By Thomas Boswell
Wednesday, June 24, 2009
To some, the capacity crowds at Nationals Park this week for Red Sox games have been a heart-lifting sight. This is what baseball in Washington was always supposed to be: a roaring crowd of about 41,000 in a beautiful ballpark on a perfect, balmy summer night.
To others, the sold-out scene has been an embarrassment for loyal local fans of the Nats, who watch as zealots of the visiting Red Sox occupy one-half of the seats and easily out-cheer the home crowd. It's a sight with which they are all too familiar. At the home opener, Phillies fans, invited to come on down by team president Stan Kasten, made a full house of 40,386 possible. Since then, vocal fans of the Mets, Phils and Orioles have also helped the Nats have five healthy crowds that averaged more than 30,000. In three weeks, Cubs fans will occupy Nats Park and make it feel like the Unfriendly Confines to Washington fans.
But there is another perspective: the view from the owner's box. Those invading fans sure do make the turnstiles spin. The poor Nats, all they do is rake in the money. As far as they care, root for anybody you want, as long as you buy a ticket. And have a $6 beer.
How can a team that's had the worst record in baseball for the past two years, and one that usually has a rock-bottom payroll, be ranked as the second-most profitable team in the sport in 2008 by Forbes magazine? How can the Nats, who often draw only 17,000 fans on weekday nights against mediocre opponents, have revenues at the gate that will be ahead of about a dozen major league teams at the end of this season?
The answer is on display right now. The fans of visiting teams pay the Nats' bills and much more. This week, Red Sox fanatics, many of whom traveled from New England to get the prime seats they could never score in Fenway Park, will generate three straight sellouts, including 41,517 on Tuesday night. But the Red Sox throngs are just the most extreme example of a general trend. Every season, the Phils, Mets, Cubs and Orioles play 24 games here -- and bring their fans. Some years, the Yankees or Red Sox come, too. There's always Opening Day. And the Nats are sure to be home for one or two of the big holiday weekends -- Memorial Day, July 4th or Labor Day.
How powerful is this almost guaranteed visiting-team gate to the Nats? It's strong indeed, because Washington has the advantage of East Coast geography, natural rivalries and transplanted fans. Early in the season, there were lamentations that the Nats ranked 29th in attendance out of 30 MLB teams. It was an illusion. The invasion just hadn't begun.
Now, it's in full swing. Since mid-May, home series against the Phils, Orioles and Mets have moved the Nats up to 27th in attendance. By the time the Red Sox leave town, they'll likely jump past four teams to 23rd. In a month, after a Fourth of July home weekend plus seven games against the popular Cubs and Mets, the Nats' ears will be ringing -- from cheers for the other team and their own cash registers.
By then, their average attendance will rise to about 24,500 a game. That will probably put Washington ahead of Pittsburgh, Oakland, Florida, Cleveland, Baltimore, Tampa Bay and Toronto at the gate, and maybe Kansas City, Cincinnati and San Diego, too. Even if the Nats slip back a bit by season's end, the bottom line will look fine. The Nats, because of their major-market ticket prices, will easily surpass the revenue at the gate of all 10 of those teams and probably others, too, like the Twins and Braves.
The core question about the Nationals is not whether they'll generate enough revenue to stay in Washington. That's a lock. In addition to beating about a dozen teams in revenue at the gate, the Nats then collect revenue from various other streams, including revenue sharing from high-spending teams such as the Yanks and local TV revenue (almost $25 million this year from the Orioles). That doesn't include the Nats' share of MLB's national TV contract, merchandizing and Internet revenues.
The Nats can take in enough money to live comfortably in Washington indefinitely. As a business proposition, they function quite nicely right now. Too nicely? The broader issue is whether the Lerner family, who may be the wealthiest owners in baseball, will be content to let the fans of other teams subsidize a low-budget tail-end team.
For years, the Orioles have lived on the kindness of strangers. Where do the Red Sox get the most fans on the road? "Definitely in Baltimore," Boston Manager Terry Francona said. "It's very convenient for New Englanders to fly down there." Last year, the Orioles averaged 38,557 fans when the Red Sox and Yankees came to Camden Yards 18 times. For all their other games, they averaged 19,937 -- roughly half as many.
The Nats maintain that the last thing they want is such subsistence living. "Every team wants to win because that's how you make the most money," Kasten retorted yesterday. "A team's expenses are constant. So if you win, your attendance goes up and your revenues go up. And you make more money on every thing else, too," like merchandize and concessions.
"The single most important factor in having a successful franchise is winning and that's the case here, too. The only reason people get into this is to win," Kasten said.
Including the Lerners?
"Absolutely. No one wants to win more than they do," said Kasten, who has become pretty much the team's only public voice as the team's performance has plummeted.
There are two problems with the Nats' position. First, a team's costs are not, in fact, "fixed." If payroll goes up $50 million to create a better team, no one knows in advance if increased attendance and ancillary revenues will bring in an additional $50 million to compensate. In fact, if a better team generated only an additional 5,000 fans per night, it wouldn't come close to covering the cost. At some point, with bigger sales of higher-priced luxury suites and boxes, it would. But the Nats may be a better business now, with low payroll and visiting-team-boosted attendance, than they would be with a $100 million payroll, a winning record, happier fans and average MLB attendance of 30,000.
The second issue is more difficult to parse, but is important. When they bought the team, the Lerners maintained, and still do, that they will "take no money out of the team for 10 years." That sounds good. But it is incomplete. Twice, principle owner Ted Lerner has explained to me that he considers "servicing the debt" on the team to be a major component of the team's costs and a restraint on other spending.
If the Lerners consider "debt service" to be a club expense -- and the team never gives details of its finances -- then fans should understand the implications. The Lerners may be accurate in presenting themselves as not having positive cash flow from the Nats. But eventually, if they pay off some or all of the team's debt, they will greatly increase the family's equity in the franchise and, thus, their own net worth. Owners don't have to, literally, take money out of a team in terms of annual profits to increase their net worth greatly over time. Perhaps the Lerners simply need to clarify such issues more.
Nationals fans, and the team's owners, claim that they share a common goal: a time when a winning team creates huge enthusiasm and big crowds in Southeast Washington along a flourishing waterfront. If such a day comes, then there will be many nights like the semi-magical ones this week, when you could wander around the packed stands, climb to the upper deck and see the Capitol and Washington Monument silhouetted against the night sky and almost imagine a Nationals pennant race.
That is, if you could ignore the chants of "Let's go, Red Sox."