So I have a class and one of my assignments was to do an analysis of two competitors in a business. And because I did well in the rest of my assignments and the teacher is an ardent Yankee fan I figured why the hell not, lets do a Yankee vs. Red Sox comparison.
Focus
In the upcoming stages of professional baseball the two teams that stand above the rest will be the Yankees and the Red Sox. Due to the financial structure of major league baseball teams that can raise their salary levels higher than the typical team have a significant advantage to compete. This paper will analyze the similarities and differences in ways that the Yankees and Red Sox are currently acquiring their cash to supply to their teams salaries and possible ventures in the future, which could expand their wealth.
The paper will provide a value curve comparison between the two franchises.
Value Curve Categories
Brand Name: Both franchises have a large history resulting in loyal local fan bases as well fans throughout the entire United States. This is evident in road attendance figures. Since 2001 the Yankees have lead Major League Baseball in road attendance 5 times while the Red Sox lead in Road Attendance Numbers in 2005 and are the current leaders this season.
Forbes magazine estimated that the Yankees are worth 1.2 billion dollars while the Red Sox are worth an estimated 724 million.
The Red Sox and Yankees are vastly ahead of the majority of major league clubs with regards to brand name and image.
Foreign Expansion: The Yankees expanded their brand image to Japan initially with the signing of Hideki Irabu. However their biggest splash has come with the signing of left fielder Hideki Matsui. With the signing of Matsui the Yankees saw their telecasts to Japan take an immediate jump from 20 per season to around 100 games each season. In addition the signing of Matsui opened the doors for Japanese advertising both on television and from within the stadium. A Japanese newspaper currently has an advertisement on the left field wall behind Matsui when he is in the field. The Red Sox entered the Japanese market this season with the signing of Daisuke Matsuzaka who was amongst the Japanese best pitchers. The deal has given the Red Sox similar Japanese advertising and coverage as the Yankees received with Matsui. To further their exploitation the Red Sox have developed a ticket package called the Daisuke experience which allows people to watch the game and meet Daisuke Matsuzaka.
In addition the Yankees became the first major league baseball team this season to sign a player from mainland China in an effort to further their international brand.
Furthermore, the New York Yankee symbol is synonymous with the city. And often in foreign markets Yankee hats can be seen in stores to allow the customers to purchase a New York product.
The Yankees and Red Sox are much further ahead of the typical major league franchise when it comes to global expansion. The only other major league team that can lay claim to having as much international interest is the Seattle Mariners with Ichiro Suzuki.
Stadiums: Both teams currently play in tradition soaked stadiums that are amongst the three oldest stadiums in the country. With Fenway Park the Red Sox have the smallest capacity in the major leagues. However, they have increased their capacity in recent years with the addition of premium seating above the Green Monster as well as the .406 club. The Red Sox are currently on a stretch of 370+ sellouts and as a result have the demand to charge a higher ticket price than any other franchise. Meanwhile the Yankees lead baseball in attendance and eclipsed 4 million tickets sold in both 2005 and 2006.
The Red Sox with their additions to Fenway have made it clear they plan on staying in the historic park for the foreseeable future. In contrast the Yankees have begun developing a new Yankee Stadium to be opened in 2009. The resulting stadium, which is being built at an expense of 800 million to the franchise, is expected to increase luxury box revenue from 157 million in 2005 to an estimated 253 million in 2009. In addition the Yankees rent fee will be lowered from 10 million per season to 10 dollars per season. The Yankees may also take over the concession system or offer advertising of plazas within the new stadium to garner more revenue.
Fenway Park and the current Yankee Stadium have more prestige than other ballparks around the country. In reality though the team is what brings people to the stadium, and not the stadium itself. For the Red Sox their attendance restrictions drive up ticket demand, however it limits them hitting their top capacity, as if the stadium had more seats more tickets would be sold.
TV Networks: Both the Yankees and Red Sox ventured into the cable TV business which the staple point is their baseball franchise. The Yankees own a 37 percent share in the Yankees Entertainment and Sports (YES) network which was recently valued at a price of 3 to 3.5 Billion dollars. The Red Sox own an 80 percent share of the New England Sports Network (NESN). Both Networks provide a large revenue stream per season from cable fees and advertising.
Only a few other major league baseball teams have ownership in a television network.
Additional TV Revenue: Both franchises are commonly featured on nationally televised games by the FOX network and ESPN. This furthers brand image as well as generates additional revenue. Also, the Yankees currently have a licensed deal with local UPN networks to show Friday night games, allowing non-cable subscribers in the tri-state area to watch games. Meanwhile, the Red Sox left their former agreement with UPN 38 this season and all games are broadcast on NESN with the exception of national broadcasts.
Because the Yankees and Red Sox show most of their games on NESN and YES respectively their additional TV Revenue is lower than other franchises.
