A new season ...

... brings new challenges as O's try luring fans amid a recession

It's Opening Day Orioles Vs. Yankees @ Camden Yards

April 06, 2009|By Childs Walker | Childs Walker,childs.walker@baltsun.com

After 11 straight losing seasons, the Orioles might struggle to fill Camden Yards in any economy. This year, they'll try to sell a struggling product in the bleakest financial climate since the Great Depression.

"If you don't have a strong-performing team, you're in a really vulnerable situation," said John Moag, chairman of Moag & Co., a Baltimore-based investment banking firm that focuses on sports. "That hasn't been the case in past recessions."

Orioles officials say that with the season opening today at Camden Yards, it's too early to know how much they'll be hurt by the recession. But they're relieved that demand for season tickets, luxury suites and corporate advertising has not plummeted.

"We're pleased that overall, we aren't seeing what some predicted in terms of a major decrease or the losses of customers that some industries are seeing," said club spokesman Greg Bader.

He noted that corporate advertising and suite sales have remained similar to last year and that the season-ticket renewal rate is also steady, though customers are buying fewer tickets per order. Based on early sales, he said the club is cautiously optimistic about matching last year's attendance of 1,950,075, the lowest in its 16 seasons at Camden Yards.

Attendance has dropped steadily over the past five years, and the club hopes to combat that trend with a "stimulus package" of ticket discounts, including free admission to children under 10 on Thursdays and free seats for fans celebrating their birthdays.

Baseball could be a fascinating test case for the recession's impact on professional sports. Though the NFL and NBA have experienced effects, both sold many of their 2008-2009 tickets before the extent of the crisis was clear. The baseball season, however, will steer right into the teeth of the worst economy in decades.

Many analysts had thought professional sports were immune to recession. Moag's firm studied all of the bear markets since 1970 and found that in general, professional leagues grew more profitable in the face of general downturns.

But this recession, with its broad impact on consumers and corporations, has rocked the sports world like no other. Struggling NBA teams have been forced to hawk tickets at greatly reduced prices, and commissioner David Stern recently secured a $200 million line of credit for clubs that are losing money. In baseball, elite free agents dangled far longer than usual this offseason as every team but the Yankees seemed cowed by financial uncertainty. Even the NFL, the industry's financial heavyweight, cut about 10 percent of its staff in December.

"It's been far worse than I expected," Moag said.

Baseball commissioner Bud Selig told the Los Angeles Times that he's worried about the impact of unemployment. "I used to think we were recession-proof," Selig said. "I really did. This is different."

Ticket worries have caused many franchises to get creative. The Minnesota Twins, for example, have tied a block of 6,500 tickets to the success of the stock market. If the Dow sits at 8,000, the tickets will cost $8 each. The Milwaukee Brewers and Atlanta Braves are offering $1 seats. The Houston Astros are selling season-ticket packages for as little as $76.

Some analysts have argued that sports franchises are more vulnerable this time because their budgets are far more tied to corporate sponsorships and suite sales than ever before. With major partners such as the banking and automobile industries faltering, teams are losing revenue (Bank of America, for example, dropped plans to become a lead sponsor for the new Yankee Stadium.)

But the Orioles haven't seen much of a drop, according to Bader. "Baseball has a better chance to hold on to corporate dollars because of the sheer number of games," he said. "Even in an off year, we still get 2 million fans."

The Orioles are most worried about attendance, an area where the club has suffered in recent seasons, regardless of the economy.

"It's the most visible, most obvious way, we'll be affected," Bader said. "We will have instances, especially early in the season, where the crowds aren't what we want them to be."

On the plus side, he said, Opening Day against the always-popular New York Yankees has been sold out for weeks, and Orioles officials have "restrained confidence" that the club can draw 2 million fans again.

The Orioles drew 25,000 a game last year, 24th out of 30 in major league baseball and down about 2,000 a game from 2007. Such drops are to be expected with a perpetually losing team, sports business analysts said, but could be exacerbated by high unemployment and budget worries in American households.

When asked about the club's attendance prospects, Moag said, "It depends on the team's performance, as it always does."

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