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…. The other shoe drops

According to this well-researched SF Chronicle piece, the Giants will find themselves in the unenviable position of having to sell significant ticket price increases to season ticket holders just one season removed from a 2005 season that promises to be one of the worst in at least a decade.

…. That’s when seven years of ticket “price protection” runs out for the holders of 6,800 club-level season tickets, and their ticket prices may rise by about 40 percent. These people help form the backbone of the Giants’ fan base, and the club is banking on their continued support.

Of the Giants’ 28,271 season ticket-holders, 7,715 charter-club seat holders hold protection plans limiting how much their ticket prices could rise each year.

…. Overall, Baer estimates the Giants will have a net loss of $1 million-to- $2 million this year mainly because of an increased payroll. The club takes a $13 million-to-$14 million hit each year in revenue sharing, a figure that Baer said “has more than doubled from what we anticipated in the late ’90s.” Sponsorships provided “a few million more than we anticipated,” but he said the Giants would have to sell out every game in order to break even.

Besides payroll, the other big expenses are the $18 million the club pays each year for loans on the park construction and $2 million in loans for the purchase of the team, Baer said. Other teams don’t have to pay such sizable mortgages, but may have to pay considerable rent on publicly owned facilities.

The Giants will be paying off the park until 2017.

First things first. The team finds itself with 50 losses at the All Star break due to a three-year “re-tooling” program that has been just shy of a total disaster. I’ve covered this in detail, I know, but in this context, it’s important to note that a team that has been built to revolve around one transcendent player has not set itself up to replace that player, even though there have been players available on the free agent and/or trade market.

From a performance standpoint, the Giants unwillingness and inability to handle this situation has been frustrating, to say the least. From a financial standpoint, it has been a nothing short of a disaster. Heading into 2006 after a lost 2005, with an ancient lineup, a patchwork pitching staff, and the possiblity that Bonds is finished, the Giants will find themselves paying for their poor planning, because you can bet that a 100-loss team will be an impossible sell for the prices they are going to be selling at.

Add in the fact that they never fail to tell us how little money they’re making, or how tough it is to own your own ballpark, or how big their mortgage is, and you see a side of the organization that makes me wonder whether they really have any idea at all what the hell they’re doing.

I’m no financial expert, but I know that owning a baseball team and a ballpark puts them in position to have a pretty substantial stream of revenue, and although it may be true that they show a book loss of a million dollars this season, there can be no doubt that Magowan and company are doing very, very well with their investment. And we know that Baer is -knowingly- choosing to ignore the revenue sharing refund that the Giants receive in the form of their deducted ballpark construction costs.

The last Forbes report I linked to showed the Giants as one of the top ten baseball teams in terms of estimated value, and the poor-mouthing the owners insist on doing every chance they get is frankly insulting. Asking fans for thousands of dollars while telling them how poor you are is, well, a really shitty sales pitch, and one that would get your average car salesmen fired. Why the Giants think it’ll work is beyond me.


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All commentary is the opinion of John J Perricone unless otherwise noted.
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