SBJ/February 27-March 4, 2012/Research and Ratings

Clubs give winter homes a branding boost

Cities cede ballpark revenue but get more help in luring tourism

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Baltimore Orioles radio announcer Joe Angel has been known to tease fans listening to the club’s spring training broadcasts, letting them know that the game-time temperature at the O’s Florida ballpark is comfortably in the 80s while the current temperature in Baltimore is, well, not. Coupled with a similar proclamation by the stadium’s public address announcer, it generates chuckles at the game and presumably groans from snowed-in Mid-Atlantic listeners back home.

In the past, it’s been merely a friendly taunt from the Sunshine State. Now, it highlights the way many MLB clubs are casting their business relationships with their spring training hosts.

Since 1988, nearly $1 billion has been spent in Florida and Arizona on spring training stadium construction.
Photo by: GETTY IMAGES
Since 1988, nearly $1 billion has been spent in Florida and Arizona on the construction of spring training stadiums, resulting in 19 of the 30 clubs scoring new venues and the rest receiving renovations or updates — in some cases, extensive ones — to their ballparks. Despite the fact that the majority of that money has come from public coffers, many of the municipalities have become increasingly willing to turn over all the revenue streams from these city- and county-owned venues to their MLB spring training tenants. Every team has signed a new lease since 1988, and nearly every club has received a bigger share of stadium revenue than it received in its previous lease.

In return, what clubs like the Orioles are providing the municipalities is marketing muscle. Public officials defend their spending on spring training facilities by saying that most of the funding for the projects comes from tourist taxes, rather than out of local residents’ wallets. So while the cities are willing to surrender to the teams the money generated at the ballparks, they’re seeking the teams’ help in getting people to come to town — for spring training and beyond — knowing that those tourist dollars are more important than ever to making the spring training business equation work.

“For decades, the municipalities had all the power,” said Jorge Costa, senior vice president of ballpark operations at AT&T Park for the San Francisco Giants. “Eventually, the teams started demanding more, and the balance of power swung the other way. Now I think the two sides are starting to see the benefits of working as partners.”

Costa joined the Giants soon after the team moved its spring training business to Scottsdale, Ariz., from Phoenix in 1984. The team’s most recent lease took effect in 2006, and it provides the Giants with nearly all of the revenue from the game-day operations at Scottsdale Stadium and with no obligation for spending on on-site operations, maintenance or utilities. Those expenses are covered by the city. What the team does provide, similar to most MLB clubs, is an ad for the Scottsdale community in the spring training program book sold at the city-owned stadium and what’s labeled in the lease as a “reasonable effort” to promote the city during radio and TV broadcasts of games transmitted from the city.

Caroline Stoeckel, director of marketing for the Scottsdale Convention and Visitors Bureau, said the city spends more money on marketing efforts in San Francisco than in any city other than New York. She said the group highlights its status as a spring training market even in ad campaigns that are not necessarily targeting spring training travelers. The city also uses a suite at AT&T Park periodically throughout the regular season to entice Bay Area clients to bring conventions and other business to Scottsdale.

Orioles marks can be used in campaigns because marketing is a joint venture.
John Angelos, Orioles executive vice president and chief operating officer, developed the O’s partnership proposal with Sarasota. He likens an effective spring training lease to a deal that a brand would reach with a team: It’s not enough just to say the relationship exists; there needs to be active and sustained support of the partnership for it to be effective for both parties.

“I looked at a lot of leases, and it struck me that there was almost no promotional support by the clubs,” said Angelos, who is also president of MASN, the Baltimore-based regional sports network. “So we have offered all the resources at our disposal — MASN, exposure at Camden Yards, radio — and crafted a package of media support so Sarasota can tell its story to our fans.”

It’s a story that would cost the county at least $1 million to buy each year, a figure no spring training site would be willing to, or be able to, spend in a single market, according to multiple convention and visitors bureau officials. Because the marketing efforts are a joint venture, the Orioles’ marks can be used in campaigns.

Sarasota officials saw the deal as one that provided the perceived tourism-related economic impact that has been historically connected to spring training. Getting yearlong media access to 8.3 million potential visitors living near three major airports in the Baltimore and Washington, D.C., markets was a perk they could not have otherwise afforded.

“John Angelos came to us and said he wanted to create a new model for how spring training would work, [one] that would mean more than just coming here a few weeks a year to play games,” said Jenny Yarabek, Sarasota County’s ballpark project coordinator. “It opened up the marketing doors for us in the Mid-Atlantic.”

Early numbers suggest it may be having an effect. Sarasota’s hotel occupancy rate in March 2011 was up 3.6 percentage points from March 2008, a growth rate above the statewide mark. The Sarasota airport reported an increase last year in passengers arriving from the Mid-Atlantic compared with prior years, and the website for the local convention and visitors bureau saw a 6.5 percent year-over-year increase in traffic from the Mid-Atlantic between January and May of 2011, and a 27 percent surge between June and October. The team also had its highest spring training attendance ever last year, drawing 115,506 fans.

