Winning Yankees aren’t faring nearly as well at the ticket office

Fans of Yankees right fielder Aaron Judge react from a place in Yankee Stadium's right field dubbed "The Juddge's Chambers" after the 6'7 outfielder threw a ball in their direction during a game against the Royals at Yankee Stadium in New York, Wednesday, May 24, 2017. AP Photo/Kathy Willens

NEW YORK — The New York Yankees are, at the moment, a marketer’s dream. With a spirited start to the season, they can boast of having one of baseball’s best records, bask in the captivating presence of Bunyanesque outfielder Aaron Judge and nod in approval at some popular changes to their ballpark — with all of these developments wrapped in the team’s rich history.

But even those selling points have yet to turn around attendance at Yankee Stadium, where ticket and suite revenues through last season had fallen by a staggering $166 million since the end of 2009, the year the Yankees christened the new ballpark with their last World Series title.


The financial figures, from the public filings the Yankees are required to make on their stadium bonds, represent a 42 percent loss in ticket and suite revenues during the last seven seasons. And despite the team’s compelling play this season, attendance through the first quarter of their home schedule is down from the same point last year.

The ticket and suite revenues are only a portion of the Yankees’ overall income, which also includes television and radio broadcast fees, advertising and licensing, and a portfolio of ancillary businesses. And indeed, the decline in ticket and suite income has offered some relief from baseball’s revenue-sharing system, allowing the Yankees to pay less into the pot that is distributed among all 30 teams.

But the losses do provide a window into how even the blue-blooded Yankees, who have been largely impervious to the market forces that have affected the rest of baseball, have had difficulty maintaining their audience.

The challenge confronting the team comes at a time when the entire sports industry is feeling the ground move beneath its feet as consumer behavior shifts drastically, with the changes even rattling broadcasting titan ESPN.

For the Yankees, one of the most prestigious sports franchises in the world, gaining a foothold with younger fans has proved particularly difficult, especially in a period in which the team has lost its championship gloss, failing to secure a postseason berth in three of the last four years.


“Baseball, I think, has somewhat struggled with the millennial problem,” Hal Steinbrenner, the Yankees’ managing general partner, said in an interview before the start of the season. “We recognized in looking at our fan base, we recognized in looking at our viewers on YES, that that age group is not what it could be and not what it should be.”

The drop-off in ticket and suite revenues also comes at a time when the team’s expenses are still among the highest in baseball: The payroll is $212 million (third behind the Los Angeles Dodgers and Detroit Tigers, according to Cot’s Baseball Contracts, which tracks salaries), the stadium bond payment climbed to $83.8 million this year, and the luxury tax at the end of last season was $27.4 million.

So perhaps it is no surprise that Steinbrenner wants the Yankees’ payroll to dip below next season’s $197 million luxury-tax threshold.

It would be the first time since the tax was instituted in 2003 that the Yankees would be below the threshold and it would come just in time to avoid the onerous penalties for repeat offenders that will kick in next season. Still, Steinbrenner maintained that the decline in ticket and suite revenues had nothing to do with his payroll objective.


“We’re not afraid to spend money,” he said.

Indeed, as much as Steinbrenner is preaching more responsible spending, he would not rule out again blowing past the luxury-tax threshold if the situation calls for it — as he said it did after the 2013 season, when the Yankees committed more than $450 million in a free-agent spending binge.

“Every year is different,” Steinbrenner said. “I wish I could kind of sum up my overall philosophy, but I tend to roll with the times and really take a look at the team every year and what we need.’’

It does help Steinbrenner’s payroll quest that the Yankees have two substantial salaries coming off the books at the end of this season — with pitcher C.C. Sabathia ($25 million) and the released, and now retired, slugger Alex Rodriguez ($21 million) in the last year of their lengthy deals. Both players are relics of the Yankees’ last championship.

It also helps overall that the Yankees have been at the fore in building a broad reservoir of income streams that can be used to help underwrite club expenses, a business strategy that the Boston Red Sox and the Chicago Cubs, other teams with strong national brands, have begun to emulate.

