Of course ticket prices are increasing for the Ravens

February 20, 2013 | Drew Forrester

Of course ticket prices are increasing for the Ravens

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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13 Comments For This Post

  1. rubengy Says:

    As a season ticket holder I can’t say I’m happy prices are going up. But the Ravens have raised ticket prices every two years since they got here like clockwork. I don’t begrudge them this since the cost of doing buisness goes up every year. They haven’t raised prices however, for the last three years, I’m guessing because of the ill will fans felt after last year’s lock-out. This year’s rise was entirely predictible.

  2. Steve From Sandpoint Says:

    The Ravens are contenders every year and won it this year.That’s pretty good bang for the buck, what more do you want. You already pay masn money every month to Angelos and no one complains.Either deal with it or sell them, I’m sure there’s 100,000 people who would scarf them up.

  3. Unitastoberry Says:

    Its the nature of things.It’s a good time to do this with the Championship.Tons of overhead and travel expenses. I’m no CPA but in a private owned company your profit can be a misleading thing since you have to pay tax on a profit so you want to keep profit as low as you can,so you get creative in other ways utilizing tax write offs such as company cars,travel,entertainment,charitable foundations,etc. We don’t see the books so it’s anyones guess on those.We also don’t know the owners salary or the GM’s or lots of others. That’s why the NFL will never go public lol.

  4. Brian Says:

    If raising ticket prices is to happen after a SB victory, then I’m hoping for ticket prices to go up next year and the year after.

    Threepeat !!! It’s my dream and I’m sticking with it. :)

  5. Jason Manelli Says:

    Bisciotti: Pay the Man, and we’ll keep paying you.

  6. The Armchair QB Says:

    Can’t think of too many commodities that are going DOWN in price, so no surprise here!

  7. Chris Says:

    It is what it is. It’s all about supply and demand. If the team starts slipping for a long period of time I’m sure they will go down. Of course I hope that never becomes the case. I will continue to pay as long as I see the team continue to try to win.

    Responding to untiastoberry, I don’t think the team pays taxes or they pay very little taxes because the NFL is considered a non profit. Winning is still worth it though.

  8. unitastoberry Says:

    Wow Chris never knew that.I checked it out.Section 501(c)(6)IRS code. Apparently Pete(the hell with Baltimore)Rozell lobbyied Congress in the 60s and got special approval for this I need to start a non profit business!

  9. Nick Says:

    Profits earned can be mislading…The manuevering of money in business is a fun little venture in and of itself. I thought NFL was Non-Profit and all the teams fell under the same umbrella. Isnt that why, the Ravens are spending a money on stadium upgrades? They are bound by some law to spend a certain amount of money on business costs to maintain “Non-Profit” status.
    Speaking of Player Salaries increasing… any company that plans a budget, sets that money aside because they know it will be spent…Meaning, since the Salary Cap Number has not changed from season to season…The Player’s salries budget has not changed. Some players will be cut, freeing up money and then other players salaries will be increased covering that money. In the end, the player salary budget remains the same.
    Even if Bisciotti were to loan the Ravens money to make a huge lump payment..I almost garauntee Mr. B gets interest tacked on to that loan and will make a hefty payback on top of the money he loaned to The Ravens… Since owning a football team is a money maker, he is almost certainly gauraunteed his money back with interest. I wouldnt be surprised if the payments were stretched out to maximise interest gaines. Those monies earned from loan interest by Bisciotti show as expenses on the Ravens statement sheets…
    Ravens/Bisciotti are capitalizing on a popular product…its Business 101. Get the money while you can. Just dont sugar coat it to make it seem like something else to the fans.

  10. BudIce Says:

    johnnytoray….Rozelle was quite found of Baltimore and was pained by the move to Indianapolis. His hands were tied due to the Raiders move to LA and the lawsuit Good old Al had on the NFL. It was his jackass predecessor that we all know was the problem. As for the tix increase for the Ravens, how do you think us Eagles Fans feel about our increase after the crap we had to put up with last season? Probably to offset the cost of those solar panels all around the Linc

  11. unitastoberry Says:

    @Budice its all in the past now we have 5 rings now as a city take that NFL!

  12. eric Says:

    Most owners of sports teams are happy to break even because they know the real profit is in selling the team. To wit: Angelos bought the O’s for 173 and could sell them and MASN tomorrow for 7 or 800 mil. Only major sport where this is not a lock is hockey. Now that teams worth are approaching and passing a billion you have to wonder where the ceiling is. If you buy a team in 2014 for a billion and sell it in 10 years will it be worth 1.5 billion? Probably but for the first time in 30 years or so there is a risk in buying an NFL or MLB team

  13. eric Says:

    But never buy an owner’s spin about ticket prices and salaries. It’s hogwash. IT’S ALWAYS ABOUT SUPPLY AND DEMAND. The more money you get the more you spend not the other way around. Not many owners are taking out loans to sign players like Modell did with A Rison.

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