It’s not an exaggeration to say that the Miami Marlins find themselves at a pivotal financial juncture.
After acquiring the franchise for $1.2 billion in September 2017, Miami’s new ownership group, led by Bruce Sherman and Derek Jeter, is entering Year 2 — and a crucial stretch — that could determine the organization’s long-term financial sustainability.
Two of the crucial building blocks are the on-going negotiations for a new TV contract and the search for stadium naming rights. With one of the worst media rights deals in the league, Miami is leaving upwards of $60 million annually on the table and missing out on another consistent revenue stream with no partner attached to Marlins Park.
The organization is also attempting to re-integrate itself within the local business community in an attempt to secure more corporate partners. That means changing the toxic perception that’s surrounded the team over the past two decades.
“(Previous ownership) had really undercut and undermined the community and a lot of promises were made and nothing really happened,” said AutoNation chief marketing officer Marc Cannon, whose company recently renewed its partnership with the team after leaving during the Jeffrey Loria ownership.
The franchise is currently valued at $1 billion — last in the league — per Forbes’ latest report. The Marlins also finished with the lowest amount of local revenue — $72 million — according to the study.
Without money, Miami can’t hope to make any splashes in free agency or keep its good players long-term — two key elements in creating a viable franchise for the foreseeable future.
What’s the state of the Marlins financial future? Where does everything stand? Here’s a deep-dive into the latest:
Since the new ownership took over, the Marlins say they’ve added 50 new corporate partners to the fold.
Leading the charge is David Oxfeld, the team’s vice president and head of corporate partnerships. Oxfeld, who was named to Sports Business Journal’s Forty under 40 in 2017, previously worked at Excel Sports Management with Jeter’s longtime agent Casey Close.
In 2018 — the new ownership’s first full season — Oxfeld said they surpassed 2017’s corporate revenue by over $1 million. Notably, the franchise had the benefit in ‘17 of hosting two national events with the World Baseball Classic and MLB All-Star Game, making it theoretically easier to sell inventory due to the increased spotlight on the ballpark.
Part of the new regime’s goal is introducing itself — and re-introducing the franchise — to the South Florida community. One of the most notable partnerships so far has come from AutoNation. After collaborating with the Marlins on car giveaways last season, the Fortune 500 company signed a two-year entitlement deal on the team’s new centerfield seating section, now dubbed “AutoNation Alley.”
The Fort Lauderdale-based company previously had a relationship with the Marlins, which included sponsoring the “Call to the Bullpen,” but eventually ended the partnership after it soured years ago.
“Everybody knows (the previous ownership group) did not have the greatest reputation in town for reaching out to people and being part of the community, even though they lived and worked here,” Cannon said. “You never got a call or invite or anything like that. You’ve got to work hard at this. It’s a business-to-business thing and you have to make people feel like there’s a reason people should be invested in your product.
“(The Loria ownership) just let us walk away and it was like, ‘Guess what, too bad, we’ll find somebody else.’ And of course they didn’t find many people.”
After working together last season, Cannon said the Marlins reached out regarding their plans for the new center field zone. The AutoNation CMO said he’s been thrilled with the partnership and called the new section a “huge success,” citing the great signage and visibility.
“(They said,) ‘We want to get you involved, because if people see you involved they’re going to say, hey look, the Marlins are somebody we should be talking to in the working place,’ ” Cannon said. “They made it where it was really an opportunity we couldn’t say no to.
“They’re rebuilding the community and reaching out. When you call and talk to the folks down there, they respond immediately. We’ve encouraged other companies to get involved and they have.”
In addition to AutoNation Alley, the team sold entitlement rights for the right field standing room-only section to Estrella Jalisco, a Mexican beer under the Anheuser Busch portfolio. The Marlins also revamped their premium seating section, now titled, “The Club: Dex Imaging.” The team and Dex Imaging are in the second of a three-year contract, with a four-year option.
Stadium naming rights
One of Oxfeld’s key tasks will be securing a naming rights partner for the stadium — something the franchise has lacked since Marlins Park opened in 2012.
For the Marlins, part of the issue is changing the perception surrounding the team. Stripped to its basic level — why does any company put their name on a stadium? To increase brand-awareness, and in doing so, partner with a franchise that won’t negatively impact them.
