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Orioles ticket price increases and what they suggest about the team's revenue mindset

The Orioles announced Friday that they will be increasing ticket prices for 2014. Mark tries to guess how necessary of a move this may have been, given the payroll and revenue situations.

Rob Carr

The Orioles capped a week where expensive free agent signings were happening in a blur all across baseball by announcing that ticket prices would be increasing for next season. As the top-tier and mid-tier free agents started to come off the board, as the team traded their $11 million closer to free up room in the budget, the Orioles signed the likes of Ryan Webb and Francisco Peguero.

An off-season's success or failure is not determined in the span of one week, but the optics of this week are poor for the team. It's discouraging to hear that it will cost more to see a team that has not yet opened its wallet on talent for next year. The increase, which according to the Baltimore Sun is the first since 2008, is a modest 5% over last year's prices.

In the past, I have argued that the Orioles need to be more aggressive in trying to draw fans to the stadium on short notice. The Sun's article notes that the O's are attempting to encourage more fans to be season ticket holders by having a pricing system that increases as the day of game draws closer. This will include for games with giveaways. Rather than try to fill the empty seats, the Orioles want to make more money from the people who do come to the stadium.

Such a decision seems to suggest that the O's feel they've reached the cap of what they can reasonably draw in the Baltimore market as things currently stand. If they don't think they will get much more than the 2,357,551 fans they drew in 2013, then it makes sense to try to increase the stream of revenue from those fans.

Reporters who lament the lack of fans showing up at Camden Yards next summer, as they have done for the last two summers, should probably note that the Orioles have chosen to accept that it's that way and have done little, if anything, over a span of years to change this.

This is not an evil decision. It is the reality for the market, based on the number of people and the amount of money those people have to spend. The Orioles were the seventh-most valuable baseball franchise in 2013, according to Bloomberg, but this does not mean they are raking in money hand over fist from every fan who comes through the turnstiles when compared to the real haves of baseball.

Team Revenue Gate Concessions Attendance Gate/Fan Concessions/Fan
Yankees $570M $265M $53M 3,279,589 $80.80 $16.16
Dodgers $325M $81M $29M 3,743,527 $21.63 $7.75
Red Sox $405M $174M $36M 2,833,333 $61.41 $12.71
Mets $265M $72M $26M 2,135,657 $33.71 $12.17
Cubs $320M $128M $30M 2,642,682 $48.44 $11.35
Giants $300M $126M $26M 3,369,106 $37.40 $7.71
Orioles $210M $52M $14M 2,357,551 $22.06 $5.94
Angels $275M $78M $24M 3,019,505 $25.83 $7.95
Phillies $315M $142M $28M 3,012,403 $47.14 $9.29
Rangers $260M $79M $22M 3,178,273 $24.86 $6.92

Data on revenue is from Bloomberg's estimations. Attendance is from Baseball Reference.

The Yankees make more money in gate revenue than the Orioles make in total revenue. Their concession revenue is greater than the gate revenue in Baltimore. Per fan, they make nearly four times what the Orioles make in gate receipts and almost three times as much in concessions. When owner Peter Angelos calls up a columnist to tell him that this is not New York City, this is what he is talking about. It's not Boston, Chicago, or Philadelphia, either.

Even if the Orioles were good for a sustained period of years, they would probably not be drawing a million more fans per year to put them up with the Giants and they could probably not make twice as much money per fan to put them up with the Phillies.

Average ticket prices are higher in those stadiums. A place like Yankee Stadium has its moat-protected expensive seats. It's unlikely that kind of thing would fly in Baltimore. The big spenders aren't around in as large a quantity to make the expense worth it. Raising prices by something like 50% would have a deleterious effect on actual attendance and it still wouldn't leave them competing with the big boys in money made per fan in the stadium.

From the Orioles financial perspective, the recent hike makes sense. They have probably found the number of fans who will show up to watch a good Orioles team; a third consecutive winning season might result in another modest attendance increase as more casual fans attend more often, but I'd be surprised if it flies up another 250,000 fans compared to last year. Now they have to make more money off those fans without driving them away with expensive tickets.

Note that the O's also make the least money in concessions per fan out of these top ten most valuable franchises. Some of this may be a function of price, but it may also be a function of getting people to spend money on concessions at all by having more appealing menu items, or by having popular items available in more places in the stadium, or by making sure that you don't have to wait in line for two innings to get a hot dog and a beer.

How much would you say the stadium is currently successful in these ways? Variety in menu selection has improved over the last few years, but the O's don't have the most popular items spread out well throughout the stadium. If a niche item is nowhere near your seat, forget about it. You might not even know where to go for something unless you're specifically looking for it. Even for traditional ballpark fare, waiting in line can be a frustrating thing to do if you're in the wrong place on the wrong night.

The Orioles are already fan-friendly in the sense that their concessions are not mandatory. You can bring food in from the outside. One dollar water, ice cold can slake your thirst, and any of the assorted food vendors you'll find in the vicinity of Howard Street between Pratt and Conway can give you hot food for less than stadium prices. The proximity of places like Pickles and Sliders allows for fans to get some cheaper beer in them before the game begins as well.

These are not bad things. People who might be priced out if they could only eat stadium-priced food or go hungry can now go to more games.

Where does that leave the Orioles? Raising prices risks driving away some fans; changing policies to not allow fans to bring in food would almost certainly drive away some fans. They have to thread a delicate needle to capitalize on the opportunity presented by higher quality teams on the field.

While the O's have less than a third of their revenue tied up in gate and concession revenue - as compared to a team like the Yankees, who get nearly 60% of revenue from tickets and food - they still probably find it hard to pass up a chance to add $3 million in revenue by increasing ticket prices. You would not pass up the chance to make that money, either, especially if you were making some of it from causing Yankees and Red Sox fans to spend more money on prime games, or uber-prime (actually termed "elite") games.

That revenue won't suddenly make the team search out every top-tier free agent, but maybe it will keep them from feeling like they have to trade a quality-but-possibly-overpaid player like Jim Johnson in the future.

It seems like the Orioles have settled on about a 30,000 fans per game average attendance. That means there will be fun, big attendance games if the 2014 team plays big weekend games against teams whose fans historically invade Camden Yards, but it also means there will be 15,000 fans or less per game mid-week, even in the summer, when playing teams like Houston and Kansas City.

Whether this is the right decision is probably for someone with some accounting degrees, or at least the ability to look at the Orioles' books. The Orioles seem to be happy with the way things are now, so as disappointing as that is, we have to live with that. Look on the bright side: when you go to that Tuesday night game in April against the Rays, you can still help yourself to a really nice seat. Just don't expect to see Shin-Soo Choo.