SBJ/December 28, 1998 - January 3, 1999/No Topic Name
Yanks crank marketing bank
Published December 28, 1998
What can the New York Yankees do as an encore after their unprecedented 1998 season? For one thing, start marketing.
At least that is the mission Joe Perello has set for the club, which historically has done little to promote its on-the-field product. But Perello, hired from credit card giant MBNA Corp. 12 months ago as director of business development, wants to change that.
His campaign includes creating a direct marketing list with 5 million names (it was fewer than 150,000 when he arrived) and a merchandise catalog that would rival L.L. Bean Inc. Already, he has the list up to half a million entries.
Because the Yankees always rank at the top of Major League Baseball Properties Inc. merchandise sales, the team, by starting its own catalog, could bypass MLB and keep a good chunk of the profits for itself.
That would be a scary proposition for teams already outdistanced by the Yankee money machine. The Yankees now receive only one-thirtieth of the profit from the sale of merchandise bearing the Yankee logo.
"In order to capture the emotional attachment fans have and profit from it, we have to run the merchandise business ourselves," Perello said. "The only way to do that is through a very large database. ...I am not suggesting we change the rules; all I am saying is in order for us to cash in on that, we have to be in the direct marketing business."
While it sounds simple, collecting those names and marketing to them will mean a virtual cultural revolution at Yankee Stadium. The stadium has never been the most hospitable environment for fans, to put it politely.
From the uninterested stares of food service employees dishing out what is widely acknowledged to be awful fare, to the dearth of rest rooms and the grime found in too many areas, the stadium is not a friendly place. The situation is not helped by principal Yankees owner George Steinbrenner's frequent bashing of the stadium in his campaign to win a new venue outside of the Bronx.
"We need an incredible amount of focus on the way we treat our fans," Perello said. Asked if he had Steinbrenner's full support in his quest to make the Bronx stadium more fan-friendly, Perello paused, then responded that he has been given his marching orders by the team's partners, who include Steinbrenner.
Regardless of whether the team moves, however, it is entirely in the organization's interest to improve the environment of the stadium and make its games a must-see attraction for fans, said Brandon Steiner, owner of Steiner Sports Marketing in Manhattan.
"Sellouts would lead to more corporate marketing," Steiner said. "The persona you want is you can't get a ticket. That is what they should be going after. That is what the Knicks did."
While the Yankees set an attendance record in 1998 with nearly 3 million fans, the per-game average was still nearly 20,000 fans shy of a sellout. By contrast, the Cleveland Indians sold out every game last year.
To reach the sellout goal, however, the club needs to market to the minority community that surrounds Yankee Stadium, Steiner said. Because the local fans do not have to travel as far, they will fill the seats that crowds from neighboring Manhattan, Westchester and New Jersey will not sit in, he said.
Perello agreed and said he wanted to create a campaign to market to Hispanics. "We are in the Bronx, and Hispanics love baseball," Perello said.
The question Steiner asked is: "Will George will let Joe do that?"
Whether Steinbrenner lets Perello realize his dreams of a major league marketing campaign, Perello has already succeeded in several areas.
Sponsorship revenue rose 30 percent this year and should rise another 30 percent next year.
Revenue from publications rose 86 percent to the mid-seven-figure range, Perello said. Subscribers to the team's magazine jumped from 24,700 to 32,000.
The Yankees' new CD-ROM sold 40,000 copies this year, turning a 20 percent to 30 percent return on the team's investment, Perello said.
If the Yankees are successful in creating an industry-leading catalog, it could generate up to $10 million a year in revenue, Perello predicted.
The team has a catalog, but Perello wants to bulk it up and push most of the sales over the Web.
"Jimmy Buffett has a $10 million a year catalog business just selling Hawaiian shorts and goofy songs," Perello said. "People have an emotional attachment to him, and they have an emotional attachment to us."