$4.3 Bil. in New Ballparks to Usher in Grand Slam Gate, According to New Kagan Sports Business Study

Business Wire, Oct 21, 1999

CARMEL, Calif.--(BUSINESS WIRE)--Oct. 21, 1999--

Research Firm Analyzes the Revenue Push Created by

Baseball's Next-Generation Facilities

More than $4 billion worth of proposed new stadium construction will revive fan interest in some of Major League Baseball's depressed markets, according to THE BUSINESS OF BASEBALL(TM), the latest professional sports study published by Paul Kagan Associates, Inc.

State-of-the-art facilities scheduled to debut next April in San Francisco, Detroit and Houston could add $30 million to $40 million in revenue per club, with a second wave of new facilities promising similar gains over the next four years. As many as 12 new ballparks to be built at an estimated cost of $4.3 billion could generate an additional $475 million in revenues league-wide by 2003, according to the study by the Carmel, CA-based media and sports business research firm.

"Teams that haven't been competitive for years like the Tigers, Brewers and Pirates will benefit the most from their new stadiums simply because attendance will be revived, regardless of the on-field product," said Kagan Sports Analyst Hadrian Shaw. "Fans will come for the team -- or in spite of it -- as part of romancing the new stadium." -0-

                      WHAT A NEW STADIUM IS WORTH
                  (Ranked by potential new revenues)

Team                  New Stadium         Debut   Cost     New Revenue
                                                 ($ mil.)  ($ mil.)(a)
----------------------------------------------------------------------
Seattle Mariners      Safeco Field        1999     $517      $44.78
Cincinnati Reds       not yet named       2003      297       44.01
Montreal Expos        Labatt Park         2002      250       43.51
Detroit Tigers        Comerica Park       2000      260       43.35
Milwaukee Brewers     Miller Park         2001      367       43.17
Pittsburgh Pirates    PNC Park            2001      228       42.61
Boston Red Sox        under proposal      2003      545       41.52
Minnesota Twins       under proposal      n/a       439       40.84
N.Y. Yankees          under proposal      n/a       600       39.58
San Francisco Giants  Pac Bell Park       2000      306       37.88
Houston Astros        Enron Field         2000      265       28.41
San Diego Padres      not yet named       2002      268       25.64
----------------------------------------------------------------------
                                         Totals   $4,342     $475.31

(a) Difference between 1998 stadium revenue and estimated stadium
revenue during initial season at new facility.

   (Copyright) 1999 Paul Kagan Associates. Inc. All rights reserved.

The growth potential of MLB in anticipation of new stadiums is one of the many key issues covered in Kagan's THE BUSINESS OF BASEBALL(TM), the most in-depth report on MLB operations and economics available. The 530-page study analyzes the business fundamentals of all 30 professional baseball teams from every angle, including player salaries, franchise values, the media, stadium financing, team revenues, expenses and cash flow.

"This reference work focuses on the same issues that Major League Baseball is actively studying in anticipation of its next collective bargaining agreement," Shaw said. "Although the stadium boom will undoubtedly help the sport's overall income, issues of revenue sharing and cost containment still loom large."

Commissioner Bud Selig appointed a team of baseball economists in January 1999 to help deal with the game's fiscal problems, seeking to establish the economic relevance of market size, the impact of higher payrolls and the effect of new stadiums on the game of baseball, among other issues.

The Kagan analysis reveals that teams playing in stadiums no more than 10 years old pulled in an average of $47 million at the gate in 1998. The remaining MLB teams averaged $28 million in gate revenue while playing in stadiums built mostly in the 1960s and 1970s. The difference in stadium revenue is reflected in payroll, where teams playing in new stadiums spent $10 million more on payroll than teams playing in old-stadiums -- and still managed a profit.

"Some highly competitive clubs have developed winning teams by taking the revenue from their new facilities and applying it to payroll," Shaw said. "But in some cases it is financially more rewarding to limit payroll during the honeymoon phase of a new stadium, allowing for unabsorbed revenue." -0-

                NEW-STADIUM VERSUS OLD-STADIUM REVENUE

                            Avg.         Avg.     Avg. Team  Avg. Team
Stadium Criterion   # of   Stadium   Gate Revenue  Payroll    Cashflow
                    Parks  Age (Yrs.)   ($mil.)     ($mil.)    ($mil.)
----------------------------------------------------------------------
Built after 1989(b)  10      4            46.6        47.8       8.3
Built before 1989    20      39           27.5        37.4       0.2

(b) Includes significant stadium renovations

   (Copyright) 1999 Paul Kagan Associates. Inc. All rights reserved.