For the Yankees, business interests include Legends, the sports concessions and marketing company founded with the Dallas Cowboys that recently won the naming rights and ticket sales contract for the new NFL stadium in Los Angeles; a handful of New York Yankees Steakhouses; a stake in New York City FC, the Major League Soccer club that is affiliated with Manchester City and is a tenant at Yankee Stadium; and the YES Network, in which the Yankees team up with Fox Sports.


The Yankees also joined forces last year with a longtime adversary, the ticket reseller StubHub, in a deal that could earn the Yankees as much as $100 million over 6 1/2 years.

Still, all these deals and the income they generate have to be set against the very expensive stadium the Yankees are financing, and the problems they have filling enough seats and suites. And some of that problem may have its roots in pricing.

“When the Yankees went into the new building and set pricing, it was clear to me that they priced a perennial contending team into their tickets and suites,” said Vince Gennaro, director of the Columbia University graduate program in sports management. “They’ve come off that some, but I was always a firm believer that if the Yankees faltered on the field with this economic formula, there’s no question attendance would drop more than another team because of the aggressive pricing.”

Last year, ticket and suite revenues declined $46 million. It was a sharper-than-expected drop that was cited by Moody’s, the bond rating service, as a factor in its decision this month to downgrade the outlook of the $1.2 billion in stadium bonds to negative from stable.

The negative outlook indicates a higher likelihood that the bond ratings — currently Baa1 — could be downgraded in the next 12-18 months, which could then make future borrowing by the Yankees a costlier proposition.

The main reason for the Moody’s downgrade was the Yankees’ decision not to refinance the bonds. The Yankees had received approval by the city to refinance last September, but shelved the plans when interest rates climbed. Under the refinancing, the Yankees had forecast $16 million in savings on their debt service in 2018, $11 million annually from 2019 to 2030 and $6 million a year beyond that until the bonds mature in 2046, according to Moody’s.


The refinancing “would have saved us significant money,” said Randy Levine, the Yankees president. “Then Trump got elected and interest rates went up, so you don’t save any money. There’s no reason to do it.”

But what the Yankees have done is try to alter the atmosphere of a still relatively new stadium. The famous building it replaced was often raucous in the championship era that began in 1996. The new stadium, by contrast, has too often had a desultory vibe.

For instance, it was striking in September when several thousand Los Angeles Dodgers fans congregated in the left-field corner of Yankee Stadium and all but made the ballpark their home — boisterously mimicking right-field Bleacher Creatures’ ritual roll call and unrolling a tifo, the enormous banner prevalent at soccer matches.

And this month, a game in the Bronx against the Toronto Blue Jays drew an announced crowd of 25,556 — the smallest for a Yankees home game in 13 years.

Even with a young, vibrant team that is playing beyond expectations, attendance has continued to fall this season. The Yankees’ per-game decline of 3,793 over the same number of games last season, through Tuesday, is the third-sharpest in baseball, according to Baseball Reference, trailing just Kansas City and the New York Mets. And the average attendance of 34,642 represents a decline of nearly 12,000 from the new stadium’s peak.

To be fair, the Yankees’ average attendance this season is diminished in part by a rainout that caused them to play a single-admission Sunday doubleheader — two games for the price of one — when the team retired Derek Jeter’s jersey. Additionally, the Yankees had hosted the rival Boston Red Sox by this point last season, but have yet to do so in 2017.


But even factoring in those two elements, an attendance dip would probably still exist.

In addition, the Yankees reported last week in their first-quarter filings that ticket and suite revenues had declined nearly $14 million from the first-quarter filing of a year ago. The team noted in the filing that a three-month delay in invoicing and a home schedule that began one week later had affected cash collections.

But if these numbers are frustrating for the Yankees, they are not necessarily that surprising. The Yankees, internally, were acknowledging a problem well before now.

By the end of the 2015 season, when the Yankees made their lone playoff appearance of the last four seasons — a wild-card loss to Houston — Steinbrenner and his top executives had come to understand that an older team whose most renowned player was the polarizing Rodriguez was not resonating with young adults.

