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“It’s incomprehensible that you watch a game, and there will be front-row seats empty.”
—Major League Soccer Commissioner Don Garber, on the new Yankee Stadium.

“Don Garber discussing Yankee attendance must be a joke. We draw more people in a year than his entire league does in a year… Hey Don, worry about Beckham, not the Yankees. Even he wants out of your league.”
—Yankees President Randy Levine, on Don Garber.

Levine’s emotional response to Garber’s comments—one that some might say downright betrays a certain insecurity—probably should have told us that something was coming. The Yankees were clearly frustrated with all of the empty seats surrounding home plate and the dugouts, both from a PR standpoint and in terms of revenue maximization. Hal Steinbrenner had even admitted that some tickets were a little overpriced, given the awful economy.

So, on Tuesday, the Yankees took an enormous step toward fixing it. They cut the prices of some of the most expensive full-season seats at Yankee Stadium in half, from $2,500 to $1,250. Tickets which had previously gone for $1,000 were cut to $650. Customers that had already bought season tickets in those sections are being offered a refund or a credit.

That, at least, was the main story being told on Tuesday. But the full release is much more complex, with a number of price cuts, refunds, and credits—to the point where some of it seems almost arbitrary. Some $2,500 seats are being cut in half, while others are staying the same? Some customers can get refunds, while others only get complimentary tickets? Just imagine the Yankees’ ticket staff trying to make sense out of all the requests that will be coming their way in the next few weeks—based on their recent track record, don’t be surprised if Charlie Steiner and Mark McGwire show up.

Putting aside the assorted refunds for a second, Maury Brown has a really good rundown of how many tickets have actually had their prices lowered. Here’s the data, in spreadsheet form. The numbers wind up being relatively clear in terms of what they mean going forward: the Yankees’ total earning potential for this selection of 1,895 seats is down by about $83,000 per game, or $6.7 million over the course of the entire season. They’ll also be giving away thousands of premium tickets to existing season ticket-holders. (One note: I’m almost certain there were other cuts that weren’t included here, such as the $750 Delta SKY 360 Suites, which are now $550.)

These are big concessions, and the Yankees are going to be returning a lot of cash that had already been booked as revenue. But this certainly isn’t charity; they wouldn’t be doing it if they thought it was going to decrease their total intake, be it this year or over a period of years. So while their revenue potential is certainly down, it stands to reason that they could actually make more money with the new price points.

Let’s assume, for a second, that the Yankees really did sell 75 percent of their premium seats on a full-season basis, as the team has claimed a number of times. Since we don’t have a section-by-section breakdown, we’ll use 75 percent across the board. By that measure, the Yankees would have been bringing in about $1.22 million per game from those 1,895 premium seats. Now check out the second sheet on that spreadsheet linked above; even though the team cut the prices of many of the top tier tickets in half, their break-even point is actually fairly low: if the Yankees can sell 80 percent of their tickets at the new prices, they’ll be able to match or exceed the revenue that they would have made by selling 75 percent at the old prices.

Looking at it another way, the average price drop is only five percent. A five percent bump in volume, regardless of how many tickets have already been sold or given away, would make this a positive move. That’s some pretty low-hanging fruit, and it clashes with the mainstream meme that most premium ticket prices are being cut in half. Also keep in mind, the Yankees are almost certainly targeting sections that haven’t sold well—in some cases, prices were cut by fifty percent in one section, and left the same in the next section over. This will allow them to hone in on those poorly performing spots, and probably move well past their break-even point.

One other interesting note to keep an eye on: the Yankees are saying that these price cuts are for the 2009 regular season only, whatever that means. Are all prices going to revert back to where they were, going into 2010? Doubtful. The economy might be in somewhat better shape by then, but corporate demand probably won’t fully recover for at least a couple of years.

There’s also the issue of the givebacks, which are difficult to quantify. Premium tickets could end up flooding the secondary market—at much lower prices, obviously—which could really hurt the team’s ability to sell new full-season packages. Still, with the break-even point being so low, this may not really matter in the end.

What’s most important to remember is that the Yankees are still going to make a ton of money this year (far more than last year), and are very well-positioned going forward. Let’s say they only make $1 million per game off of those 1,895 premium seats, well below any reasonable estimates. Based on Forbes’ 2008 estimates, that alone would put them in front of all but six teams in terms of gate receipts—and that’s before they sell a single ticket for any of the other 50,430 seats in Yankee Stadium. So no need to fret, the new ballpark is still a massive ATM machine.

Obviously, the Yankees were caught off guard by the sheer magnitude of this economic slump. The general pricing strategy was probably set years in advance, and it seemed perfectly in line with demand, at least up until this past fall. But looking forward, there’s no reason to think the Yankees won’t be able to at least sustain these new prices. Even with the major banks struggling, New York is still filled with companies that can afford to buy suites or premium packages. There’s certainly some competition—the Mets‘ packages are much cheaper, and the Giants and Jets will be opening their new stadium in 2010—but the Yankees are still the undisputed, crowned jewel of the area as far as sports venues. There will probably still be some remaining empty seats, but these price cuts should help them maximize revenue in 2009, while lining up easier sales for 2010.

