Jeff Beresford-Howe: Gold-flecked cake or a third baseman?

Friday, December 05, 2008 - 07:13 AM

Pitch-perfect as usual, major league baseball management gathers in Las Vegas this weekend for the annual Winter Meeting tradefest. The venue is the Bellagio Hotel, a place where there are Picassos in the dining room, caviar fusion facials help keep you hydrated in the harsh desert air and you can have a Patek Philippe delivered to your room if you "lose" your Cartier after a drunken trip to Little Darlings.

When they pay $12 for a beer there, you can bet it won't be Belgian Bud.

Despite their allegiance to the gilded lily that is the Las Vegas high end hotel experience, there is quite a bit of evidence that major league teams are beginning to get the sense that the financial landscape has changed.

The biggest clue was December 1, the first significant date in the off-season player movement dance. It was the deadline for teams to offer arbitration to certain players with expiring contracts. (In arbitration, the player and team commit to a one-year deal; the actual salary is determined after each submit a figure to an independent arbiter, who decides which better fits the player into the current salary structure in baseball.)

Only twenty-four players were offered arbitration. They fell into two categories.

First were guys who are looking for and are exceptional enough to get long-term, big money contracts – A.J. Burnett, Orlando Hudson (the Arizona second baseman who is the most under-rated player in the sport), Derek Lowe, Manny Ramirez, Francisco Rodriguez, C.C. Sabathia, Mark Teixeira, Casey Blake, Juan Cruz, Raul Ibanez, Jon Garland, Orlando Cabrera and Ben Sheets.

These players were offered arbitration with the near certainty on the part of their teams that they would refuse it. When they sign with a new team, their old team will get a high draft pick in compensation. (If arbitration isn't offered, no draft pick, hence the kabuki.)

The second group is guys who, for one reason or another, have had a bad or injury-filled year or two that would lead their team to think that they could deliver a beat down at an arbitration hearing. Into that category, you can put Brian Fuentes, Darren Oliver, Oliver Perez, Jason Varitek, Paul Byrd, Mark Grudzielanek, Brandon Lyon, Dennys Reyes, Brian Shouse, Milton Bradley and David Weathers.

The upshot is that teams were anxious to avoid anything that committed them to new contracts that fit into the good-times, free money salary structure of the last decade. The average player salary has been rising without interruption since 1960, according to UW-LaCrosse professor Michael J. Haupet – that is to say, for the entire adult lifetime of anyone under 66 years old. It's an astonishing recognition from one of the most coddled and entitled groups in society that things are getting dark out there.

The cautionary tail here is attached to the Detroit Tigers, who have $100 million committed next year to only ten players; they're locked into a good-times salary structure and to pay for it they're going to raise ticket prices in 2009. Good luck with that in the Michigan economy.

The Philadelphia Phillies and Tampa Bay Rays are going the traditional route and raising prices the year after a World Series appearance, and both New York teams, playing in new stadiums, are reaching deeper into the pockets of their fans. For Yankees games, if you want to sit down front, you're going to shell out $2,500. Further back in the infield, look to pay $325 a seat.; the equivalent ticket at the Coliseum in Oakland to watch the A's and their ongoing experiment with Mass Fan Alienation is $35.

But sixteen teams have announced that they're freezing or reducing ticket prices next year, and the Pittsburgh Pirates, a sad sack on the field and in the stands, are offering a layaway plan.

Please Place Your Fandom in a Locked and Upright Position

Of course, those ticket "freezes" are relative, because most teams have jumped on board one of the most odious trends in modern baseball: teams scalping their own tickets.

As far as I can tell, the early adapter in scalping was the Chicago Cubs, who created the Wrigley Field Premium Ticket Services as a shell company in 2002 and used it to sell tickets directly to StubHub, the Mike Damone of ticket companies and now an official partner of Major League Baseball.

Teams were slow to follow the example. For awhile, all they did was create bulletin board systems that created an easy way for their season ticket holders to scalp casual fans, and they started charging more for "premium games," i.e., it would cost you a couple of bucks extra to see the Boston Red Sox instead of the Kansas City Royals.

That reticence passed. Many teams now essentially conduct auctions for games with high ticket demand.

The most original approach to this has to be the one announced on Wednesday by the San Francisco Giants. The Giants fired Barry Bonds last year and were terrible. Attendance dropped by 360,000. Although they haven't released season ticket renewal figures for 2009, it can't be a good sign that the Giants were routinely announcing crowds of 30,000 in September (ticket holders are counted whether they show up for the game or not) when in fact there were about 10,000 people in the stands.

So the Giants looked around this off-season and said, "Hey, our product sucked and times are tough here in the Bay Area. Adobe just laid off 600 people, Yahoo and Google are struggling, the state government is melting down. Who can we look to for some really good advice on providing a better experience for our customers? Hey, I know! The airline industry."

That's right. The Giants want to be the United, the Delta, the AmericaWest of major league baseball.

They're going to accomplish this by introducing variable pricing using a complicated, demand algorithim just like our friends at the airlines do.

For example, if you buy tickets today for an April 21, 2009, weeknight game against the San Diego Padres, you might pay $25. Come the 21st, though, imagine that the Giants and the Padres are both terrible again and it's "foggy" (the quaint local term for rain) and cold at the park. It's possible the Giants may charge you only $10 for that seat. Now imagine that you buy that same seat today for a Giants/Los Angeles Dodgers game on Sunday, Sept. 13. Twenty-five bucks again. Come the morning of the 13th, though, it's a gorgeous, warm day. The surprising Giants and a fine Dodgers team are fighting it out for the pennant and Tim Lincecum is looking for his twentieth win for the Giants. The Giants plug in the algorithim and ask you for $250 for the ticket.

It's going to create the situation so familiar to those of us who travel on planes a lot: the feeling that the guy sitting next to you got a better deal and that you're the sucker. The Giants claim it's a pilot program and that it's only for 2,000 seats – and nowhere near the best seats in the house. Any baseball fan who hears about it, though, knows exactly what that means: we're going to do it, and if people don't march on the stadium with pitchforks and torches, we're going to expand it until we make sure we've squeezed every dime out of our fans.


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