Toronto Blue Jays: A Large Market Team?
During the Toronto Blue Jays wonderful run to the playoffs this fall, many fans flooded sports talk radio and social media with their thoughts about how the team would be able to go on a free agent shopping spree this off season. The sharp rise in attendance, along with record television ratings and a huge boost in merchandise sales, the commenter’s said, would lead to record revenues and profits for the crown jewel of the Rogers corporate empire.
With all due respect, and even though season tickets sales for 2016 have reportedly been brisk, half a season of full houses does not put a franchise in the same league as the Red Sox, Yankees, Cubs, and Dodgers.
Before we begin, let’s have a look at the Blue Jays attendance over the past 30 years:
|2015||2 794 891||34 505||4th of 15|
|2014||2 375 525||29 327||7th of 15|
|2013||2 536 562||31 316||6th of 15|
|2012||2 099 663||25 922||8th of 14|
|2011||1 818 103||22 446||10th of 14|
|2010||1 495 482||19 173||12th of 14|
|2009||1 876 129||23 162||10th of 14|
|2008||2 399 786||29 627||6th of 14|
|2007||2 360 644||29 144||7th of 14|
|2006||2 302 212||28 422||8th of 14|
|2005||2 014 995||24 876||11th of 14|
|2004||1 900 041||23 457||10th of 14|
|2003||1 799 458||22 216||10th of 14|
|2002||1 637 900||20 221||11th of 14|
|2001||1 915 438||23 359||10th of 14|
|2000||1 705 712||21 058||10th of 14|
|1999||2 163 464||26 709||8th of 14|
|1998||2 454 303||30 300||8th of 14|
|1997||2 589 297||31 967||5th of 14|
|1996||2 559 573||31 600||5th of 14|
|1995||2 826 483||39 257||3rd of 14|
|1994||2 907 933||39 287||1st of 14|
|1993||4 057 947||50 098||1st of 14|
|1992||4 028 318||49 732||1st of 14|
|1991||4 001 527||49 402||1st of 14|
|1990||3 885 284||47 966||1st of 14|
|1989||3 375 883||41 678||1st of 14|
|1988||2 595175||32 039||3rd of 14|
|1987||2 778 429||34 302||1st of 14|
|1986||2 455 477||30 315||2nd of 14|
As late as 2010, the Blue Jays were a bottom feeder both off the field and at the gate – a far cry from the glory years of 1985-93, when the team was always near the top of the standings and attendance. The team could afford to take on the salaries of a David Cone or a Rickey Henderson for half a season, because they were pulling in 4 million fans a year, drawn by the novelty of the newly-opened SkyDome and a competitive team. Half a season of near capacity crowds this year put the team only 4th in the American League, and 8th in MLB.
It has long been said that Toronto fans are Blue Jays fans first, and baseball fans second. The St Louis Cardinals, long a competitive team both statistically and financially, last had an average attendance of under 30 000 in 1995. The Blue Jays, by contrast, have topped that mark only 5 times in the past twenty years. The Dodgers last had an average attendance under 30 000 in 1976, while the Yankees have led the AL in attendance for the past 13 years. The Cubs and Red Sox have both outdrawn the Blue Jays by a wide margin over the past two decades. Toronto fans appear to only show up in huge numbers when the team is competitive, which they have seldom been since 1993.
So, the Blue Jays are behind the 8-ball when it comes to competing with the other large market teams who have far outpaced them at the gate over the last twenty years. No big deal say those who feel that Rogers has deep pockets that can afford high-priced free agents. Guess again – the Red Sox are owned by a media conglomerate that dwarfs Rogers, while the Dodgers are owned by a well-heeled group of investors, and the Cubs and Yankees have ownership groups headed by families in the Forbes Top 500 wealthiest in the U.S. Most of the large market MLB teams, in fact, have at least partial ownership by a media conglomerate, several of which outpace Rogers in terms of revenue and market size. Granted, television ratings for Blue Jays telecasts were through the roof during August, September, and October, and no other ownership group in MLB owns the team, the stadium the play in, and their radio and television rights. No other team in MLB, however, takes in revenue in one currency, and pays out salaries and other operating costs in a higher one. Despite record revenues, like a marginal player who has a career season, it’s hard to see the Blue Jays in the same high-rent district as the other top market teams until the team can post these numbers on a consistent basis.
At the same time, the Blue Jays brand has grown in value, and Rogers has certainly more than made back their investment in both the team and the former SkyDome. There’s no doubt that their pennant chase helped the bottom line, boosting revenues for 2015 by perhaps $20 million. With revenue sharing about to end for the 15 largest market teams (the Blue Jays rank 13th) in 2016, an important source of income (one that helped sustain the team in the early years of this century) will cease to exist for Toronto. Currently, all MLB teams put 31% of their local revenue into a pot that is shared by all teams. Revenue sharing has been worth between $30 nd 40 million to the Jays since Rogers took over the team in 2001.
