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Sports Money: Contracts And The Real Losers

Sports and Money

NOTE: The numbers in this piece were pulled in early 2014 when piece was originally written, these numbers may or may not be higher in today’s sports. With the addition of Giancarlo Stanton’s $300 plus Million dollar contract it is likely that the figures are higher.

Is it me, or have ticket prices gone up to unheard of levels? I mean sure the sports are probably as good as they’ve ever been. But does the increase in talent account for tickets going up to insane rates? Do we blame the players? The owners? Ourselves as fans?

Before we answer that question, let’s take a look at ticket prices today in the NHL, the league itself runs well over $100 per ticket, and the NHL increased ticket prices on average of 5.7% after the debacle that was the NHL lockout of 2012-2013. Add on another 2.3% at the start of this season and the NHL has an average ticket price hike of 8% since January 2013 (as of early 2014 when numbers were pulled).

That alone should signal something, and on top of that the NHL advertised the lowest price for NHL Center Ice in 5 seasons being this season, and I am not even sure if that is true. Outside of last years NHL lockout I think the price is on par with what was offered the season before, if anything a few bucks cheaper which is a little deceiving if you ask me.

While we are on the topic of hockey and prices, lets take a look at NHL ticket prices. According to Forbes Magazine there are just four teams that have an average ticket price of under $100, those teams being Columbus, Anaheim, Colorado and Phoenix. Meanwhile teams that have been terrible for awhile make it into the top ten for average ticket prices, these teams include Calgary and Winnipeg, and surely it doesn’t matter because Canadians will pay pretty much any price for a hockey ticket. Speaking of Winnipeg, they actually lowered their ticket prices by almost 20% and still have an average price per ticket of a little over $275.

Of the biggest spikes in ticket prices, the New York Islanders more than doubled their average ticket price from $74.22 to $150.60 a spike of just shy of +103%. Other big climbs were Anaheim going from $49.00 to $91.49 (+86%) and Tampa Bay going from 49.00 to 96.79 (+97.5%)

Interestingly enough according to the same report teams such as Detroit, Philadelphia and St. Louis are in the bottom 12 for ticket prices despite being some of the more successful teams in the NHL. Detroit I can understand because the city is bankrupt so charging a lot of money for sports tickets would keep fans away instead of helping the team. Plus during hard times people need to get out and enjoy a night out and there is no being way in my opinion than a sporting event.

But the Flyers and Blues should have higher prices if on ice performance is a true indication of ticket values, but lets be honest if that was the case Toronto would not lead the pack in average ticket price of just shy of $370. That honor, or dishonor depending on how you view it would go to Chicago, Boston, Pittsburgh, Los Angeles, and Detroit if recent success counted for anything.

However while I source the NHL as part of the problem, they are the best league in terms of reasonable contracts, no one player can make over 20% of the NHL Salary Cap number, so for example, the NHL has a $56.3M Salary Cap, so a player can make at most roughly $11M a season. All players in the NHL have a cap hit of less than $10M/season, and all but 3 players have a base salary this season of under $10M including superstars with longevity going for them such as Zdeno Chara, Patrice Bergeron, Steven Stamkos, Alexander Ovechkin, and so on. The three players with base salaries this season above $10M are Shea Weber of Nashville ($14M), Sidney Crosby of Pittsburgh ($12M), and Ryan Suter of Minnesota ($12M).

So what’s the issue? The contracts themselves, according to ESPN.com 57 contracts are north of $10 million per season and one of them exceeds $30 million per season which belongs to Kobe Bryant who is a well known figure in the NBA. A total of 79 contracts are $8M/season or above. According to one report the average NBA player salary is $5.15M/season.

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Clayton Kershaw of the Los Angeles Dodgers. Photo Credit:Wiki Commons.

The average player contracts for Major League Baseball for the 2013 season was $3.39M according to the MLBPA which is up from $2.37M in 2003. That is sure to rise for 2014 when this was originally written when Clayton Kershaw got a contract that averages out at over $30M/season, Miguel Cabrera got a new contract extension for $292M over 10 years, Mike Trout got 6 years for $144.5M, and the Yankees last year gave Masahiro Tanaka the 18th highest contract in MLB history without ever throwing a single pitch in the Major Leagues. Tanaka received a 7 year, $155M contract earlier last winter which is an average of over $22M/yr based mainly on potential essentially being just 25 and dominating the Japan league.

Now in 2015 you can bet it will go up even more with Giancarlo Stanton getting the first $300M contract in baseball history to go along with Kershaw’s contract from last season.

So who loses when you see a big contract given out? Let me put it like this, you might as well be adding about $5-10 to a teams ticket price per seat, per game whenever your favorite team spends a huge chunk of money on a contract extension or free agent. The fans demand that owners spend, so the owners in some cases pass the expenses on to you via ticket prices.

