The Washington Nationals just won a series against the mighty New York Yankees. Manager Dave Martinez penciled up lineups of mostly rookie players for that series. One player made his MLB debut in this series. On first glance, last night’s lineup looked like a bunch of rooks that you would force to make the nearly 4-hour bus ride from West Palm Beach to Tampa for a Spring Training game between these two teams.
This is a story about the Nats’ next youth movement and how their future must be positively impacted by a Nationals’ revenue push to add tens of millions of dollars to the coffers. That money will allow the team to spend on the burgeoning star players to retain them beyond the year 2030, as well as adding some key free agents that are needed to compete for the postseason — sooner than later.
From “Hope Row” to the victory circle in two-of-three games in that series against the Yankees is symbolic of the architect, Mike Rizzo, and his message: Be patient, good times are ahead, and we see light at the end of the tunnel. You do not even have to squint any more — this is clear that you can see the light.
All that is remaining is for the Lerner ownership group to green light a repaving of the potholes that need repair on Martinez’s proverbial bumpy road that leads to beautiful places. The cost is $55 million at a minimum, and $77 million (math below) if you want to do it the right way. The payback will come from a smoother ride, and tolls paid at the gate. Don’t forget, get those sponsors to put their signs on the road. Increase revenue, and reinvest it in the product.
From the revamped player development group to the beefed up draft group, Rizzo’s front office is paying dividends in a big way. From the outhouse to the penthouse, they have taken a barren farm and turned it into Ein Gedi, a biblical oasis that thrived in ancient times. The words translate to “fountain for the kids.”
While you can see the light at the end of the tunnel, you have to drive with caution on that bumpy road before you can push that sports car to the checkered flag. Rizzo is trying to build a Ferrari on a Fiat budget. Both were owned last decade by FCA Group, and so were Maserati and Jeep. The Jeep traverses the bumpy roads the best. Rizzo knows that. He owns a Jeep and a luxury car. The architect puts together the blueprints and the plans, and since this is a design-build, there is a budget. The Lerners made their fortune in construction. They know this, and have done it before with the Washington Nationals from what looked bleak, and Ted Lerner took Rizzo’s vision to the Promised Land by spending — and then spending more to create seven years of consecutive winning.
What we don’t know is if Ted’s son, principal owner Mark Lerner, can follow in his father’s footsteps. You hope he could build something even better. In order to do that, the team must take advantage of the revenue side of the business and not make this as difficult as they have in the past.
The Commanders lost their stadium naming rights sponsor 7-months ago, and 7-months later replaced the FedEx name with Northwest Federal Credit Union. Reports have said the Commanders will make “significantly more” with this new deal, than the $7.5 million that FedEx was paying them. The Commanders just changed ownership last year with the Josh Harris group, and look how swiftly he is capitalizing on revenue opportunities. Contrast that with the Lerner’s pushing on nearly two-decades owning the Nationals — and they’ve never had a stadium naming rights deal and are dragging their feet on a jersey sleeve sponsorship patch.
The Commanders play in their stadium less than a dozen times a year. The Nats play in their stadium more than that in just the month of April. You can debate if a football stadium sponsorship is worth more than a baseball stadium sponsorship.
The value of stadium naming rights netted the Mets a reported $20 million a year from CitiBank. There is money available for the taking. The Commanders are selling ticket packages, sponsorships, and raising revenues by making it a priority.
The Nationals are the only team in MLB that have not sold either a stadium naming rights deal or a jersey patch sponsor. Even the Yankees and Red Sox have jersey patches reportedly paying from $18 to $25 million a year. Yes, you read that right.
Some background, in March 2016, the Washington Nationals engaged with Korn Ferry, an executive search and advisory firm, along with MLB Advanced Media, to explore and facilitate the sale of naming rights for Nationals Park, aiming to capitalize on the stadium’s visibility and revenue potential. Despite those efforts or lack of, we are over eight years removed from that point. On the jersey patch sponsorships, that were approved by MLB for use during the 2023 season. Per The Athletic, there are now 23 teams as of this date with jersey patch deals. The Nats are 1-of-7 without a jersey patch deal — but the other six teams all have stadium naming rights deals.
Now if you still don’t believe in the revenue not being capitalized on, according to Thom Loverro of the Washington Times, the Orioles are getting $15 million per year in their deal with T. Rowe Price. How does a smaller market team get a deal that large? Again, they made it a priority.
Some might scoff at the idea of a money grab as in, “How dare you rename Nationals Park” but look around at Audi Field (DC United), Capital One Arena (Wizards and Capitals), and now Northwest Stadium (Commanders). Even the college teams have EagleBank Arena, Xfinity Center, and SECU Stadium. Of the big venues, only Nationals Park has not sold its naming rights. After a while, the name blends end and gets a nickname in many cases.
In Forbes valuations of MLB teams, they have the Nationals in the bottom half of revenues. Most of this is educated guesses except for the publicly traded Atlanta Braves provide an insider’s glimpse into some of the numbers. That gives us quite the clue as to how the inner workings add up.
