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Sports Business

No city subsidy needed for Indians' profitability

December 4, 2013

The Indianapolis Indians have one of the most impressive winning streaks in all of professional sports.

The AAA minor league baseball team this year registered its 38th straight financially profitable year.

That streak of profitability dates back to 1975, when the Tribe was affiliated with the Cincinnati Reds’ Big Red Machine. The pairing with the popular Reds certainly helped drive Indians attendance.

Since then, the Indians have been the farm club for Major League Baseball teams in Montreal, Milwaukee and Pittsburgh.

On the field, the team has had some good years and some bad years. There have been years where the Indians had a roster full of hot MLB prospects and some years when the cupboard was a bit bare.

People are quick to say what a draw Victory Field is. And rightfully so. The picturesque ballpark nestled on the west side of downtown is consistently rated one of the best minor league ballparks in America. But remember, Victory Field didn’t open until July 1996. That means more than 20 years of the Indians’ profitable streak was played in Bush Stadium. Most of those years, the stadium on 16th Street was well beyond its prime. Few would have called it a draw.

But through it all, one thing has been consistent. This team has churned out six- and seven-figure profits.

This year, total revenue increased 7 percent over 2012 to $11.8 million as the economy continued to slug through a weak recovery.

Revenue for the Indians was up in every significant category. Ticket sales rose from $4.56 million in 2012 to $4.81 million this year. Concession income was up from $1.98 million to $2.11 million during the same period. Suite rental was up $24,000 from last year to $956,897, and merchandise sales increased $31,000 to $740,602.

The biggest financial driver was increased attendance, team officials said. The Indians finished their 2013 season with the highest overall regular-season attendance of all 176 Minor League Baseball teams.

This year, the Indians drew 637,579 fans (8,980 per game) through the turnstiles, a 7-percent increase from last year. The Tribe’s home attendance was the fourth-highest in Victory Field history and the best single-season total since the team’s championship campaign in 2000. This year’s attendance wasn’t far off the Indians’ record home attendance of 658,250 in 1999.

Victory Field saw a record-setting eight sellouts this season, which surpassed the previous high mark of six capacity crowds in 1997. The Indians this season hosted 25 crowds of 10,000 or more spectators.

The current recession might actually be helping the Indians, sports business experts theorize. With family budgets stretched thin, the relatively low price of tickets for an Indians game looks pretty good compared to other entertainment options.

Fans aren’t the only ones flocking to the Indians.

As professional teams at many levels struggled with advertising and sponsorship sales, Indians ad revenue grew from $2.67 million in 2012 to more than $3 million this year. That’s a 12.5-percent year-over-year increase, a number that any major league team in any sport would love to post.

It’s quite a performance by a team that doesn’t get nearly the same amount of press as its major-league neighbors.

“We’re really pleased with the way the season turned out,” said Indians Chairman Max Schumacher. “A lot of credit goes to our sales and marketing team and really our entire front office staff.”

The only downer for the Indians is that expenses increased slightly faster than revenue. The team was still plenty profitable, but its profit dipped from $1.57 million in 2012 to $1.41 million this year.

On the whole, the Indians’ operating expenses increased from $9.11 million last year to $9.93 million this year. That’s a 9-percent increase, and if I know Schumacher and Indians General Manager Cal Burleson as well as I think I do, they’ll be giving those expenses close scrutiny this offseason.

But don’t expect wholesale cuts. Schumacher and Burleson understand they have to spend money to make money, and they’ve never been shy about making improvements to the ballpark. The duo puts a premium on the fans’ game-day experience, and they won’t jeopardize that.

The two biggest cost increases this year came in the team’s advertising and promotions budget, which increased from $2.1 million last year to $2.43 million this year, and the grounds operating budget, which grew from $4.15 million to $4.46 million. General and administrative expenses saw a slight increase from $1.94 million to nearly $2.1 million.

It’s important to note that the players’ salaries are covered by their MLB parent team, the Pittsburgh Pirates. That’s certainly a part of the Indians’ financial success story. Still, if they played hardball with the city, they could make even more.

It’s notable at a time when sports organizations such as the Indianapolis Colts, Indiana Pacers and Indianapolis Motor Speedway have come to the city for financial assistance, the Indians have chosen not to do so.

The Indians consistently find themselves in the black while paying the city of Indianapolis $500,000 annually to lease Victory Field, paying for all operational and capital expenses at the ballpark and receiving no public subsidy.

The Indians finished last season at 80-64 and won their division before getting knocked out of the playoffs by eventual International League champions, Durham, in the playoffs.

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