- The Washington Times - Tuesday, January 13, 2009

Tom McDonald’s job isn’t usually this stressful. For the past decade, the San Francisco Giants‘ senior vice president of consumer marketing could sell pennant races, Barry Bonds and one of America’s most widely praised ballparks to one of its most affluent markets.

Since AT&T Park opened in 2000, the Giants had drawn more than 3 million fans every season. Until last year, that is. With no Bonds and a fourth-place team whose best attraction (National League Cy Young winner Tim Lincecum) is only on display every five days, attendance sagged to 2.86 million - nearly 360,000 fewer fans than packed the ballpark to watch Bonds chase Hank Aaron’s home run record in 2007.

Now McDonald is trying to line up season tickets while Californians are saddled with the third-highest unemployment rate in the nation. Around Christmas, that got the Giants into the discount retailer business.

They rolled out a $49 gift card at warehouse club giant Costco, good for four reserved tickets to a 2009 game. They slashed prices on 28 percent of their season tickets, held another 55 percent at the same price as last year and gave fans six months to make season-ticket payments.

On top of all that, they will become the first MLB team to use dynamic ticket pricing, moving prices up or down on 2,000 upper-deck seats until the morning of a game based on a computer model that projects demand.

“It’s probably more difficult than any year since we’ve moved into this ballpark,” said McDonald, who said the Giants are four points off their goal of retaining 88 percent of their season-ticket holders. “It’s difficult for us to project revenue with some sense of certainty. We’ll plan for the worst and work for the best.”

He isn’t alone. In baseball, which might be the most market-driven of all the major sports, the economy is leading teams into territory most haven’t seen since well before the stadium boom started with the opening of Camden Yards in 1992. Even though 2008 attendance was the second highest in MLB history, it represented a year-over-year drop for the first time in five years. In October - just after the start of the financial-services meltdown - commissioner Bud Selig warned teams not to “get too cocky” with ticket prices for 2009.

In the final weeks before pitchers and catchers report, the prevailing sales strategy is to try anything and everything to get fans to the ballpark. Twenty-three of 30 teams have cut or frozen ticket prices or introduced new discount options for the upcoming season. While the Giants are working with Costco, other teams are offering season tickets with the kind of discounts usually found there.

The Indians have a buy-one-get-one-free deal on some full-season packages. In Seattle, it’s buy two, get two free - potentially dropping the price of four full-season packages by $6,300.

“It’s fair to say a lot of people are very concerned. We’re accepting [that] they’re being very cautious,” Mariners public information director Rebecca Hale said. “If someone calls and says they want to stay with us, we’ll see what we can do to try and make it possible.”

Other maneuvers appear to be more long-lasting. Teams are responding to the economic meltdown by splitting season-ticket packages into smaller chunks while expanding the number of price points at the ballpark, attempting to cut as wide an economic swath as possible. Some are paring down their complement of private suites, turning them into meeting rooms or bigger luxury boxes while adding premium options to other parts of the ballpark.

It’s Mass Customization 101, giving fans as many options as a 40,000-seat ballpark allows, and it only figures to get more sophisticated over time. But as teams respond to the deepening recession by packaging tickets in dozens of different ways, they’re still forced to compete with two clubs proceeding as if they don’t have to compromise with the market.

When the New York Yankees and New York Mets open new ballparks this spring, they also will be unveiling teams retooled with cash that most teams just aren’t spending right now.

The Mets made the first big splash of the offseason when they signed closer Francisco Rodriguez to a three-year, $37 million contract. And the Yankees’ scorched-earth policy landed the top two free agent pitchers (CC Sabathia and A.J. Burnett) before they signed first baseman Mark Teixeira to an eight-year, $180 million deal, wrapping up their shopping spree with a $423.5 million tab.

Analysts say the openings of the new parks might not be as robust as they would have been before the recession, but there’s an added bonus: The teams can write off maintenance costs of the new stadiums against their luxury tax bill. And the Yankees’ payroll is still expected to drop next season, meaning the rest of baseball would see less shared money than the $26.9 million the Yankees paid last season.

“I don’t think you can overestimate the impact of the new stadiums,” said Vince Gennaro, author of the book “Diamond Dollars” and a major league consultant who said he has talked to two teams expecting double-digit percent drops in season-ticket sales.

Whether it’s to stay within striking distance of the Yankees or simply to stay strong during the recession, the rest of baseball is going to have to be more creative.

“I see [ticket pricing] getting even more sophisticated,” McDonald said. “We’re trying to appeal to the different segments of the market. I’m glad we’re doing it. It’s a good thing to respond to the current climate.”

