On Economics of Making the Fall Classic

Vince Gennaro, a consultant to several MLB teams, has recently written a book called Diamond Dollars: The Economics of Winning in Baseball.

He shares some insight into what it means for both the Rockies and the Red Sox after their trip to the World Series this year in this Yahoo! article.

For those of you that don’t want to read the entire thing, here are some relevant points:

  • “Over the next five years, the Red Sox should realize a cumulative $45 million in additional revenue for achieving their second World Series championship in four years, while the Rockies stand to gain an estimated $30 million as a result of getting to the Fall Classic for the first time.”
  • Since the Red Sox already have sold out tickets at Fenway Park, the Red Sox stand to gain money through advertising and other promotions; the Rockies will realize gains through increased ticket sales.
  • Gennaro estimates that the Rockies are likely to turn this year’s 14,000 season tickets into 20,000 to 25,000 in 2008.
  • History shows that it takes *five* full years to lose the attendance and revenue gains generated by a trip to the World Series.
  • Although it seems obvious, but virtually every component of a team’s revenue equation – ticket sales, television contracts, advertising rates, corporate sponsorships and merchandising experience a major boost as a result of the trip to the World Series.
  • And the one that really gets my attention – why do fans spend more after their team has done well? Numerous theories abound, and Gennaro posits one in the article: “One popular theory is that it takes winning to bring aboard the casual or “bandwagon” fans that swell ticket sales and broadcast ratings. And studies show that athletic success triggers the brain to produce feel-good hormones that enhance self-confidence. Although it may not be rational, fans respond to wins and losses as if they participated in the competition.”
  • Teams on average spend 49 percent of their revenue on payroll.

Again, this article is pretty cool. I will check out the book next time I stop by my local Borders store.

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~ by mlb2007playoffs on November 1, 2007.

2 Responses to “On Economics of Making the Fall Classic”

  1. […] article is presented below. It is an excellent read. In order to make sense of this story, do read this summary of Gennaro’s article concerning what it means for a team to make the World […]

  2. […] have some spare time on your hands, read the entry about A-Rod’s ten year contract and the economics of making the World Series. Gennaro’s latest article, published at Yahoo! Sports, is very interesting as well. One key […]

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