Atlanta Braves Holdings, Inc. (BATRK) showed a breakdown of revenues into three large components of: 1. Baseball Event 2. Broadcasting 3. Retail and Licensing and then the rest goes into “Other.” What they did was bury the money they receive from MLB into those revenue categories per the 10-K filing (pages II-26 and II-27) with the Securities & Exchange Commission (SEC), making it difficult to figure out exactly where all of the money is coming from such as the national broadcasting rights and licensing collected by MLB. The Braves also own their own real estate venture which is a separate line item on their P&L. By the way, overall they claim they lost $46.44 million last year, even though they reported record revenues.
One interesting fact that we did learn is that in the latest SEC filings by BATRK is that they define attendance as “the number of ticket holders who enter Truist Park” and said the “average number of attendees per regular season home game” for 2023 was 32,542. That number is 17 percent lower than the Braves’ announced average attendance of sold tickets at 39,401 which gives you an idea of the no-shows on average. Why does that matter you might ask? You don’t make food, beverage, and in-game merch sales to no-shows.
The Nationals hired Kimberly Bolt as their CMO (chief marketing officer) to work under Michael Carney who is the Nats’ CRO (chief revenue officer). The C-suite is fully staffed, but the Nats’ failure to cash-in has caused them to operate as a small-market team in terms of revenue.
Of course a source on the business side of the team tells us the Washington Nationals are still diligently working on selling stadium naming rights and a jersey sponsorship patch. Why is it taking so long?
Let’s add to all of this the ongoing issue with revenues from the Nationals agreement for their regional TV rights that is controlled by MASN. This is out of the Nats’ control for now. That deal was in place when the team was purchased in 2006 by the Lerner ownership group. It’s the only deal in the major sports whereby another team owns the majority of your TV rights.
The bigger issue is that the TV deal is so far below the Nats’ closest geographical NL East competitor, the Phillies, that it has the Nats in a competitive disadvantage for revenue. Remember, the team was getting a reported $61 million in MASN money in 2022 versus what the Phillies received at $125 million in their TV deal — and that alone was a $64 million difference that Philadelphia has to spend over the Nats. That differential in TV revenue buys you at least two additional superstar players. This is another part that needs to be fixed in the future.
Your main competitors are the teams in your division. For the Nationals, that would be the four NL East teams names the Mets, Phillies, Braves, and Marlins. You face them a combined total of 52 times a season. Those four NL East teams have sold stadium naming rights as well as jersey patch sponsorships. Yes, even the Miami Marlins have capitalized on the dual revenue source.
Make this easy on yourself. You have $15 million per year for the taking by selling the jersey patch and stadium naming rights and probably much much more — probably double that, but we are trying to be super conservative with the numbers. Then if you build it they will come. You know what “it” is. You’ve seen the movie. You sign Juan Soto as a free agent at $44 million a year AAV, and the other $29 million will come from the toll paid at the turnstiles. That is how the Phillies did it when they signed Bryce Harper for just over $25 million a year.
Here’s the Soto math: 15 + 29 = 44. How did we come up with $29 million? That is 4,500 higher average attendance per game times $79.50 revenue per person times 81 home games. More on that below with historical perspective on attendance at Nationals Park. This is easy. I just did it all for you, and you don’t have to pay me a consulting fee.
And let’s be honest, you have tens of millions coming off of payroll this year with Patrick Corbin, Trevor Williams, Lane Thomas, Eddie Rosario, Hunter Harvey and others off the books. Sure, you will replace some of them and have raises due to arbitration to others — but come on, this is too easy. You will replace Corbin and Williams with Mitchell Parker and DJ Herz, and Thomas and Rosario with James Wood and Dylan Crews. What do all of those players have in common? They all make league minimum salaries for the next three years. When they are due raises, guess what? Stephen Strasburg‘s money is already off the books for CBT purposes. Net/net after raises, payroll should be lower by $24 million.
Take that $24 million and reinvest it in a second-tier proven starter, bring back a veteran leader like Jesse Winker, and spend that $44 million on Soto. If we can tug an additional $9 million, can we have that for the bullpen? So we are looking to spend $77 million overall on new acquisitions. I bet if you do all of that — you will blow past 4,500 in new daily attendance and get well over 29,500 on average attendance. The team was at that point every year from 2012-2018 and higher for most of those years. From 2013-2015, the team averaged over 32,000 per game. Add to this that MASN seems to be finally fixed in regards to paying on-time now, and not through the court systems.
We know the Nats can bring back winning by adding Soto and another shrewd acquisition in a starting pitcher to be the team’s veteran No. 1 pitcher. It is so close that you can taste it like a mirage in the desert that seems so real.
Winning just means going at least 82-80 in a full-season, but winning a World Series has little in the way of guarantees. In the past 30 years, only a Sweet-16 have won at least one World Series. Repeating winners happened often before MLB set to have more parity and set spending taxes and other disincentives. But you make these changes and keep making the farm system better — and you get to annual winning, and trips to the postseason which brings that extra windfall of revenue.
While Wood and Crews are now part of the roster, there are other parts of “Hope Row” that are still in the minor leagues. There is more to come, and the next wave could bring some top of the rotation pitching too.
You know what else continual winning brings? More attendance. More sponsors. More fun. Good things come to those who are willing to wait. The 2010 Washington Nationals won 69-games, and these 2024 Nats have already won 61-games with 28-games remaining this season. Win, 11 more games, and this 2024 team will have won more than the 2023 team. That is improvement. One step at a time.
UPDATED:
Per the MLBPA, the average team revenue from local TV (RSN) is 21 percent.
