04/09/09 10:00 AM ET
Minors should survive current economy
Industry insiders optimistic as the Minor League season opens
By Jonathan Mayo / MLB.com
Much has been written about baseball -- and sports in general -- and how it will be impacted by what's happening with the economy. Tucked away in smaller towns and lesser markets, it would be easy to think that the cottage industry of the Minors might be immune to the recession. That's not wholly accurate, but there are some signs as the Minor League season kicks off that point to it being able to withstand the storm.
"I don't think it's recession-proof, but we're more recession-resistant than other industries just because of how we've always positioned ourselves," said Kurt Landes, general manager of the Lehigh Valley IronPigs, the Phillies' Triple-A affiliate set to start its second season on Thursday night. "The industry as a whole and specific teams are more adaptable and able to think quickly on their feet in order to combat the economy. They're already integrated into the communities, and I think they're going to continue to do well."
The first reaction might be, "Easy for you to say." Landes, after all, has got a pretty good thing going. His team is the highest-level affiliate of the World Series champions, located in Phillies country. The team has only been around for one year and plays in a beautiful new ballpark.
"We're fortunate in a number of ways," Landes said. "Our region is so excited about baseball. We're in a honeymoon period I hope that never ends. Fans are still hog wild, as it were."
Horrible pig puns aside, Landes is not completely alone in feeling pretty good about the 2009 season. Not everyone will do as well as the IronPigs, who were expected to have a standing room-only crowd for the opener against the Scranton/Wilkes-Barre Yankees, but there's also some cautious optimism in other Minor League locations.
"In general, the economic foundation of MiLB is very solid, even during these challenging times," said Chuck Greenberg, president and managing partner of the Myrtle Beach Pelicans and founder of Greenberg Sports Group, which also oversees the operations for the Class A Short-Season State College Spikes. "It will make for a soft landing, but these are difficult economic times."
That's why Greenberg and others might not paint an unrealistic picture of what 2009 will look like. Ticket sales overall will probably be OK. Season tickets and packages might take a hit, especially those which had been purchased in the past by businesses now tightening their belts. The big question, of course, is whether those sales will make up for the inevitable struggles with sponsorship and advertising.
"I think most Minor League franchises will have slightly lower revenues this year and most of that will come from losses in sponsorship and advertising," Greenberg said. "Some will have modestly increased and some will have modestly decreased attendances, but even those with increases will have a hard time compensating for sponsorship losses."
The man overseeing all of this, of course, is Minor League Baseball president and CEO Pat O'Conner. The long-time Minors executive has helped build an unprecedented period of financial growth for the industry and realizes that 2009 might see the graph turn south for the first time in a long time.
"If we're down, it's not going to surprise anybody," O'Conner said. "I don't think the bottom's going to fall out. It's not going to be a great year, but we'll survive the year."
Before questioning O'Conner's outlook, it's important to know that "surviving the year" might be a huge victory compared to the rest of the economic landscape. And while he's not going to put on a happy face just to appease some, he's not all doom and gloom.
"I think we're all going to feel sponsorships take a bump down because of the economy," O'Conner said. "But I'm pleasantly surprised it's not as bad as the economy in general would lead you to believe it is. Compared to other industries, it's not as severe and deep as you would think."
A quick survey around the Minors, O'Conner said, would show some clubs with a fairly substantial drop in preseason revenues. But then there are teams with new ballparks or affiliations that are up the same amount. The rest of the clubs are scattered in terms of loss or growth, which could mean things more or less will even out.
"Flat would be a good sign for this year," O'Conner said.
There's still a lot that will determine just how the 2009 season plays out financially for Minor League Baseball. O'Conner wants to see how game dollars come in. Will the economic downturn keep people from buying hot dogs or a new hat at the ballpark? How much will that impact the overall picture?
There are other factors to consider as well. A team that sells fewer season-ticket packages might have a larger pool of single-game or walk-up ticket buyers. Both Lehigh Valley and Myrtle Beach are ahead of last year's gate sales. That's not inconsequential, considering the IronPigs drew more than 600,000 fans in their inaugural season and the Pelicans finished third in the Carolina League en route to a franchise attendance record last year.
"If we continue to see this uptick in gate and walk-up sales, we're hoping we'll make up [the loss in season and group ticket sales] and maybe end up on the plus side a little," said Greenberg, whose Pelicans open Thursday night against Wilmington.
Myrtle Beach is a little different than many other Minor League locations. Other towns might benefit from the down economy because families will stay home rather than travel over the summer, but will still be looking for reasonable ways to enjoy themselves. Myrtle Beach, however, relies on tourists and vacationers. But again, there's reason for optimism. Last year's attendance record was set despite gas prices topping the $4-per-gallon mark. With that figure slashed in half, and the area generally considered a more reasonable vacation stop, the hope is more people will be able to afford to check the scene out.
"We're cautiously optimistic that tourism will be up and more of those who are in the community this year will come to a game because you can't have more fun for your money than at a Myrtle Beach Pelicans game," Greenberg said.
There it is again, that motto about an affordable night out, getting more bang for your buck. Perhaps the industry is clinging to it too much, but it also seems it will help keep it afloat for longer than many other businesses these days.
"I would probably be optimistic," Landes said of the industry-wide prognosis in terms of ticket sales. "I think more people see the value of Minor League Baseball in terms of the whole mantra of affordable family entertainment."
O'Conner, who took over as Minor League president in 2007, agreed.
"We're price-pointed and we're flexible. People are going to recreate," he said. "We're local, we're hometown, they know us. When you align price with value, we're OK. We'll compete in that market.
"We have traditionally done well in economically tough times," he added. "People are not going to make the family pay for economic hardship. I think this is a buyer's market for baseball games if you're interested in going."
Jonathan Mayo is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.