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Red-hot Rays double TV audience — but ad revenue gains go mostly to Fox

Bartender Sarah Wilson, 32, of St. Petersburg sports her Rays attire while patrons watch the game at Georgie’s Alibi. Rays TV viewership has doubled over the last year.

LARA CERRI | Times

Bartender Sarah Wilson, 32, of St. Petersburg sports her Rays attire while patrons watch the game at Georgie’s Alibi. Rays TV viewership has doubled over the last year.

ST. PETERSBURG — Television viewership for the sizzling Tampa Bay Rays has doubled since last April — which any sports bar owner can confirm.

But by contract, Fox Sports Florida — not the Rays — will rake in the lion's share of advertising gains through 2016.

Such contractual commitments illustrate an important side of baseball finance often overlooked as the community debates a new stadium and the money it might generate:

For all the buzz about attendance, only about half the Rays' income depends on how many fans show up.

Ticket sales, concessions and parking fees are vital income streams. More fans mean more money. But a large chunk of the Rays' income — something like $70 million to $80 million a year — remains largely impervious to attendance swings or how the team performs. If anything, this income depends on ticket sales in Los Angeles, TV deals in New York and baseball jersey closeouts in Dubuque department stores.

That's because Major League Baseball finance has become more socialistic in the last decade, with have-not teams sharing some of the wealth the big boys bring in.

"A lot of general national revenues are put in the pot,'' says sports economist J.C. Bradbury. "Whether you win or lose, you are going to get a lot of money.''

Neither the Rays nor Major League Baseball provide details about income, expenses, profits or losses. But various reports and interviews paint a broad picture.

For starters, baseball maintains a "central fund" of nationally generated income, which is split evenly among the 30 teams. This money includes merchandising and TV revenues from the playoffs, World Series and games of the week.

According to widespread reports, each team earns about $30 million a year from this fund.

Teams also share 31 percent of their locally generated revenue with each other — including regional television and radio, ticket sales and concessions. This stems from a decade-old push to reduce income gaps between teams.

The Rays benefit when Milwaukee draws 3 million fans, when Seattle carves out a widespread Pacific Northwest TV territory or when Atlanta sells luxury seats at $300 a pop.

Attendance-driven revenue can vary from $30 million or $40 million up to $300 million to $400 million, says sports economist Andrew Zimbalist.

That disparity sets up a financial transfusion for low-revenue teams like the Rays. In 2005, the Rays received $33 million, the league's largest revenue-sharing payout, according to the Wall Street Journal.

The Rays have boosted attendance since then, so their slice of the pie may have shrunk. On the other hand, the pie is bigger. Shared revenue has grown about 25 percent since 2005. It is reasonable to estimate that the Rays now receive $30 million to $40 million a year.

Local television contracts can also bring in millions, but after the Rays renewed their contract with Fox Sports Florida in 2008, they are now locked in until 2016, according to Sports Business Daily.

Fox, which carries games all over the state on its FSN and Sun Sports channels, pays the Rays an annual fee, then collects the bulk of advertising revenue, as well as payments from cable companies that want to carry the games. The amount of the contract was not disclosed.

The Rays own rights to only a few commercial slots during a broadcast.

Since Fox can jack up its rates when viewership is strong, success on the field can translate pretty quickly into dollars — but not for the Rays.

According to Fox, an average of 94,000 households in the Tampa-St. Petersburg market tuned into Rays games this April, compared with 47,000 last April.

That compares with an average annual viewership of 31,000 households in 2007 and 62,000 in 2008, the World Series year.

Walter Hill, owner of Walter's Press Box Sports Emporium in Tampa, and Tara Mattiacci, a manager at El Cap restaurant in St. Petersburg, are not surprised.

Customers wearing Rays gear have driven up business about 15 percent this year when the game is on, they both said.

"When the local teams are winning,'' Hill said, "a lot more fans come out and watch the games.''

With Central Florida in their pockets, the Rays enjoy a strong media market. Major League Baseball released local TV and radio income figures nine years ago. The Rays fell in the middle of the pack with about $15 million in earnings, Baseball Prospectus reported.

That was a gross income figure, but reportedly similar to what the team nets today.

With Forbes magazine estimating total Rays' revenue at $156 million, the combination of local media income, central fund dollars and the revenue sharing transfusion account for about half the team's take.

Still, shared revenue is largely outside an individual team's control, and no team wants to rely on it, said Dave St. Peter, president of the Minnesota Twins. Teams stay financially competitive by putting fans in the seats, he said, and that's difficult without a modern stadium.

The Twins sold the equivalent of 24,500 full season tickets this year, their first in Target Field, St. Peter said. Last year, they sold 11,000 at the Metrodome.

After market size, the ball-park "is the next biggest factor in how you drive your revenue,'' he said. "If you are in a small to medium market and have a less than adequate stadium, you face a double whammy.''

Red-hot Rays double TV audience — but ad revenue gains go mostly to Fox 05/09/10 [Last modified: Monday, May 10, 2010 7:30am]
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