KC Royals Need To Go For Broke At Trade Deadline
By John Viril
KC Royals general manager Dayton Moore faces an interesting decision as the July 31 trade deadline approaches. Just how much should he commit to winning this season? Does he try to keep his core together to extend his contention “window”? Or should he try to win it all this season?
A big part of this answer depends on how likely the Kansas City Royals are to keep their core players together.
Forbes.com published an interesting piece on June 26 asserting that the current tech boom in Kansas City is likely to help the KC Royals keep cornerstone players like Alex Gordon, Eric Hosmer and Mike Moustakas as they reach free-agency.
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Forbes staff member Mike Ozanian reported that Kansas City is becoming a mecca for tech companies. He cited statistics from the Kauffman Foundation that in the twenty-year period from 1990-2010, Kansas City enjoyed the third highest increase in high tech startup density of any major metropolitan area in the United States.
He then attributed the Kansas City Royals payroll increase to $113 million this season to the new affluence in Kansas City plus the $25 million annual revenue-sharing payment from major league baseball.
Certainly, the KC Royals revenue must be up. The Kansas City Royals lead all of baseball with an attendance increase of 396,174 fans through 35 home games this season, which averages out to 11,319 fans per game. The next closest increase is Seattle, where the Mariners are getting 5,339 more fans per game.
At a current average ticket price of 29.76, and their current attendance, we can estimate the Kansas City Royals will get a $27.5 million bump in revenue from ticket sales. Add in another $20 per person in parking fees and concession revenue, and the KC Royals might make as much as $45.5 million in extra stadium revenue compared to last season.
However, teams make their real money from their local TV contracts. This is where the KC Royals have a problem. Unfortunately, the Kansas City Royals are locked into a bad local contract that does not expire until 2019.
The KC Royals make a mere $20 million per year for their local TV rights, according to Rant Sports. Meanwhile, local TV rights fees have exploded across major-league baseball over the last couple of years because live sports programming is one of the few events that viewers will not TIVO. Thus, sports content has become highly prized by advertisers—and no sport has more content than baseball.
These market realities leave the Kansas City Royals trying to compete with teams like the Los Angeles Dodgers—who make $250 million per year from their local TV rights.
What’s even worse, is that the KC Royals can’t leverage their TV audience boom from their 2014 World Series run into increased local revenue, because they are locked into a rights contract based upon numbers from when the team lost year after year. That’s not even taking into account the increased valuation on sports programming.
In short, I’m not sure that Forbes is correct. While I do not doubt that the Kansas City Royals revenues are up, I am skeptical they are truly competitive against other teams that have done a better job of capturing the increased value of sports programming.
Unless general manager Dayton Moore, and owner David Glass, can re-negotiate a better deal—perhaps by informing Fox Sports Kansas City they will NOT get a renewed contract unless they tear up the old agreement—the KC Royals will still lag behind their competitors when it comes to their free-agent war chest.
What this means to me is that the Royals probably can take on extra salary this season at the trade deadline, but they will have a hard time keeping their cornerstone players until they can land a better local TV contract. While you do not want to kill the pipeline of future talent, it seems like a good idea to sacrifice some future production to fuel this year’s playoff push.
In short, the KC Royals general manager Dayton Moore needs to go for it now while he has a team that can win.
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