Cameron: Big-ticket signings don’t drive attendance

From Dave Cameron at FanGraphs on December 9, 2011:

With the Angels throwing a small mountain of money at Albert Pujols, a common justification for the expenditure is that the revenues he creates through gains in attendance and merchandise sales will make up for the costs of acquiring him in the first place. This argument is a pretty common one among people looking to defend free agent prices, but it has one fatal flaw – there isn’t much in the way of evidence to support the idea.

The merchandise argument is almost a total non-starter, in fact. As part of MLB’s revenue sharing plan, the profits from sales of jerseys, hats, and the like are pooled into the central fund and distributed equally to each team around the league. While about one-quarter of all baseball jerseys sold have a Yankees logo on them, each team shares equally in the profits from those sales. Even if every person to walk through the gates in Anaheim next year purchased a Pujols jersey, the Angels wouldn’t get much benefit from those sales.

Where teams can really differentiate themselves and create additional revenues are attendance and television contracts – teams pocket the profits they make by selling more tickets or by negotiating better rates with their local cable provider, or, in many cases, creating their own regional sports network and cutting out the middle man.

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Originally published: December 9, 2011. Last Updated: December 9, 2011.