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April 08, 2008
Sox Making Money At Yankees Expense?
Via the FOX Business Network -
The Red Sox may have won two of the last four World Series, but as a business, the franchise has two strikes against it: the smallest ballpark in the Majors and one of the highest payrolls. At Fenway Park, every home game has sold out since 2003, leaving little opportunity to boost sales.
"We need to be creative," says Mike Dee, the team's COO. "We're not building a new ballpark à la the Yankees." So in 2004, he launched Fenway Sports Group, FSG, a marketing subsidiary of Sox parent New England Sports Ventures that creates new businesses based on the team's relationships.
The Sox are now drawing revenue -- more than $200 million a year, sources say -- from Nascar, pop music, and even the New York Yankees. And because most of the work doesn't involve the team, nearly all of the new income falls outside the league's revenue-sharing agreement. "We turned a profit in year one," Dee says.
It's a tough act for most teams to follow -- they're focused on filling seats. But "teams are keeping an eye on [FSG]," says Joe Giles, the Philadelphia Phillies' director of business development. "I like their aggressiveness."
Online Ads
FSG proved so adept at selling online ads for the Red Sox Web site that MLB Advanced Media contracted it to do the same for other teams -- even the Yankees. So, yes, when New York fans visit yankees.com, they're indirectly paying the enemy.Travel
Red Sox Destinations offered $5,000 packages to Boston's opener in Japan, featuring a chartered 747 and a meet and greet with players. FSG has organized previous trips to New York and Baltimore. An offshoot does trips for BC.
Great, just great. MLB (or, if you prefer, MLBAM) is asking the Red Sox to sell ads for the Yankees site. And, the Yankees are allowing the Red Sox to bus in Sox fans for games at Yankee Stadium.
The Yankees can't do much about the former. But, they should try, without question, to stop the latter. It's just not right.
Posted by Steve Lombardi at April 8, 2008 11:38 AM
Comments
It's just not right.
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It most certainly is. Makes sense from a business perspective.
The Yanks, if they haven't figured it out already, should be taking advantage of the fact that they draw strongly on the road.
When the Yanks opened in Japan, did they offer the same package that the Sox did? Did they think about it if they didn't? I'd find it hard to believe that well heeled Yankee fans wouldn't pony up that kind of loot to meet ARod & Jeter.
Posted by: Raf ![[TypeKey Profile Page]](http://www.waswatching.com/nav-commenters.gif)
at April 8, 2008 12:11 PM
The front office is still in the 90s with the way they market the team. That's not a bad thing - it will be successful as long as the Yankees are successful. YES Network generates profits outside of the revenue sharing agreement and while it's not the best network when the Yankees aren't on it is a great way to generate that extra revenue. The Yankees aren't as fan dependent as the Red Soxs are - but they don't need to be. If Cashman can keep the Steinbrenner's from getting more Dave Winfield's there will be no economic necessity to go to the extremes the Red Soxs have had to. (And they have been the highest paid teams to win WSs, no one mentions that)
The Red Soxs also have to deal with a fan base that is RABID - they demand access and to be loved and coddled. If the Red Soxs' were run like the Orioles (shudder) there would be blood on yawkey street or whatever.
Posted by: Straylightrise at April 8, 2008 01:05 PM
It's terrible that the Yanks' FO is behind the curve.
And the Yanks are just as dependent on the fans, if not more so than the Sox. That would go towards explaining some of the moves they have made over the years.
Both clubs have been spending on free agents, and both have had big ticket items (remember the record setting deal Pedro got when he was traded from Montreal?). The Sox utilized different methods of roster construction than the Yanks during the Duquette era. Where the Yanks would retain a player, the Sox would cut them loose (Vaughn - Stanley/Daubauch, a pitching staff that seemed to change year after year)
The Sox aren't doing what they're doing out of economic necessity, but because they can.
Posted by: Raf at April 8, 2008 02:47 PM
Hey, if Sox fans want to contribute to the ever-growing payroll, fine by me.
Posted by: Pete at April 8, 2008 03:11 PM
The Yankees are "cursed" with having too much money. That sometimes breeds an inefficient decision making process.
Posted by: Rich at April 8, 2008 03:19 PM