November, the Mets had already sold more than 8,000 new ticket packages between quarter-, half-, and full-season plans. While ticket prices for season-ticket holders are set to rise by just 3% this next year, single-game tickets are subject to dynamic pricing, creating a greater overall increase, particularly for games that are in demand. There are no more single-game tickets available for the Mets’ home opener, and tickets for the rest of the weekend for the higher-priced tickets are also unavailable.

In all, the Mets are figuring on a 500,000 increase in attendance. Using the same factors from above, and adding an extra 4% for ticket price increases, it would appear as though the Mets could reasonably expected to earn another $21 million in ticket sales. Adding in increased money for sponsorships and money for concessions — even after adjusting for revenue sharing — it’s easy to see how the Mets can be expected to gain $25 million next season. The Mets front office, Sandy Alderson and his staff especially, have done a very good job rebuilding and making the Mets competitive, and at least for the time-being the Mets owners do deserve some credit for putting their increased revenues back on the field.



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Craig Edwards can be found on twitter @craigjedwards. His writing also appears regularly at VivaElBirdos.com where he is an Editor.


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mrmaddness
Member
mrmaddness
3 months 27 days ago

This is just tickets.

What about TV ratings? The Mets averaged just as many viewers per game as the Yanks did last season (207,000 vs 196,000). Those numbers represent the largest 2 average audience sizes in baseball. The Mets numbers were also up 56 percent. They could probably charge a lot more per ad. According to AdAge, the average cost per 1000 viewers for a 30 second ad in 2014 was $24.76. So if the rate remained the same, 2014 viewers at 125,000 per game = about $3100 per commercial aired. If the rates remained the same, but they priced based on last years viewership of 196,000 per game = $4800 per 30 second ad.

That’s a $1700 increase for EACH 30 second commercial. Remember, this is just SNY, and they will probably have about 130-135 games on that network this season. A 3 hour game has roughly 42 minutes of commercials (so 84 total commercials). That’s an increase of roughly $140,000 per game just in straight tv ad buys (not counting discounts or partnerships or Mets advertising for themselves) or probably close to $20 million in overall money over the course of the season. Not counting the increase in viewers to the post game and pregame stuff as well, and the amount more they can charge for the ads all over the stadium. The Mets only own 65% of SNY, but overall, between actual ads, or the “Subway” (or whoever) post-game wrap-up, that’s easily $20-30 million they could probably count on as well.

Paul22
Member
Paul22
3 months 27 days ago

TV ratings and advertisement revenues are inconsequential to team revenues in the short term. They have a contracted rights fee arrangement with the RSN for a fixed amount. For the RSN itself (which the team may have an ownership stake), the vast amount of their revenues comes from the carriage fees the cable company charges to customers (fans and non fans alike). Advertisement fees are a small portion of that, not to say RSN’s don’t try and maximize them since every dollar counts. Many RSN’s operate on 40-50% profit margin, so a dollar in advertising fee is almost 50 cents profit.

But anyways, assuming your numbers are right and the Mets RSN gets an additional 20-30 million in ad revenues, that adds up to 8-15 million in profits, and their 65% ownership stake gives them 5-10 million extra.

However, most teams keep separate budgets and the revenues of the RSN are not shared with the team to avoid paying a 30% revenue sharing tax

Curacao LL
Member
Curacao LL
3 months 27 days ago

Thanks. I think I understand.
What I don’t understand is why they bought Cespedes instead of Justin Upton…

Brians Sticky Sock
Member
Brians Sticky Sock
3 months 27 days ago

Because Detroit bought him first and likely intended on keeping him.

mrmaddness
Member
mrmaddness
3 months 27 days ago

Because Justin Upton can’t play CF?

paqza
Member
paqza
3 months 25 days ago

The Mets have Michael Conforto in LF and Granderson in RF. Where would they put Upton?

Avi24
Member
Avi24
3 months 25 days ago

Because Upton would have cost a pick and Cespedes did not cost a draft pick.

Shirtless Bartolo Colon
Member
3 months 27 days ago

I’m waiting for them to turn my You Tube videos into their own pay channel. That would cover most of Yo’s salary.

Paul22
Member
Paul22
3 months 27 days ago

The WSJ said the Yankees generally reaped an extra 70 million in revenue making the playoffs and getting to the ALCS. I would expect the Mets to be in similar territory. Not sure what other revenue sources there are besides gate receipts and merchandise sales at stadium. Maybe stadium advertisements. TV revenues are basically fixed for most teams and the league by contract.

Not sure what the revenue boosts hold true for all teams, but 50-70 million is only about 15-25% of a revenue jump for the average team, and for the Yankees just for example its only 12%. Maybe the pot needs to be sweetened more to get teams more interested in making the playoffs. Be interesting to see the historical numbers for revenue boost as a percentage of revenue for making the post season and going deep into the playoffs

Dave T
Member
Dave T
3 months 26 days ago

The Yankees have higher ticket prices – this site says double the Mets’ average http://www.statista.com/statistics/193673/average-ticket-price-in-the-mlb-by-team/ – so that could be most of the difference.

RoyalsFan#14321
Member
RoyalsFan#14321
3 months 27 days ago

So, like, clarification… the Mets player pool was $70M or was that a total for all MLB teams in the playoffs?

kenster84
Member
kenster84
3 months 25 days ago

And the number one reason? Cuddyer retired !

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