When all else fails, the Tweeters and Facebook posters and talk-show callers call the Blue Jays “Canada’s Team.” As a lifelong Southern Ontarian who was educated in Toronto, and visit there multiple times a year, I feel that label’s a bit presumptuous. I have family members in the Vancouver area who, thanks to the Blue Jays wildly successful Short Season affiliate there, are devoted fans, rushing home from school or work to catch the Jays telecast at 4:00 Pacific Time. However, not every Canadian is a Jays fan, and it’s a huge leap to think otherwise. I know of many native Maritimers who think of the Red Sox as “their” team, and baseball fans in Quebec, who seem to be biding their time until the Expos return (yeah, don’t hold your breath on that one, mes amis), did not necessarily flock to the Blue Jays bandwagon. So, maybe it’s better to think of them as Southern Ontario’s team, with pockets of support across the country. There is room to grow the brand, which is why the Jays were considering re-locating their AA affiliate to Ottawa, until City Council balked at footing the cost of stadium upgrades. Suggesting that they’re Canada’s team sounds highly Toronto-centric.
Forbes ranked each MLB team according to a number of financial indicators in March. The Blue Jays no doubt experienced a jump in value based on this season, but they’re still not in the same ballpark as the top teams.
|Rank||Team||Current Value ($mil)||1-Yr Value Change (%)||Debt/
|Revenue ($mil)||Operating Income ($mil)|
|1||New York Yankees||3,200||28||0||508||8.1|
|2||Los Angeles Dodgers||2,400||20||17||403||-12.2|
|3||Boston Red Sox||2,100||40||0||370||49.2|
|4||San Francisco Giants||2,000||100||4||387||68.4|
|6||St Louis Cardinals||1,400||71||21||294||73.6|
|7||New York Mets||1,350||69||26||263||25|
|8||Los Angeles Angels of Anaheim||1,300||68||0||304||16.7|
|16||Chicago White Sox||975||40||5||227||31.9|
|19||San Diego Padres||890||45||22||224||35|
|22||Toronto Blue Jays||870||43||0||227||-17.9|
|28||Kansas City Royals||700||43||8||231||26.6|
|30||Tampa Bay Rays||625||29||22||188||7.9|
So, until Blue Jays fans turn out in numbers sufficient and consistent with the other big players, it’s hard to think of them as a big market team. There’s plenty of evidence to suggest that if the team fails to repeat its success of 2015 next season, attendance and support will fall off. Which is why Rogers likely decided to hire Mark Shapiro as their new head of baseball operations. Shapiro has plenty of experience in building a small market team through the draft. The contract the Red Sox landed David Price with was obviously not sustainable for their business model. The Blue Jays may have awoken a slumbering fan base with their successful second half, but the bigger challenge may be sustaining that interest. Attendance is not the be all and end all – it does account, on average, for about 35% of revenue across MLB. More importantly, it does signal to a franchise the amount of fan interest in the team.
This graphic from Forbes does seem to muddy the waters a bit:
At first glance, this would seem to give merit to the argument that Rogers is sitting on a huge chunk of revenue garnered from record television ratings this season (or three months’ worth). It’s worth noting, however, that the measurements used in Canada and the US are not the same – the above total for the Blue Jays reflects total viewers, while the American figures show total households. One would think that the Jays would be entitled to a larger slice of the revenue pie when it comes to rights fees, but it’s not that simple. Rogers is paying over $5 billion for NHL rights, but that’s largely due to competition from Bell and the CBC. Since they own the product they’re broadcasting when it comes to baseball, there is not the same impetus to charge high advertising rates, and thus, no incentive to share a larger amount of what tv revenue there is with their baseball property. For Rogers, the Jays are more of a marketing vehicle when it comes to television than they are a significant source of income.
For those argue that Rogers are cheapskates when it comes to payroll, this graphic tells another story:
The Jays, of course, added significantly to their payroll at the trade deadline, and had, at least, a $20 million boost in revenues over the 2014 season. It’s worth pointing out that the former was in US$, while the latter was in CD$. And with the Loonie at an 11 year low, and forecast to sink as low as 72 cents against the American dollar before it begins to rebound, the challenge for the team will be to continue to remain competitive in the face of effectively sinking revenue.
Many Blue Jays fans will scoff at all of this, and claim that Rogers is a $9 billion company that can afford to spend with the big boys when it comes to MLB players, and they point out the team’s failure to even submit an offer to Price. What no one knows, of course, is whether or not Rogers made that choice because they felt they lacked the financial wherewithal to do so, or if they felt meeting Price’s salary demands was a smart business decision. The Jays are not the Red Sox or Yankees, the latter of which can afford to pay a broken-down 36-year-old C.C. Sabathia $25 million next year after a steep decline in 2014 and 2015.
Since the Jays are but one part of a larger corporate empire, it’s easy to argue that the team is awash in hidden cash, and even if they’re not, they are part of a larger conglomerate that can easily afford to throw cash at top players in order to field a competitive club. In the real world, it’s not that easy. Jays fans likely have to prove to the Rogers corporate masters that they are in this for the long haul, and that they will continue to support the club in the type of numbers that will allow them to be among the league leaders in attendance before they begin to toss mega contracts around. The declining Canadian dollar and a still unproven fan base are reason enough for the team to take things cautiously at least for the short term, looking for market inefficiencies and players with hidden value, and scouting and drafting wisely before they take on more risk. In that way, they are neither like a large market or a small market team, inhabiting a world where managing risk and building from within take precedence.