Yesterday, I had the pleasure of participating in a conference call with Mets Executive Vice President of Business Operations, Dave Howard. I was joined by Matt Cerrone, Ed Marcus, Shannon Shark and other notable Mets bloggers. There’s a link to the entire transcript at the end of this post.
I knew going in that the call was basically to discuss the new dynamic pricing the Mets announced on Tuesday as well as the new rescaled ticket pricing which you can read about here. But my bigger concern was not so much about the lower ticket prices and all the perks for season ticket holders, as it was about getting attendance up again by putting a better product on the field.
I know that this concept is lost on many, but consumers in any industry want value for their dollars, especially their discretionary and entertainment dollars. All baseball fans, particularly in this market – the grandest and most storied of them all, want to see a competitive product. At minimum, you want a better than 50/50 chance that you will see the team win that day – in other words a better than .500 club. That’s the minimum most fans will accept.
I used to manage a big box store in New York that had 12 million dollars in annual sales, but was bleeding cash badly. When I accepted the transfer to the store, after a few weeks I gave our front office my overall assessment and action plan for making one of the top stores in gross sales in our region profitable again. Most of them were shocked when my top recommendation was to increase payroll 15%. I explained that we needed to have people on the floor offering better customer service and that their increased presence on the sales floor would have the cumulative benefit of increasing security and reducing shoplifting, which I concluded was very high based on previous years inventory shrinks. I was willing to risk my career that this strategy of increasing payroll would not fail and I emphasized to them not to look at it as simply escalating our already high expenses, but as making a very smart investment in one of the company’s most valuable assets. In one year the store was number one in the region in net profit and I was off to fix another problem store in New Jersey the following January, along with a fat bonus envelope and a 15% raise.
That same principle could be applied to the Mets. Yes, the Mets had an extraordinarily high payroll going into this season, that much is certain, but it might have been more prudent to spend a little more to make the team more competitive and thereby keeping the fans engaged for a full season instead of a half season. And of course, the season-long fan interest would have led to higher revenues and increased profit margins… And maybe lucking into a Wild Card… That was the basis for my question.
Joe D: My question is, last offseason you rolled out Amazin’ Mets Perks as an incentive to increase ticket sales only to see attendance drop a reported 8% from 2010.
I’m of the belief that the longer a team stays in contention, the more the fans will continue go to the park, support the team and buy tickets.
I would imagine that these new reduced ticket prices, the Amazin’ Perks programs, and all the free tickets that were given away this season cost the organization a very significant amount of money.
In the grand scheme of things, might it have been better to simply invest an additional five-to-ten million in improving the roster so that we could’ve kept the season more relevant through September? Wouldn’t it have been more beneficial, and maybe profitable, to spend just a few more million at the front end in exchange for tens of millions more at the back end, even with the high payroll?
Dave Howard: Obviously, you can’t predict what’s going to happen before the season begins. Things played out as they did, Injuries played a significant role as well. If you looked how well Ike Davis and Daniel Murphy were performing, in particular, before their season-ending injuries. That’s something you can’t predict.
With regard to what we have done from a promotional standpoint, the Amazin’ Mets Perks program was intended to bring added value and benefits to our season ticket holders because they are so critical to the success of our business. We wanted to treat them sort of like we treat our major corporate sponsors, in a very special way, give them exclusive access, exclusive benefits. There was some cost there. I wouldn’t say the cost is extraordinary. The primary benefit of that program is, number one, to provide incentive to renew season tickets. That was effective, because we renewed last year at over 85%, which was a very good renewal given the performance of the team. From that standpoint, that was successful.
Obviously our payroll was high last year, at about $145 million. The value wasn’t there – we did have two players who were released in spring training in Oliver Perez and Luis Castillo, we had Johan on the disabled list all year, so we didn’t get the full benefit of that high payroll. Again, I don’t think anyone can criticize our ownership for not supporting a high payroll. Perhaps you can criticize us for not spending the money wisely.
That’s where I’m very optimistic that Sandy Alderson and his team will be doing that much more effectively as we move forward. I think we have to balance everything and it’s very important for us to treat our fans, season ticket holders, and sponsors in a first-class way on the business side, and obviously baseball operations is charged with elevating the value of the team and getting appropriate value out of the money that we are spending on players.
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I’m not sure that Mr. Howard grasped the totality of my point, but he did bring up some valuable points in his response and I thank him for the opportunity to engage him. Maybe someday we can both talk again so we can establish a clearer understanding of what I was trying to convey. By no means would I ever criticize the organization for not supporting a high payroll, in fact we may have the highest in the league if you tallied up the last ten years. His point on spending all that money more wisely is valid and of utmost importance, and may have avoided this quagmire we now find ourselves in.
Thanks to the guys at Amazin Avenue for transcribing the whole conference call which you can read here.