Rangers stay in Arlington with a new stadium
Texas Rangers fans and players aren’t the only ones who stand to be more comfortable with an air-conditioned stadium.
If Arlington voters decide to subsidize the plans for the Rangers’ proposed retractable-roof stadium, the club’s already rich owners will be sitting even prettier.
Sports economists say owners tend to cash in on the novelty of a new stadium by increasing the cost of tickets, parking and concessions. The annual revenue increases can be up to 30 percent, said Stanford sports economist Roger Noll, though owners typically face increased costs with a new stadium.
“In baseball, it’s really important to get a lot of people to go to the games,” Noll said. “They will jack up the price initially because people will want to go see the new facility and experience the new facility even if the team isn’t all that good. That is the main short-term benefit from a new stadium — ticket prices get kicked up for two or three years. Then what happens after that depends on how good the team is.”
The New York Mets increased ticket prices by 8.6 percent after Citi Field opened in 2009, Minnesota Twins fans paid 45 percent more after the team’s move to Target Field in 2010, and the Miami Marlins hiked prices 55.4 percent when their new ballpark opened in 2012, according to the baseball blog Fangraphs.
You will find an upward blip in the value of the team that is on the order of 25-30 percent. Sometimes a little more, sometimes a little less.
Stanford sports economist Roger Noll
A 30 percent increase in Arlington would push the average Rangers’ ticket to $31.20 (but it’s likely to be higher because prices will undoubtedly increase by the time the proposed stadium opens in 2021). Now let’s assume the Rangers average 40,000 fans in their new stadium, up from the 33,462 they had in 2016. The increase in attendance and ticket prices translates to an extra $36 million.
The Rangers’ average ticket price of $24 in 2015 was below the league average, according to the Team Marketing Report.
“Part of it is what economists call a honeymoon effect or a novelty effect,” said Victor Matheson, a sports economics professor at College of the Holy Cross. “It’s something fun and new and everyone wants to see the new stadium. Even stadium critics like me like to go to a stadium for the first time to see what it’s like and check it out. The other part is if the new stadium is perceived to be bigger, better and newer, more luxurious. That means people are willing to spend more for it.”
The Rangers expect to “add premium areas and amenities that we’re not able to offer in Globe Life Park,” said Rob Matwick, executive vice president of business operations for the Texas Rangers, in a statement.
“With the addition of the premium spaces, I would expect to see some increase in prices there,” he said. “However, we understand that we need a range of price points to meet the needs of all of our customers. We evaluate ticket pricing continuously and scale our prices accordingly.”
In addition, the Rangers said they will be investing in the team, which has reached the postseason five times, including two World Series, since 2010. The club purchased a minor league franchise in Kinston, N.C., in September and expects to begin construction soon on an academy in the Dominican Republic.
But the real money for the owners could be in the increased value of the franchise, which is already estimated at $1.23 billion. Noll said a new stadium can increase a team’s value by as much as 30 percent.
The Rangers ownership group, led by oilmen Ray Davis and Bob Simpson, paid $593 million for the club in 2010. Davis, who co-founded the Dallas-based pipeline company Energy Transfer Partners, is worth $2.4 billion, according to Forbes. Simpson is not on Forbes’ list of billionaires. He owns MorningStar Oil & Gas in Fort Worth, a company he started after selling XTO Energy, which he co-founded, to Exxon Mobil in 2009 for $31 billion.
Club valuations are subjective, of course, unless team owners are looking to sell, Matwick said in the statement, something this group is not planning to do.
The advantages of a retractable roof have been the Rangers’ main argument for the new stadium. There is no denying that a temperature-controlled environment could attract more fans to games on hot summer days. While that is an understandable desire for player and fan comfort alike, the additional amenities of a new venue bring with them higher costs to fans.
$1.23 billion Estimated value of the Texas Rangers, according to Forbes.
The value of the Twins went from $328 million in 2008 to $490 million in 2011, a year after their stadium opened.
The Twins ranked sixth in the league in attendance in 2010, averaging nearly 40,000 a game. They made the playoffs that year, helping push them to fourth in attendance in 2011. But they’ve missed the playoffs the past six seasons, and their attendance has dropped accordingly, from 12th in 2012 to 23rd (1.9 million) in 2016.
And the team’s value has slipped from 12th to 20th among the 30 major league teams.
“There’s always a big positive for the first two or three years but it tends to go away and how fast it goes away depends on how good the team is,” Noll said. “If the team is generally above average, then the increase is more durable and it’ll last for a decade. But if it’s not a good team it disappears after two or three years. A good example in the NFL right now is the 49ers. They are having mass defections of people not going to the games and so the revenues from inside the stadium have fallen because the team is so bad.”
Voters in Arlington will be asked Nov. 8 to fund as much as 50 percent of the retractable-roof stadium’s $1 billion cost under a 30-year lease extension, with the city’s participation capped at $500 million. To pay for it, the city would extend and redirect part of its half-cent sales tax, 2 percent hotel tax and 5 percent car-rental tax. The sales tax now is being used to pay off AT&T Stadium debt.
The Atlanta Braves will open $622 million SunTrust Park next season. It replaces Turner Field, which opened in 1997, three years after the Rangers’ Globe Life Park.
“Here’s a team with a stadium that is not particularly old and all of sudden it looks like Arlington is pushing this more than the Rangers even,” said Matheson, the sports economist from Holy Cross. “It’s all of a sudden not what they want, is not as shiny and as pretty as others. That’s exactly what’s going on in Atlanta. They have a stadium that is younger than Miley Cyrus but is somehow not acceptable to play in. People say they’ll be there forever, but forever is a pretty short amount of time nowadays in major league baseball. Forever seems to be more like 20 to 25 years.”
New stadium, new prices
Increase in average ticket prices in the newest MLB stadiums, according to fangraphs.com: