The Mets and Yankees are missing out on millions of dollars in potential ballpark-related revenue with baseball shut down during the COVID-19 pandemic, records show.
Last season, the Mets reported $148.7 million in premium ticket sales, luxury suites, concessions, advertising and parking. Annual ballpark-related revenue has averaged $143.8 million since Citi Field opened in 2009, according to a Newsday analysis of the team's annual financial reports presented to bondholders. The Mets’ filings do not include revenue from the sale of 30,000 non-premium seats and national and local TV and radio contracts.
The Yankees said the team generated $336.2 million in ticket and suite sales in 2019 and has averaged $323.4 million since Yankee Stadium opened in 2009, according to an analysis of their reports to bondholders. The Yankees' filings do not include revenue from the sale of concessions, advertising and national and local TV and radio contracts.
Those once-steady revenue streams are gone, and even if the baseball season resumes, it is likely to happen with no or limited fans in the ballpark.
“They’re probably losing hundreds of millions of dollars coming in,” said Andrew Spieler, a professor of business and finance at Hofstra who has no affiliation with Major League Baseball. “Whether that’s all profit or not is another story, but yes, it’s unprecedented for sure.”
The financial data, obtained by Newsday, come from statements the teams file with the Municipal Securities Rulemaking Board, a regulatory organization that oversees the municipal securities market. The reports are designed to show bondholders the teams have enough revenue dedicated to support the annual tax-exempt bond payments related to the construction of their stadiums.
The public filings provide only a partial view into each team’s overall financial picture because they do not include all sources of revenue, listing only the specific revenue streams the teams pledged to their bonds when they were issued 14 years ago.
The Mets and Yankees both declined to comment on their financial situations amid the sport’s shutdown.
The Yankees are one of the most valuable professional sports organizations worldwide, with a Forbes estimated valuation of $5 billion. Owned since 1973 by the Steinbrenner family, the Yankees have branched out into related businesses. They are part owners of New York City FC, a professional soccer team. They founded a stadium marketing and hospitality company with the Dallas Cowboys. Last summer, they joined Amazon and Sinclair Broadcast Group to purchase a controlling stake in the YES Network in a deal that valued the regional sports network at $3.5 billion.
The Mets, estimated by Forbes to be worth $2.4 billion, have struggled financially since their majority owners, Fred and Jeff Wilpon and Saul Katz, suffered significant financial losses in the Bernard Madoff Ponzi scheme in 2009. A deal that would have sold the team to billionaire hedge fund manager Steve Cohen for $2.6 billion — with a five-year grace period for the Wilpons to remain in control — was called off in February. The Wilpons are looking for another buyer.
Bond payments due
Both teams have annual bond payments to make on their stadiums.
The Yankees made their payment of $84.2 million in February, weeks before the pandemic shut down professional sports.
The first of the Mets’ two payments of $21.7 million is due Monday. The second is due in December.
“This is the sports equivalent of the average person having to make their mortgage payment without any concessions from their bank,” said Robert Leib, a financial consultant who works with professional sports franchises. “And without any games being played, these teams are essentially out of work right now.
“But they’re still obligated to make the payments.”
The ratings agency Standard & Poor's last week downgraded the Mets’ Citi Field bonds to below investment grade, citing the team’s inability to generate revenue. S&P says Citi Field’s downgraded bond rating of BB+ indicates “vulnerable characteristics that may outweigh its strengths.”
While the S&P report said the Mets have enough cash to make their scheduled bond payment Monday, it also noted the team might need to dip into its debt service reserve of $66 million for its next payment in December.
"Management has indicated the team is likely to provide equity support rather than draw on the reserves and that the team has strong economic incentives to support the stadium," according to the S&P report. "However, we have no insight into the team's financial ability to do so, and no formal support agreement exists."
The S&P report also estimated that a truncated season that could be played mostly without fans in the stands would decrease the Mets’ ballpark-related revenues up to 85% from 2019.
“Game-day revenues will likely be sharply lower because of COVID-19, and recovery in 2021 is uncertain,” the report said. “We don't expect fans to return to the stands until at least September and stadiums will almost certainly be subject to some form of social distancing requirements.”
In March, S&P placed the Yankee Stadium bonds on a “watch with negative implications” to reflect the uncertainty of the impact of the pandemic.
No games, no revenue
As Major League Baseball and the players' union negotiate the financial terms of a truncated season, experts said teams must plan for the stark financial losses that will come as a result of not having fans at games.
