A Look Inside St. Louis Cardinals Revenues

St. Louis Cardinals president Bill DeWitt III discusses sources of revenue for his club, including television, the relationship between tickets and player payroll, and other avenues such as concessions, merchandise and the post-season.

During Winter Warm-Up, St. Louis Cardinals president Bill DeWitt III answered a series of questions relating to club and MLB revenues. Areas covered in this segment include television contracts, the relationship between ticket revenue and player payroll, and other sources such as concessions and merchandise as well as the post-season.

DeWitt III's direct remarks follow in quotes.

On television revenues.

"There was a lot of talk about how could the Angels afford Albert at $30 million a year at age 42... (That was) an intentional long pause… Not just in terms of Albert, their capacity is a lot higher. They have a new cable deal that allows them to basically have $125 million more just in TV revenues than the Cardinals have on an annual basis.

"That is due to the fact that their deal was up. It has been sort of a frothy market in terms of rates, renewals of cable TV contracts. Theirs is up. We have six years left to go on ours. We'll never get anywhere near that number but we hope that as we get closer to that date we would hope to see an increase depending on market forces. In our favor, we see an interest but we won't get up to that level.

"It is just simple demographics. I don't know how many people are in the L.A. market, maybe seven or eight million, something like that. We have two-and-a-half in this market. What happens is that most people who pay for cable… the bill you pay every month, a little portion of that goes to FOX, who then pays the Cardinals the rights to broadcast the Cardinals games. Some of it is going to FOX for the national network and some of the other channels that they own, but a piece of that theoretically is going to the Cardinals, as well. Even if you don't watch Cardinals games… your monthly bill is filtered through FOX because it is part of the basic package. That happens throughout the league with sports.

"That is one of the reasons why these payrolls are so high. The revenues are so high in the industry because everybody is paying as part of their basic pay TV package for sports content. It is a model that has gotten some scrutiny lately but it is the way it has evolved in the industry.

"There is a lot of people that think, ‘Oh, my gosh, it is the ticket revenue.' It is still the life blood of the industry. It is more than half of the entire industry revenues – ticket revenues – but a big chunk of it is that TV revenue. What has happened is the people with the most eyeballs and the most cable subscribers and satellite subscribers in the market are those markets that create huge cable TV revenue contracts for the clubs. No surprise we don't have a big market.

"That is the underpinning of it. That is how it all works. The Angels got a big one and we are six years out so hopefully we will see an increase. We have been sort of in our cable position – because a lot of teams look at this – where are you with your cable revenues ranked among all 30 clubs. We are below the midpoint. We are down towards the bottom. Hopefully we can climb up as we get closer to that extension and renew for a good deal and with the great ratings which we get helps."

On other revenues.

"Where we really overachieve is with ticket revenue and concessions and merchandise and things that are a function of the great fans that we have. We just don't have enough of them… St. Louis isn't big enough, that is all (laughing).

"No, we don't complain about our position because we feel very fortunate. With the great fan support, we are able to overachieve relative to our market size on ticket revenue, attendance and all those things, which bring us from what would otherwise be a mediocre position in the industry to right around the top third – right around nine, ten, 11 in revenues.

"We think about the fact that the two New Yorks, the two LAs, the two Chicagos and Boston making up the top seven of those big revenue clubs, we hope to be the best of the rest in revenues right after those guys so we can compete for the free agents and everything else.

"We have been able to hang on there in that top third spot and hopefully, we will continue to do so. It is a big component of how you remain competitive over the long haul."

On typical daily revenue and relationship to player payroll.

"Around the league – I guess we are right in there – a really, really good day could be a $2 million dollar revenue day. A really bad one could be less than a million (dollars). You are talking about over $100 million in total ticket stadium revenues, which is as I said, is the life blood of the industry.

"If you think about it – and these are big, round numbers – it really takes a two-to-one relationship. Most clubs are in that 50 percent range of the payroll that is published compared to their revenues. $200 million revenue is $100 million payroll was our model from a couple of years ago and we have gone up from there.

"That is kind of what you are looking at in the industry. You will see that the Yankees with a $200 million payroll, $400 million-plus revenue."

On the Cardinals additional playoff revenues.

"You never want players to be motivated to focus on anything other that the pure desire to win the game. So when you get into later games in a series, all of the sudden those revenues go to the central office in baseball. The visiting team and the home team - according to a somewhat of a pretty complicated formula - it gets sliced and diced.

"But at the end of the day, the club does make some money. It is part of our revenue sharing bill, so we get taxed on it, so to speak. But for those who usually don't make it, you are happy that the teams that make it are paying into the revenue sharing pool."

(Much more about revenue sharing will be coming in the next article in this series.)

Related articles ahead:
Cardinals Competing as a Mid-Market Club
St. Louis Cardinals Player Insurance and Analytics
Cardinals Season Tickets and Dynamic Pricing

Brian Walton can be reached via email at brian@thecardinalnationblog.com. Also catch his Cardinals commentary daily at The Cardinal Nation blog. Look for his weekly minor league column during the season at FOXSportsMidwest.com. Follow Brian on Twitter.

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