Levine, who is now 62, spent months after that season exploring how to better reach fans 35 and under, canvassing people in various industries, including entertainment, retailing and health care, to better understand how that demographic made its decisions. For example, Levine said, how a recent college graduate decided whether to sign up for the Affordable Care Act might tell the Yankees how he or she decided to buy tickets.
Marty Greenspun, senior vice president for strategic ventures, visited every other major league ballpark, conducted surveys of 5,000 Yankee fans and, with several outside consultants, examined ways the club could make the stadium more convivial for young adult fans.

“When there’s a trend going south, you look at it,” Levine said. “Like a doctor, if somebody’s hurt, you look at it and try and diagnose it and fix it.”

What the Yankees found out was that younger fans were more likely to buy tickets at the last moment — as they would for a play or a concert — and attend with a group of friends. They also preferred not to spend the entire game tethered to their seats. And they wanted a good deal.

So after more than a year of planning, the Yankees rolled out a series of changes.

They removed 2,100 obstructed-view seats in center field over the winter, and created plazas — the kind of gathering spots in the outfield that have become popular at other ballparks. They have also made more than 200,000 tickets available for $15 or less, including the Pinstripe Pass, which comes with a drink (soda, water or beer) and park entry, but without a seat. They hired a new social media director to help better connect with young fans.

They have been more aggressive with advertising and also took to the streets during the winter, parading young players around the city — picture Gary Sanchez slapping together hero sandwiches at a Bronx deli — on publicity stops that the Yankees might have once felt beneath them.
After all, when the new stadium opened in 2009, in the midst of the financial downturn, the Yankees had the hubris to put a $2,500-per-game price on some of the seats behind and near home plate. When many of them stayed empty and became an embarrassing eyesore on TV, the Yankees slashed those prices in half.

Even so, a certain sense of haughtiness could still be detected before last season, when Lonn Trost, the Yankees’ chief operating officer, said in a radio interview that fans buying luxury seats on the secondary market “may be someone who has never sat in a premium location, so that’s a frustration to our existing fan base.”

But that was then.

Now the Yankees are willing to try a lot of things — particularly if it will attract younger people. Their latest foray came Monday, when they cordoned off 18 seats in right field, some of which have an obstructed view, and declared them The Judge’s Chambers, an attempt to whip up more excitement about their rookie right fielder.

“It’s obvious that looking at things — baseball has been talking to us about it as well — that’s the age group that is less interested than other age groups in the game,” Steinbrenner said. “Why? What can you do about it?”

Of course, one other thing the Yankees could do is to develop more players. For years, the Yankees had a poor record of player development — Brett Gardner and Robinson Cano were the rare everyday players to come up through the system over the last decade — but that began to change last summer.

It was then that general manager Brian Cashman jettisoned veteran players in trades both to refurbish the farm system and to make room on the major league roster, and in the active lineup, for young prospects like Judge and Sanchez. Suddenly, the team taking shape on the field, younger and exciting, was better aligned with the club’s efforts to market to millennials.

“The two started completely separate,” Levine said. “Then we realized this could be a perfect storm and started connecting them up.”

Sanchez helped a lot, immediately, when he smashed 20 home runs over the final two months of the 2016 season. Judge has started this season in similar fashion, leading the American League in home runs — many of which have left his teammates (and opponents) as awe-struck as fans.

“Right now, there’s no LeBron in baseball, there’s no Tom Brady,” Levine said. “Derek Jeter was, maybe David Ortiz. But I think these young guys on our team and some of the other ones have the breakout ability, and I think that’s what’s exciting and what our fans are looking at.”

So far, Judge, with the physique of an NFL pass-rushing end and a charismatic personality, has landed on the cover of Sports Illustrated and in a comedy skit on “The Tonight Show.” If he continues to hit tape-measure home runs and the Yankees continue their early success, Judge might accomplish a truly gargantuan feat: filling up Yankee Stadium on a regular basis.