“Baseball teams rely more on game-day revenue than the other professional sports, because they play 81 home games, more than the other sports,” said Joel Maxcy, head of the sport management department at Drexel University in Philadelphia. “They’ve come to rely on that revenue because they pretty much know how much they can expect, and that’s a pretty good chunk that won’t be here this year.”
However, their publicly available financial filings provide a glimpse at the steep revenue losses they face as the days go by without games.
The Mets’ audited financial report is published annually by a subsidiary company called Queens Ballpark Co. The report lists revenue from 10,635 premium tickets, luxury suites, concessions, advertising and parking — the specific revenue streams the team has dedicated to support their bond payments. The Mets' annual payments of $43.4 million continue through 2046. In 2019, they reported revenue of $55.8 million from tickets, $50.6 million from advertising, $14.3 million from concessions, $11.9 million from parking, $8.6 million from suites and another $7.4 million from a category titled "other," according to their report filed April 29. The total reported ballpark-related revenue from these specific line items comes out to $148.6 million, just above their annual average of $143.8 million for these categories since Citi Field opened in 2009.
Experts point to the fact that the 2019 figures are close to their average ballpark-related revenue since Citi Field opened as evidence that the Mets — in a pre-pandemic world — had a strong idea how much money would be coming in this season. With the baseball world stopped, that’s no longer the case.
“The point is, if you’re not playing any games, you’re not bringing in any of this revenue,” Leib said. “In a way, this is a perfect storm.”
Mark Conrad, a professor of sports business and law at Fordham, added: “If baseball returns, could it have the same revenues if you’re going to have any kind of social distancing? Revenues are going to have to go down [if] every other seat is empty.”
The loss of revenue also comes at a time when the Wilpon family is attempting to sell the Mets.
Among those who have expressed interest, according to sources, are hedge fund billionaires Josh Harris and David Blitzer, who also own the Philadelphia 76ers and New Jersey Devils and operate Prudential Center in Newark. Alex Rodriguez, who is engaged to Jennifer Lopez, confirmed his interest in buying the Mets in an appearance on "The Tonight Show with Jimmy Fallon" last month.
Ticket sales turn to refunds
The Yankees’ financial filings differ from the Mets’ in that the team has dedicated its entire ticket and suite sale revenue to support their bonds. The Yankees' bond payments continue through 2050.
The Yankees’ filing, therefore, illustrates the fallout the shutdown will have on their ticket sales, which records show was stronger this year than in recent years as the team's acquisition of star players increased its championship aspirations.
As of March 31, the most recent numbers available, the Yankees had sold $200.9 million in tickets and suites for the 2020 season. That represents their most ticket revenue through the first quarter since the 2013 season. The Yankees' report was filed May 14.
Experts say the Yankees’ success at the box office in the months before the pandemic could be a detriment because now there are more people looking for refunds with games not being played.
“Their ticket prices are higher than most, so they take in more money than other teams,” Maxcy said, noting that the Yankees historically have ticket revenue that’s three or four times greater than the Mets. “They’re going to take a significant hit from this, because they had so much more coming in.”
The Yankees and Mets are offering credits or refunds for games that were scheduled to be played in April and May. Leib said teams are pushing credits “as a way to preserve liquidity.”
“The Yankees earn so much more when they do play games that the pain might be worse for them not playing games,” said J.C. Bradbury, author of "The Baseball Economist: The Real Game Exposed" and professor at Kennesaw State University in Georgia.
'A two-year transition'
Major League Baseball told the players' union in May that not having fans in the stands would amount to an average loss of $640,000 per game, according to a document obtained by The Associated Press. The document said gate-generated revenue accounts for 40% to 51% of a team's overall income.
Commissioner Rob Manfred said this week he is "100%" certain that there will be baseball played this summer. Experts said returning to play this season is vital to the financial livelihood of organizations.
“The teams that I have talked to about this are looking at it as a two-year transition period,” Leib said. “That’s when they expect they’re through the impacts of Covid on their fans and their revenue, and they think they’ll get back to where they were before this all started. They realize they’re dealing with an alternate universe that had never been contemplated by the organization before.”
Yankees ticket and suites revenue
2019: $336.2 million
Avg. 2009-19: $323.4 million
SOURCE: Yankee Stadium LLC
Mets ballpark-related revenue
Category 2019 avg. 2009-19
premium tickets* $55.8M $58.7M
advertising $50.6M $46.5M
concessions $14.3M $13.9M
parking $11.9M $9.3M
luxury suites $8.6M $8.4M
* represents Citi Field's 10,635 most expensive seats
SOURCE: Queens Ballpark Company LLC