Boston Red Sox

Boston Red Sox

Thursday, December 18, 2008

Will Red Sox Feel the Economic Pinch?

The Red Sox have seen a number salaries come off the books this winter, giving them as much as $40 million-$60 million to spend on free agents, namely Mark Teixeira.

In between the end of 2007 and the start of 2008, the club cut payroll by roughly $15 million. And since the middle of this year, Theo Epstein has cut roughly an additional $40 million in the contracts of Manny Ramirez, Curt Schilling, Coco Crisp, Jason Varitek, Paul Byrd, Mark Kotsay, Sean Casey and Mike Timlin, etc.

This would allow the Sox to pay Teixeira in excess of $20 million annually and still come in at, or below, last year's payroll. And if the Sox are able to deal Mike Lowell and Julio Lugo as well, there would be even more savings.

However, in the midst all the speculation about the Red Sox offer to Teixeira (rumored to be eight-years and at least $160 million), here's something to consider:

In November, Red Sox officials froze ticket prices for the first time since baseball’s bitter work stoppage in 1994-95, signaling their concerns about the economy and the willingness of fans to continually shell out for the most expensive tickets in baseball. Perhaps these officials recognize that the longest sellout streak in the history of major league baseball could come to an abrupt end in 2009.

The warning signs are clear.

Close to 2,000 seats for the final two American League Championship Series games at Fenway Park went unclaimed online at face value.

National television ratings for the 2008 Major League Baseball regular season were down for FOX, ESPN, and TBS, with declines posted at the regional level, as well. The declines weren't isolated to just the smaller markets either. Even the vaunted Red Sox, and their network, were affected.

Though the Red Sox drew more than 3 million fans for the first time in their history last season, NESN’s ratings for Red Sox games dropped by roughly 20 percent, which will have an affect on the network’s advertising rates.

I'm sure John Henry, like most other owners, is taking all of this into consideration, and perhaps that's why the Hot Stove has been so cool so far this off-season. Will families finally decide that $250 for a family of four at Fenway Park is too expensive?

One GM said the following to Peter Gammons during the Winter Meetings in Las Vegas:

"I believe that the economy is going to have a much greater impact on the baseball industry than most of those people wandering the halls of the Bellagio realize. I believe that if one manages one's payroll, there will be some very attractive, impactful players available come June and July because their teams have to deal with economic realities. So if some big-market teams lose out on certain players now, they can wait and add significantly during the season if they have the capital."

It's a strategy that many teams are surely pondering right now.

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