“We all would’ve loved to have come in here Day 1 and found a naming rights partner, but I don’t think that’s realistic,” Oxfeld said. “You really have to change the perception, so that brands want to get on board and that’s just getting out and telling our story. … So people understand what this new ownership represents.
“We have more feelers coming in and more people asking the question than when we came in and we think that’s a positive sign based on the relationships we’ve forged and the perception that’s changing.”
In terms of potential market value, it’s difficult to find a straightforward comparison. The two most recent MLB stadium deals have both come from West Coast franchises. In February, the Giants and Oracle announced a 20-year stadium rights contract worth over $200 million, per Bloomberg. The Mariners and T-Mobile partnered on a 25-year deal in November worth a reported $3 million annual value, per Forbes.
Similarly to how Jeter hasn’t publicly set a timetable for when he expects Miami to be a playoff contender, Oxfeld said franchise doesn’t have any self-imposed deadline for securing naming rights.
“We want it to be the right partner, so we’re going to be strategic about that fit, but it’s certainly part of our plan,” Oxfeld said. “Naming rights are a big part. I don’t think we’re in a rush, but it needs to be the right deal.”
One of the most basic revenue streams comes from simply attracting people to the ballpark. While one week is an extremely small sample size, ticket sales languished during the first homestand of the season. After drawing 25,423 on Opening Day against Colorado, Miami drew less than 7,700 fans for each of the next five games against the Rockies and Mets.
Compared to the first six games of last season, attendance is down 38 percent. While the Marlins hosted the Cubs and Red Sox in 2018 — teams with larger national followings — the franchise can’t rely on visiting crowds for long-term growth.
Low attendance isn’t a new trend for the Marlins, as fans were showing up in small numbers for previous ownership regimes as well. It’s unfair to compare prior figures, however, since the Sherman/Jeter ownership group decided to accurately report attendance, instead of announcing inflated numbers. It was common practice under the previous regime to include giveaway tickets and ‘no-shows’ under total attendance.
The Marlins are hoping the figures will steadily climb as it attempts to win over the local community. The team overhauled the in-stadium experience in the offseason, spending $15 million on ballpark enhancements, such as AutoNation Alley, the standing-room only section in right field and new food/beverage concessions lining the inside perimeter of the stadium.
Perhaps the most vital piece for financial sustainability will be negotiating a new TV deal. The Marlins are entering the tail end of a 10-year contract with Fox Sports Florida that’s one of the worst in baseball. The deal, which expires following the 2020 season, pays the Marlins between $15 million to $20 million per year. For comparison, the NL East rival Phillies make a reported $100 million annually on their 25-year deal, per Forbes.
“It’s a fundamental building block,” Marlins vice president of strategy and development Adam Jones said. “It’s a top-three line of business with any sport organization.
“It’s one that we’re patiently waiting until we have the opportunity to rightsize those rights at a number that we believe is at market — and hopefully above — and use that as the building block it needs to be to create the type of sustainable business model that will allow us to continue to re-invest in talent and the development of talent.”
While a nine-figure deal isn’t likely, the Marlins will see a significant revenue boost with the future deal. A favorable comparison would be the Tampa Bay Rays, who are finalizing a new contract.
Per Sports Business Journal, the new agreement will net the Rays $82 million annually, meaning Miami could potentially receive an additional $60 million per year in rights fees — money that could be used to improve the team’s payroll.
The Marlins 2019 payroll currently sits at $72 million — the second-lowest in baseball and significantly lower than the league-average $133 million, per Spotrac. Increasing its revenue stream is pivotal with the arms race that’s developed in the National League East. The Braves ($113 million), Phillies ($140 million), Mets ($158 million) and Nationals ($161 million) all have spent exponentially more with enhanced revenue.
Negotiations with Fox Sports Florida on the new TV contract have been on-going for over 18 months — since the new ownership took over.
“They’re probably one of the more meaningful relationships you’re going to form given they’ll typically be in place for more than 10 years,” Jones said. “There’s quite a lot of thought that goes into not only the economics of the deal, but the structuring and the roles that both parties — or multiple parties — will play in the delivery of the media itself.”
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