MLB Revenue To Grow 4.5 Percent in 2010

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IBISWorld Forecasts Lower Ticket Prices To Boost Attendance

LOS ANGELES – (March 3, 2010)

– With high ticket prices pushed onto consumers from overinvesting and a global economic crisis, it is no surprise that Major League Baseball (MLB) attendance dropped 6.6 percent in 2009. This downturn forced MLB franchise owners to use a more conservative business approach during the offseason, which IBISWorld believes will increase attendance by 3.5 percent and revenue by 4.5 percent to an estimated $6.9 billion in 2010.

"Over the past decade, MLB franchises have taken to a business model that invests heavily into new or upgraded facilities and larger player salaries, which justified significant increases in ticket prices," said Dmitry Kopylovsky, industry analyst with IBISWorld. "However, the recession drastically reduced disposable income, so consumers couldn't afford the 10.1 percent increase in ticket price in 2008 or the additional five percent increase in 2009."

Overspending and lack of return resulted in a particularly timid offseason for MLB franchise owners, with most offering shorter-term player contracts and reducing average ticket prices to recover attendance figures. IBISWorld expects these initiatives will help the industry rebound in 2010 to about 76 million fans, but will be short of the record-breaking 80 million fans seen in 2007.

"Franchise owners are now scrambling to create lucrative deals with players and sponsors to find a balance between financial stability and maintaining fans' interest," said Kopylovsky. "For the short-term, IBISWorld anticipates owners and fans alike to remain cautious about the future, with frugality on both ends, unlike the 'golden days' before the recession."

An additional initiative taken by MLB, like other sports franchises, is aggressively marketing products abroad. The MLB has a large Latino and Japanese fan base, so more networks are airing and streaming live games in South America, Asia, Dominican Republic, etc. In fact, the Yankees are quietly scouting baseball talent in China, simply to generate revenue from the nation's massive population from a potential signing (baseball is currently unpopular in China).

"Individual franchise profitability has taken a plunge in the past year, but these are powerhouse organizations with a lot of cash and capital," explains Kopylovsky. "Overall, state-of-the-art venues are expected to create higher profitability in the future, as shown from early success prior to the recession, with earnings averaging six percent annual growth over the next three years."

The 2010 MLB season will be pivotal in regaining momentum following a decline in 2009. With globalization in full swing, heightened domestic demand is expected to carry the league back to its pre-recession "golden days" into 2011 and beyond.

News Source : MLB Revenue To Grow 4.5 Percent in 2010