Choices galore

From the time Camden Yards opened in 1992, the trend in baseball has pointed toward more options, whether they’re in concessions, seating or ticket packages. The idea is to give fans anything they could want at the ballpark - for a price, of course - and it has helped send MLB annual revenues north of $6 billion.

That philosophy hasn’t changed now that teams are girding for a recession. If anything, it’s becoming more prevalent.

Many of the trends exhibited when Nationals Park opened last year are expanding. Luxury suites - cash cows in good times, now seen as too rigid - are decreasing, replaced by club seats that give fans a high-end experience while keeping them connected to the action. Unlike contract-based suites, those seats also can sell on secondary markets like StubHub.com.

Target Field, the Minnesota Twins’ new stadium set to open in 2010, will include club seating behind home plate and will have just 55 suites, team president Dave St. Peter said.

But the changes aren’t just at the top of the price structure. The Nationals have 23 price points for tickets; the Twins expect to have 15 in their first season at Target Field, up from nine at the Metrodome.

Seats with all-inclusive food options also have been popular, so much so that the Houston Astros will sell spring training tickets with a prepaid food option this year. Many teams are pushing six- or eight-game plans alongside their traditional season-ticket options. The Tigers added 10 “value dates” to their schedule, dropping prices by $5 for games that aren’t expected to be strong draws. And with their dynamic pricing plan, the Giants have taken flexibility to its most complex level yet.

The move ties prices to demand almost in the same model that airline companies use. And Maury Brown, founder of BizofBaseball.com, said he doesn’t see that going away once the recession does. If anything, he envisions more teams using it, especially clubs at the mercy of the weather.

“[The Twins] are going from guaranteed walk-up revenues in the Metrodome, which in my point of view is a terrible place in spring and fall,” he said. “But the weather is such an overriding factor. They have to figure out some way to make it flexible.”

While some of the moves represent a change in philosophy, others are unabashed concessions to the economy. The price cuts probably won’t be long term, but many teams admit that with so much uncertainty, they’re better off overestimating the impact the recession could have.

“We’ve always operated under the philosophy that you raise ticket prices a little each year. It’s not common for us [to freeze them],” said Pam Gardner, the Astros’ president of business operations. “Price is always a consideration. This year, it’s the consideration. It’s probably the biggest difference in how we’re going about our business.”

New York, New York

The other unknown is what it means when the New York teams, more so the Yankees than Mets, appear to have such unfettered resources. The two teams are among the last to respond to the stadium boom, but their prices have spiked so drastically - the top seats at new Yankee Stadium are $2,500 a game - that it’s bound to trigger some type of response.

For most, it’s likely a realization that what works in New York won’t fly elsewhere. But for a few other big-market clubs in older stadiums, it could be a more direct move - namely, a renovation.

The most likely candidate is the Chicago Cubs, currently up for sale, playing in idyllic Wrigley Field and somewhat handicapped because of the ballpark’s age.

The tight credit market makes a major project farfetched in the near future, but a new owner likely will upgrade Wrigley Field. Brown pointed to the Boston Red Sox’s ability to make minor changes to Fenway Park that have boosted the team’s bottom line. And Mark Murphy - the former athletic director at nearby Northwestern University who’s now working in a recently overhauled stadium - thinks a Wrigley face-lift could work.

The Green Bay Packers finished a $295 million renovation of Lambeau Field in 2003, adding attractions, shops and meeting space but leaving the seating bowl of the 51-year-old stadium largely untouched, save for a ring of suites and club seats at the top. Five years after the project’s completion, the team’s local revenue is up nearly 75 percent, according to a September report in the Green Bay Press-Gazette.

Murphy, the team’s president and CEO since last January, said the renovation exceeded the team’s expectations. He said the Lambeau recipe could work to keep Wrigley financially viable.

“Within the walls of Wrigley, they can do quite a bit. It’s really kind of what we were sensitive to - you have a historic stadium, and you don’t want to change the nature of it,” he said. “If something’s special now, you don’t want to hurt it. There were concerns about what the atrium was going to look like, but it’s not modern-looking at all. It ties in with an older look.”

It also has helped make Lambeau a year-round destination, and a similar move could make the Cubs enough money to keep them at the financial forefront of the National League.

For now, simpler measures will have to suffice. There are few ways for teams to maintain themselves financially - other than hoping their ingenuity trumps the market’s uncertainty.

“Over time, [the Giants have] been pretty good at being nimble and adapting quickly, according to what the market is providing us,” McDonald said. “We’re in that mindset to a greater degree than we’ve ever been.”

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