Bloomberg Anywhere Bloomberg Professional About Bloomberg


 
Phillies Defy Slump as Championship Sells More Seats (Update1)

By Mason Levinson

March 26 (Bloomberg) -- The Philadelphia Phillies are finding it easier to make money off their World Series title than they did after past successes, even amid what may become the longest recession in seven decades.

The Phillies were unable to reap much of the financial benefits of their only other Major League Baseball championship in 1980 due to a two-month player strike midway through the following season. A 1993 run that ended with the National League title and a World Series loss to the Toronto Blue Jays failed to pay off when another player strike led to the cancellation of the 1994 playoffs.

“We didn’t win at the right time,” Phillies Chief Executive Officer David Montgomery said in a telephone interview. “This time we did and it more than makes up for those two.”

The Phillies’ win over the Tampa Bay Rays in the World Series has boosted season-ticket sales for this season by 17 percent, while sponsorship revenue should increase about 3-4 percent, Montgomery said.

Philadelphia claimed its first World Series title in 28 years, which has translated into the equivalent of more than 24,000 full-season ticket sales, up from 20,487 last year, he said. The team doesn’t disclose its revenue figures on ticket sales, Phillies spokeswoman Bonnie Clark said in an e-mail.

“Could it have been more?” Montgomery said. “Perhaps, but boy, we’re not looking at it that way. We’re just very thankful.”

U.S. Recession

If the U.S. recession persists through the first half of this year, it would the longest since the Great Depression. The economy shrank at a 6.3 percent pace in the fourth quarter of 2008, the weakest performance since 1982.

Since their World Series win in October, the Phillies were able to replace the few contracts they lost on the 71 suites at Citizens Bank Park, and sponsor departures, largely automakers, were filled in by other categories, said Montgomery. He declined to list those that pulled out.

“All our business vital signs are quite good and we understand that’s in the face of a challenging time for others,” he said.

In strong economic times, baseball teams generally capitalize on the financial benefits of a World Series title for about five years, according to Vince Gennaro, author of “Diamond Dollars: The Economics of Winning in Baseball.” Smaller-market teams see gains of about $35 million and large- market franchises earn at least $60 million, he said.

“It’s not just a one-year effect,” Gennaro, who is a consultant for MLB teams, said in a telephone interview. “If the Phillies win 80 games this year and fall short of the postseason, the people that bought season tickets aren’t all going away.”

White Sox

Ticket sales for the Chicago White Sox, who won the World Series in 2005, are pacing ahead of last season, while sponsorships are slightly down, according to Chief Marketing Officer Brooks Boyer.

The White Sox’s 2005 title, their first since 1917, helped the team double its number of season-ticket packages the following year, while sponsorship revenue increased more than 25 percent, Boyer said in a telephone interview.

“Going into 2006, the banks weren’t getting killed, and the auto industry wasn’t getting killed,” Boyer said. “That’s where I think (the Phillies) will see their challenges -- making quantum leaps in sponsorship sales.”

The White Sox’s two most significant sponsorship losses this offseason were Bank of America Corp., which didn’t renew an expired five-year contract, and General Motors Corp.’s Buick, Pontiac, and GMC brands, Boyer said.

Since 2005

While the White Sox’s season-ticket levels dipped from their high after their latest title, they remain above where they were before the team swept the Houston Astros to claim the 2005 championship, Boyer said.

How much the current economy will affect teams’ revenue depends on each market, Gennaro said.

Manufacturing in the Philadelphia region shrank in March for the 15th time in 16 months as orders and employment weakened, according to the Federal Reserve Bank of Philadelphia. The jobless rate in Philadelphia jumped to 7.5 percent in January, compared with 7.6 percent for the nation, the U.S. Labor Department said on March 19.

The World Series title was the first championship for the city’s major professional teams since the National Basketball Association’s 76ers won in 1983, something Montgomery said helped as a record 3.4 million fans attended Phillies games.

Fan Support

“Getting a feel for the fan support that we got last year and expect this year, it enabled us to make decisions such as committing to the core of the club,” Montgomery said.

The team’s payroll will rise to about $137 million this season from $113 million after re-signing World Series Most Valuable Player Cole Hamels and 2006 NL MVP Ryan Howard through 2011.

Montgomery said how long the financial effect of the World Series lasts depends on his players’ performance.

“Five years, at least in Philadelphia, is a long time,” he said. “We jokingly say that we’re popular right now, but wait until we lose three in a row.”

To contact the reporter on this story: Mason Levinson in New York at mlevinson@bloomberg.net.

Last Updated: March 26, 2009 08:43 EDT

Sponsored links