Regionality II: Verticals

Last week I speculated that perhaps MLB teams were changing the way they thought about their Territories. Specifically, I was referencing the San Diego Padres push to have a Triple A team in their territory. The Braves recent move of their Triple A franchise to within 30ish miles also serves as evidence. In a more generic sense, I was talking about Verticals.

I reasoned that minor league franchises could become a revenue stream for big league clubs by allowing them to stretch their TV viewership in outlying areas of their territory and/or extended media markets. The minor league teams also could help the bottom line by reducing the cost of minor league operations. But a recent development has me thinking of another potential revenue stream and verticals.

All of these new stadiums cost a lot of money. To go to any number of games, you have to have a bit of a bigger bank account than I do, at least if you are paying your own way. So what do I do? How do I expose my family to the kind of memory building experiences that I want them to have? I mean, now that we built a snowman and all, baseball is all that’s left. It’s a question everyone keeps hitting on here at New A’s Ballpark, just packaged differently. If the new stadiums are mostly for rich folk… then we ask:

“Who will serve the common man?!?!?!?”

I see an answer! Well, an answer for Sonoma County fans, that is.

The Town of Windsor, a suburb of Santa Rosa (just north on 101), is conducting a feasibility study to evaluate the potential economic impact of a privately financed Single A type baseball stadium. While there is no team identified as a potential tenant, any number of teams could be potential targets. The Town Council only seems to be specifying that any minor league team that plays in the hamlet, on land purchased with RDA funds, have a major league affiliate (excluding the Golden Baseball League, thanks for coming!).There was no mention of where a stadium site might be, though I can imagine some very cool looking possibilites adjacent to the Town Green.

Just to paint a picture, let’s pretend the A’s are in the market for a Single A team and they decide that they want their new investment to play in Wine Country. There are several ways this could work to enhance the fan experience for the average suburbanite, but the team will be thinking about ways to increase ticket sales.

How would minor league teams, seemingly competition for the ticket dollar, benefit big league team’s ticket sales? It seems kind of counterintuitive, I admit.

An example of how this might work in the not so distant future: You live in Santa Rosa and you love the A’s. You’d love to have season tickets, but they are way too steep and you live far enough away that going to the game is an undertaking and expensive (especially since by now they are either in JLS or at Diridon, we hope). What if you could get a cheap package where you could go and watch a game (on the cheap) on weeknights, close to home , and a few times in the season, off in the big city?

The adventurous could even mix in a weekend or two in Sacramento. Mix the idea of consumer choice with demand based pricing and there are any number of ticket packages that can be thrown together for numerous types of budgets up and down the ticket buying market. Now imagine the minor league teams are much closer to the parent club than Windsor is to Sacramento or either is to Oakland. What if the team is in Walnut Creek, Pleasanton, Concord, Livemore, Fremont, Milpitas, or anywhere else in the metro area? How would time and distance from the parent club impact the effectiveness of this approach? What is too close? Should the team be on the edge of the metro, or more towards the centers of population? These are questions without answers, but I am sure someone is trying to answer them in at least one of 30 MLB team’s front office.

With the right ticket packages in place, there is a real opportunity to expand the market. There would need to be a few more dominoes to fall (starting with the TR decision from Bud) before this scenario could really play out.

Assuming Bud’s decision doesn’t rip a gaping gash in the fabric of the space time continuum (highly unlikely), and MLB’s teams are mostly unaffected by the A’s v Giants settlement (or lack of a…) of 2010 the next step would be more MLB teams investing in the business side of minor league teams. The MLB teams could pull the Gap model and own each of the brands targeted at specific demographics. For each and every A’s/Banana Republic full season ticket holder/khaki pant buyer, you find 10 Windsor Ausprey/Old Navy partial ticket buyers/khaki pant buyers.

Or teams could choose to establish separate ownership groups, like the Padres have done in their pursuit of the Portland Beavers, and create a partnership. Or, they could just sign joint marketing agreements, or invest in a small portion (around 10%) of the minor league team, sort of like Daimler Chrysler once did with Hyundai, in the early part of this decade, so they could both profit from the top to the bottom of the market. For every Benz driving full season ticket holding Padres fan you have 5 Elantra driving Solana Beach Sharks partial season ticket holders, or so the analogy goes. Again, any number of combinations could be worked based on supply and demand across the entire market, top to bottom.

However they get into the minor league game, I don’t doubt that the trend will continue. Not when you consider that Windsor is looking into buying land to lease to have a Single A stadium and selling it as a stimulus like plan. If you consider MLB owners sharks (which I don’t), then you can consider this sort of development as blood in the water. No longer do they have to build mega stadiums with $500 Million. No more pushing hard for huge public checks. Instead, pushing small governments for smaller checks. Sure there is less upside, but with less upside comes less volatility. Think of the minor leagues as the twisted equivalent of  bonds to the big leagues stocks.

The teams already own the players rights and have a fixed payroll. They already run the baseball side of the operation. How much larger of an investment would it take to make the minor league system, at least partially, a profit center instead of money drain? I am pretty sure several teams are crunching the numbers on this as the stadium boom, media explosion and league expansion money making programs are less of a boon and more of “been there, done that.”

2 thoughts on “Regionality II: Verticals

  1. Don’t the A’s already have that with their team in Stockton? It seems perfectly place in relation to the A’s and the River Cats.

    I’d wager that Windsor is hedging their bets that the SJ Giants might be looking for a new city soon.

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