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ephinz
4/30
This pricing structure provided a real-life Laffer Curve applied to ticket prices - too high and people will stop attending games. More interesting is the information Stub Hub provides given they actually have to sell the tickets or see them become worthless. I just read this morning Stubhub is selling many tickets at less than half the face value. From today's NY Post: "The market was just not supporting the face value" of the tickets, said Sean Pate, spokesman for StubHub, the authorized online reseller for Yankees tickets. Ducats with a face value of $2,500 for tonight's game against the Angels are selling in the $600 to $700 range via StubHub.
rbross
4/30
I would so much rather go to an MLS game than Yankee Stadium.
ScottBehson
4/30
You, my friend, are at the wrong website
rbross
4/30
I've been a baseball fan for my entire life; I live an breathe it; I wrote a dissertation about baseball; I am, in many ways, married to baseball. But there are two things in this world that will keep me from watching a baseball game: Fox's Saturday broadcasts and an abundance of Yankee fans. Given the choice between either of those options or an MLS game, I'd take the latter.
leez34
4/30
I don't understand why they had to do the partial refunds/givebacks. If I buy a car and next week the price drops due to lack of demand, my car dealer won't send me a check.
chabels
4/30
To keep customers happy. Sure, you may have agreed to pay $500 for your tickets, but if you know everyone around you is only paying $250, this will upset you.
Mountainhawk
4/30
The car dealer isn't expecting you to pay him $50-100K again in 2010, and 2011, and 2012 ...
mattyc33
4/30
The Yankees are very lucky to have such loyal fans. I have never heard of a sports team sticking it to their fan base like this during a stadium transition. Randy Levine is a first class *ss, in my opinion. Strike that—he is a low-class *ss. They play his rants on Boston sports radio from time to time, and we laugh at how pathetic the man is. On behalf of all Sox fans, I invite all disenfranchised Yankee fans to switch loyalty as payback for how they've been treated. The current Red Sox management has bent over backwards to make the fan experience as enjoyable as possible.
kjgilber
4/30
Never heard of PSLs? NFL teams have been sticking it to their fans for years. The Yankees aren't doing anything different. They just over shot the mark a bit. And while Red Sox management have done a great job with Fenway, its not like they haven't increased ticket prices at every opportunity. I was a partial season ticket holder back when I was a poor grad student, now I make a good living and I can hardly afford to go to more than 1 game a year.
jrbdmb
4/30
I don't understand why the Yankees (and to some extent Shawn) think its a given that when the economy comes back businesses will be lining up to purchase $2500 tickets. Philadelphia and Boston sell their best seats behind the plate for two to three time the price of other field level seats, but the Yankees feel that their best seats are worth more than 6x the price of the almost-as-good field level seats for $375. I suspect that as long as the Yankees insist charging $2500 for some seats, those seats will remain mainly empty despite the state of the economy.
ScottBehson
4/30
I thought they could take a page from what Broadway does, and set up a "last-minute, half-price" TKTS booth somewhere in the city- starting at 4pm, you could sell remaining tickets for cash only for 50-75% of the face value.
rbross
4/30
Am I the only person here who actually believes that field level seats (in any ballpark) aren't the best seats in the house? I'd rather sit low in the upper deck (or, better in most places, the mezzanine) right behind home plate. From there, you have the best view of the whole field.
kjgilber
4/30
agreed. Never understood the pricing difference there.
bbienk01
5/01
When I used to live in Boston I once $80 to sit in right field. Last week I caught my Giants playing the Dodgers and paid $13.50 ($9 cover plus service fees) to sit in the upper deck behind home plate at Dodger Stadium. I hate the Dodgers, but I give them much respect for charging reasonable prices for seats that I'd take over field level in the outfield any day.
stevman17
5/01
You are definitely right, but people pay the money to sit there for the same reason they will spend 500$ on a concert ticket, or 2k on a meal at a hot restaurant. They want to be seen.
sunpar
4/30
"The Yankees are still the undisputed, crowned jewel of the area as far as sports venues" Well, if the Knicks weren't the worst run basketball team in the nation for nearly a decade, Madison Square Garden would be the crown jewel. And they will be again, if they can get a winning team back.
marioreturns66
4/30
In terms of pure fan interest... maybe the Knicks could compete, but I'm not so sure about that. In terms of corporate hospitality though, it's no contest. The Garden is aging, and Yankee Stadium was largely built with business customers in mind. Plus, you get twice the number of games with the Yankees as you would with the Knicks or Rangers, which makes a big difference in terms of total spend.
patrickclark
4/30
Crown jewel if they win, but its going on ten years since the last Yankees title. When they win, they can charge whatever they want, but there's a lot of things to spend money on in this town... anyway, that's my perception of the thing...
patrickclark
4/30
Should have asked in my last comment what winning means to the business costumer. Presumably, the Yankees will be competitive, given the way they spend. But I don't think NYC has been swept up in the Yankees for a while, which makes me feel like there's not the same demand for the seats... Wondering how that plays out in reality, though...
WaldoInSC
5/01
Yankee Stadium is an ATM machine? That made me LOL out loud. I'm going AWOL without leave after reading that. I'd like to invite you along, if you would please RSVP. We'll go to an OPEC country and read BP Prospectus from there. :)