In addition, Yarabek said the team two years ago gave the county naming rights to the annual winter business-to-business conference the team and MASN host in Baltimore for Orioles business partners — an action Yarabek said has resulted in an increase in the number of Orioles and MASN partners subsequently making trips to Florida for spring training.

Angelos points out that with only a few weeks of games and relatively low-priced tickets, neither a team nor its host community gets rich off game-day spring training revenue. Most spring games generate total revenue in the six figures, according to team officials and financial overviews of spring training business. Where money can be made is from that family of four that attends the games coming to the area in the first place, spending money on hotels, rental cars and food — thereby
Part of the allure of spring training is the ability to get close to the action. Fans in Peoria, Ariz., (top) and Sarasota, Fla., (above) interact with teams.
Photo by: GETTY IMAGES (2)
generating tax revenue that helps pay off a stadium’s debt.

The Tampa Bay Rays, whose current lease began in 2009 after Charlotte County spent $27.2 million to renovate Charlotte Sports Park, assign a team liaison to work with the county on joint promotional and public relations efforts. The team is required to provide the region with a number of marketing opportunities at Tropicana Field and on the team’s radio and TV broadcasts throughout the regular season, including a permanent concourse sign and scoreboard ad during each game at The Trop proclaiming Charlotte Harbor and the Gulf Islands as the official spring training home of the Rays. The agreement also has a clause that calls for the two sides to make “reasonable efforts” to secure spring training housing within the county for the Rays’ players and staff, as well as accommodations for visiting teams.

The Boston Red Sox, similarly, have solidified their relationship with municipal officials in Florida for their new JetBlue Park, the largely publicly funded venue opening this year in Fort Myers. A promotional clause in the team’s lease calls for the Red Sox to meet with the Lee County Visitor and Convention Bureau annually “to devise a mutually beneficial promotional campaign targeting the Boston/New England market.”

Jeff Mielke, executive director of the Lee County Sports Authority, said the Red Sox have already gone well beyond their contractually obligated marketing requirements. Mielke said that while the club retains all stadium-related revenue, the team reached out to the county two years ago, when tourist dollars had slowed, and offered to share naming-rights revenue. Although the Red Sox are not obligated to provide any of that money, the club will now pay the county $1.2 million over the eight years of JetBlue’s naming-rights contract.

The Sox also have introduced county economic development representatives to team corporate partners, such as Dunkin’ Donuts.

“The B2B connection between the [Red Sox] and the region is so much stronger than it was even three years ago,” Mielke said.

CACTUS LEAGUE
What Arizona municipalities have gained from, and spent on, spring training sites, according to their leases. Municipalities are listed in order of their net cost to operate the respective facilities last year.
Click here to see chart
 
GRAPEFRUIT LEAGUE
What Florida municipalities have gained from, and spent on, spring training sites, according to their leases. Municipalities are listed in order of their net cost to operate the respective facilities last year.
Click here to see chart
The Chicago White Sox share the Camelback Ranch spring training facility in Glendale, Ariz., with the Los Angeles Dodgers. Brooks Boyer, White Sox vice president and chief marketing officer, said his team has the benefit of having a large population of Chicago natives who live in Arizona during the winter or have relocated there. Like most clubs, the White Sox stage a themed spring training host-city day at their home ballpark, U.S. Cellular Field, during the season.

In addition, season-ticket holders receive direct mailings with spring-training information and travel packages, and while Glendale officials did not come to Chicago for last month’s annual team fan fest, Boyer said longtime team corporate partners Vienna Beef, Mission Foods and DiGiorno now have contracts at Camelback Ranch.

Having these deeper relationships is increasingly important. Florida’s Office of Tourism, Trade and Economic Development, an entity established by the state in 1991 to help fund new stadiums and renovations, no longer exists. It is now part of a newly created Department of Economic Opportunity and operates under the Division of Strategic Business Development for the state. While municipalities can still apply for state grants to help fund spring training construction, the process is now less direct and less guaranteed. Similarly, in Arizona, the Arizona Sports and Tourism Authority has no funds remaining for new stadiums. The organization does have $46 million guaranteed for renovation projects, but the beneficiaries risk losing those grants if they fail to sign long-term leases.

That fact further strengthens Angelos’ belief that the evolution of the team-municipality relationship has to include strong joint-marketing efforts outside the spring training communities.

“I don’t believe this is corporate welfare,” Angelos said about communities’ spending on spring training sites. “Spring training is not someplace that would be visited by Occupy Wall Street. I think it’s a good deal for all the municipalities, but especially for our partnership.”
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