The owners do not take account the new TV contracts which are richer than ever before, especially for the NHL who has two record breaking TV deals inked with NBC and Rogers worth millions if not over one billion dollars. So when I call the NHL lockout a disgrace consider that this league is coming off of a record TV deal with NBC the year before the lock out, and last spring the NHL signed a 12 year, $5.2B deal with Rodgers to give them national broadcasting rights for Canada.

And then there is Major League Baseball, a league that is signing record deals for local TV contracts and they also just re-upped their national TV contracts last season with ESPN for $700M and Fox|TBS for $800M for a total of, get ready for it, $1.5 billion which according to this report doubles the revenue bought in over the last TV deals that the MLB had in place.

This doesn’t even take into account the millions if not billions of dollars college football gets from ESPN, and other broadcast partners to broadcast college football on a given weekend. Nor does it factor in the NBA or NFL both of which have huge contracts themselves, but I cannot find actual figures to post so I won’t.

So again, why are tickets so damned expensive? All the leagues are doing quite well, I can’t imagine the MLB doing too badly for money considering that they bring in $1.5 billion in just TV deals, that doesn’t include the approximate income for tickets which using my math below bring in just shy of $13 billion. So there is roughly $14.25 billion right there not including concessions, merchandise or revenue from MLB.TV or MLB Extra Innings because I doubt the MLB can pinpoint, or count on a said amount of money.

Let me explain how I figured out the game ticket revenue figure. Lets assume the average ticket price for Major League Baseball is $150/seat and we then have to multiply that number by the amount of games which is 2,430 and then we throw in a rough average of 35,000 fans per game. All of the numbers are examples and not guaranteed to be accurate, I am just throwing out what I think are realistic numbers. So by the time we go to multiply we have a math problem that looks like this (2430x150x35,000) and that comes out to 12,757,500,000 or in short a little north of $12.75 billion.

So given all of the information, it is safe to assume that the leagues are making us fans pay for the players they bring in. But the unintended consequences are more fans not being able to afford going to a game than ever before, which actually takes away sales from some teams.

But then again in baseball there are just some teams not worth going to see such as Miami and Houston because the owners clearly do not care about fielding a competitive team but rather make money. There was no bigger example of this than the Houston Astros last season. According to this report the Astros despite having the lowest payroll in baseball along with the worst record, ended up earning the most revenue in all of baseball. I never thought that a team who could in all honesty, crap all over their fans and players could gross the most in the major leagues, more than the Dodgers, Red Sox, Yankees, Angels, Rangers, and so on. The Astros with a payroll of less than Alex Rodrigez’s contract netted the most income. That makes me sick, because that might end up making it seem okay to intentionally put out a piss poor product and still make millions.

Major League Alternatives

Fortunately for us lesser fortunate folks who have to watch their money there are sports leagues that have cheaper options. For instance hockey leagues such as the American Hockey League, the Canadian Hockey League and even the Central Hockey League offer a good value for a night out at your local town without breaking the bank. For example tickets at Providence Bruins games will run you $35 for lower level seats and $27 for upper level seats and there is no such thing as a bad seat in a 10,000 person arena really. It is more of a preference. Also these ticket prices are normal prices, promos include $5 off Fridays and Buy One Get One Sundays which help lower the price of tickets. College hockey, is also a big sport in some areas, especially the Midwest and Northeast parts of the USA.

Baseball has the Pacific Coast League and the International League in AAA baseball from Fresno, California to Pawtucket, Rhode Island and cities and states in between. Baseball also has lower levels of baseball including AA and single-A baseball which go as far east as Portland, Maine. College Baseball is more of a thing in California and the southern parts of the USA.

Basketball has the NBA D-League in select cities, and college basketball which is a huge sport and probably pretty expensive now with the amount of fans it has plus the cost of tuition is at an all time high.

The NFL has no real alternative, you can probably get arena football tickets for a good price but I don’t know what tickets for those games typically run, but I cannot imagine it would cost a lot of money. Also college football is big in the USA, and has been a very high grossing sport. Also in most areas high school football can be seen for little to no money to hand over outside of concessions.

As fans we do not need to be limited in our choices, while it would be nice to see the best leagues out there for reasonable prices, it is also not so easy in some areas. The high prices pretty much pertain to bigger markets such as Boston, New York, and Los Angeles but it isn’t exclusive to those regions, but with the high prices typically found in the downtown areas in those markets it is the most common.

Meanwhile you can get really good prices in lesser hardcore sports markets, for example, when I went to Florida in the summer of 2009 in which I stayed for about 3 months, so while I was down there I was treated to two games, one game was against the Yankees and I went with my brother and sister in law. Meanwhile the other game I purchased Tampa Bay Rays tickets online through the teams website for a game that night, it was between the Red Sox and Rays, the price was very reasonable back then I think it was 15 or 20 bucks for an upper level seat which is a pretty good deal for a Major League Baseball game featuring two really good teams at the time.