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Of course ticket prices are increasing for the Ravens

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Of course ticket prices are increasing for the Ravens

Posted on 20 February 2013 by Drew Forrester

Complaining about the Ravens raising ticket prices is like moaning about a yellow light that suddenly turns to red.

What, you thought it was going to stay yellow forever?

I’m not a ticket buyer, so naturally it’s easy for me to just sit back and say, “deal with it”.  But, honestly, ticket prices have to go up every couple of years, particularly in a market like Baltimore where the team’s new revenue sources are few and far between.

The team defended themselves on Tuesday by citing “player costs” as a reason for the increase.  A couple of folks e-mailed me to complain, using the argument of “but the salary cap isn’t going up in 2013″ to justify why the Ravens were wrong for raising the prices.  No, sirs, you’re wrong.

When the Ravens are forced to fork over forty or fifty million to Joe Flacco sometime in the next two weeks, where do you folks think that money comes from?

What about the ten million they’ll have to give Dannell Ellerbe if they keep him around?

If Ed Reed stays, who ponies up his five million signing bonus?

Hint:  You know the guy.

It’s you.

Yes, sure, Steve Bisciotti owns the team.  And he might literally be forced to “loan his company” forty million to appease Flacco and his agent.  But that money goes right back to the owner when it’s in and available for repayment.  Steve Bisciotti himself doesn’t pay Joe Flacco or any player out of his own pocket.  He might initially be involved in a transaction because he has that kind of cash availability, but once all the team monies are collected and deposited, the owner eventually gets repaid the dough he shelled out.

When the Ravens cite “player costs” as a reason for increasing their ticket prices, an increase in the salary cap isn’t necessarily part of the equation.  Some people just assumed that was the case.  It’s not, though.

I also had to LOL on Tuesday when I heard a couple of geniuses say something like this on the radio: “Bisciotti makes so much money on the team it’s sickening.  Every team in the league is making fifty million a year.”

No, gentlemen, they are most certainly NOT making fifty million a year.

In fact, over the last two seasons – prior to 2012 – the Ravens have made a little more than sixteen million in profit.  Yes, the owner of every NFL team draws a one million salary from the club.  That’s a fact.  But in 2010 and 2011, the team combined for slightly more than sixteen million in profit.  ”That’s it?” you’re asking.  Yes, that’s really it.  Steve Bisciotti, if you believe him – and I do – told some of us in the media a couple of Januarys ago that it’s not at all rare for the Ravens to break even or generate very little profit in a given season.  If you just do the simple match, it’s easy to believe him.  The football team has $120 million in expenses before a ball ever gets kicked off.  This season, the TV money ($118mm) and the salary cap ($120mm) were nearly identical. You haven’t employed a staff member, flown a plane or bought insurance for anyone yet, let alone pay the light bill at the team’s facility.  I have no idea what the Ravens made in 2012, but I bet it wasn’t much.  Maybe twelve million bucks?

That will all change in 2014, though.  Given the new TV monies coming into the league, each NFL team stands to receive $200 million from the pool of money paid to the league.  Not surprisingly, the salary cap is expected to rise by potentially as much as $18 million per-team — but that’s not until NEXT season.

And, oh, by the way, aren’t football teams allowed to make a profit?  Remember, I’m the guy who has told you this little secret for about ten years now:  Owners of sports teams don’t REALLY own the club — the community owns the club.  They merely own the right to make a profit off the team.

Any economist would tell you that a company worth $700 million (Ravens) generating a profit of only $7mm to $10mm a year is doing something woefully wrong.  Yes, the football team is a winning business proposition for the owner, but it’s not returning nearly as much as you think it would based on the overall value.

Steve Bisciotti has every right to make a profit off the team.  That’s why he paid $600 million for it.  And despite what anyone might think, how much of a profit he makes while he owns the team really isn’t anyone’s business AS LONG AS HE’S RUNNING THE CLUB IN A MANNER THAT REWARDS THE INVESTMENT MADE BY THE FANS AND THE SPONSORS.

I’d say, based on that game the Ravens just won in New Orleans three weeks ago, Mr. Bisciotti is doing a pretty fair job of running the football team.

Ticket prices going up?

You bet they are.

The Ravens just won the Super Bowl, pal.

If you can’t raise the prices after you’ve won the world championship, when CAN you raise them?

 

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