Case Study: A's Revenue
Long-time lurker here. I recently had a job interview, and since I mentioned one of my interests is baseball my interviewer decided to ask questions on how my favorite baseball team derives revenue. I'm pretty sure I failed miserably at getting at a reasonable answer (I don't do mental arithmetic well under pressure!) But I was wondering if someone would have a good answer and actual data for this.
Here is how I derived my back of the envelope answer:
Tickets: average price ($15) x Average attendance (15,000) x Home games (80) = $18M Ticket sales
Concessions: added another $20 on average ($10 for food + $10 for drinks/beer) = $24M
Stadium: to get out of this one I guessed that the city owned the stadium, and that naming rights and ad revenue make up for the interest/lease payments...nevertheless the revenue from these sources could be $5M for the naming rights and another $5M for ad revenue inside the stadium = $10M
Merchandise: this could be a very large part of revenue and I have no idea how to estimate: $10-$40M
MLB: I heard that online revenue from MLB is split evenly among teams so I threw in another $5M.
Luxury Tax: I don't know what the penalties are I said $5M (It's probably much smaller)
Total Revenue: $102M
Anything else you guys can think of? How would you have approached this?
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11 comments
Comments
I mocked it up differently
Last October I did what could be considered reasonable estimates of revenue for 2007 and after the new ballpark is built. I’ve been told that the future projection is rather conservative.
Actual Stadium Expenses, which is a line item used as a deduction against revenue sharing, is probably less than stated in the table.
by vertig0 on May 9, 2008 9:25 AM PDT reply actions 0 recs
Concessions
Not sure you can count this as a part of the A’s revenue becuase Aramark runs all that. The A’s probably just get a small cut of the concession revenue.
by GusanoQuemador on May 9, 2008 9:57 AM PDT up reply actions 0 recs
Good work on this
"Put some ice on it. After that, there's nothing a few beers won't take care of. " -Pink
by OrlandoAsFan on May 9, 2008 10:12 AM PDT up reply actions 0 recs
Nice work
I would have said the Haas family left a pot of gold for the A’s when they left. You answers are much better.
by passionately objective on May 9, 2008 10:03 AM PDT reply actions 0 recs
Pot of Gold?
Expand. Like the Lucky Charms variety?
by jeffro on May 9, 2008 10:51 AM PDT up reply actions 0 recs
That's right Jeffro
And in hat pot we’ve extracted the Big 3, a few MVPs to boot, and the current team. I love cereal.
by passionately objective on May 9, 2008 2:40 PM PDT up reply actions 0 recs
don't worry
I’m sure it was an exercise in your thought process and not in getting the right number.
Jeremy was safe. He jumped over the tag.
by mrrickyg on May 9, 2008 10:12 AM PDT reply actions 0 recs
I was under the impression that the A's do not indeed get much from concessions
since an outside company handles it all.
by Zonis on May 9, 2008 11:10 AM PDT reply actions 0 recs
Costs (just some thoughts, no values assigned)
- Payroll (includes players, management, support staff)
- Taxes (includes payroll, sales, other?)
- Advertising
- Discounts/promotions
- Travel
I know the A’s have a pretty low payroll, but the other costs surely add up. That said, I’m sure that the owners are making a little cash. Plus the team’s winning. Who ever said you can’t have your cake and eat it too?
"To me, boxing is like a ballet, except there's no music, no choreography, and the dancers hit each other." - Jack Handey
by JJ on May 9, 2008 12:59 PM PDT reply actions 0 recs
They can and they do
Some of the old cost analysis spreadsheets I’ve seen have each team budgeting $40-60 million for non-player costs, non-stadium costs. That includes travel, front/back office payroll and operating costs, insurance, and other forms of overhead.
Sports teams in general pay very little in taxes on their revenues. There’s payroll tax of course but that’s already accounted for. The number of potential tax deductions is enough to make it look like an owner runs a non-profit, charitable organization – which of course they aren’t. In fact, many owners/groups buy teams simply to act as big tax shelters. Did you know that an owner can write off the entire purchase price of team over 15 years?
by vertig0 on May 9, 2008 5:09 PM PDT up reply actions 0 recs

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