Outside Ventures: Currently the Yankees as an organization have focused on baseball operations and the YES Network. Meanwhile, the Red Sox have begun to diversify and look for additional revenue streams. Earlier in 2007 the Fenway Sports Group purchased a 50 percent share in the NASCAR Roush racing team to create the Roush Fenway Racing team. Fenway Sports Group is also branching out into other businesses such as Fanfoto a project, which sells photos of fans at games.
Conclusion
The Yankees and Red Sox have significant advantages when it comes to revenue sources than do the other major league baseball teams. By having the additional revenue the Red Sox and Yankees will continue to be able to have a salary structure much higher than the typical franchises that allows them to purchase high priced free agents to bolster the current squad as well as improve the farm system coaching staffs. If the Red Sox find high success rates in their outside ventures they may be able challenge the Yankees in the near future for the largest payroll. However, if these outside ventures are not highly successful the Yankees may be able to widen the gap when they begin gaining additional revenue with the opening of the new stadium in 2009.
Yankees vs. Red Sox Sources
Red Sox expand reach through Fenway Sports Group, Sporting News. http://www.sportingnews.com/yourturn/viewtopic.php?t=258640
Home Base for Mets and Yankees Fans, NY Independent Budget Office
http://www.ibo.nyc.ny.us/iboreports/stadiumsurvey.html
New England Sports Network, Wikipedia
http://en.wikipedia.org/wiki/New_England_Sports_Network
YES Network, Wikipedia
http://en.wikipedia.org/wiki/YES_Network
Roush Fenway Racing Homepage
http://www.roushfenway.com/
New York: Godzilla to the Rescue?, Business Week
http://www.businessweek.com/magazine/content/03_09/b3822075.htm
Matsuzaka Factor Mobilizes Boston, The Boston Globe
http://www.boston.com/sports/baseball/redsox/articles/2007/02/11/matsuzaka_factor_mobilizes_red_sox/
The Yankees face life after George, Fortune
http://money.cnn.com/2007/08/03/news/companies/yankees.fortune/index.htm?postversion=2007080313
The Yankees Stadium Windfall, Fortune
http://money.cnn.com/2007/08/10/news/newsmakers/yankees_stadium.fortune/index.htm
The Business of Baseball, Forbes
http://www.forbes.com/2007/04/19/business-baseball-valuations-07mlb-cz_kb_0419baseball_land.html
Red Sox Nation new king of the road, USA Today
http://www.usatoday.com/sports/baseball/al/redsox/2007-08-22-Roadattendance_N.htm
Yankees' Chinese players are meant to be start of something bigger, Yahoo Sports
http://sports.yahoo.com/mlb/news?slug=ap-yankees-chineseplayers&prov=ap&type=lgns
Focus
In the upcoming stages of professional baseball the two teams that stand above the rest will be the Yankees and the Red Sox. Due to the financial structure of major league baseball teams that can raise their salary levels higher than the typical team have a significant advantage to compete. This paper will analyze the similarities and differences in ways that the Yankees and Red Sox are currently acquiring their cash to supply to their teams salaries and possible ventures in the future, which could expand their wealth.
The paper will provide a value curve comparison between the two franchises.
Value Curve Categories
Brand Name: Both franchises have a large history resulting in loyal local fan bases as well fans throughout the entire United States. This is evident in road attendance figures. Since 2001 the Yankees have lead Major League Baseball in road attendance 5 times while the Red Sox lead in Road Attendance Numbers in 2005 and are the current leaders this season.
Forbes magazine estimated that the Yankees are worth 1.2 billion dollars while the Red Sox are worth an estimated 724 million.
The Red Sox and Yankees are vastly ahead of the majority of major league clubs with regards to brand name and image.
Foreign Expansion: The Yankees expanded their brand image to Japan initially with the signing of Hideki Irabu. However their biggest splash has come with the signing of left fielder Hideki Matsui. With the signing of Matsui the Yankees saw their telecasts to Japan take an immediate jump from 20 per season to around 100 games each season. In addition the signing of Matsui opened the doors for Japanese advertising both on television and from within the stadium. A Japanese newspaper currently has an advertisement on the left field wall behind Matsui when he is in the field. The Red Sox entered the Japanese market this season with the signing of Daisuke Matsuzaka who was amongst the Japanese best pitchers. The deal has given the Red Sox similar Japanese advertising and coverage as the Yankees received with Matsui. To further their exploitation the Red Sox have developed a ticket package called the Daisuke experience which allows people to watch the game and meet Daisuke Matsuzaka.
In addition the Yankees became the first major league baseball team this season to sign a player from mainland China in an effort to further their international brand.
Furthermore, the New York Yankee symbol is synonymous with the city. And often in foreign markets Yankee hats can be seen in stores to allow the customers to purchase a New York product.
The Yankees and Red Sox are much further ahead of the typical major league franchise when it comes to global expansion. The only other major league team that can lay claim to having as much international interest is the Seattle Mariners with Ichiro Suzuki.
Stadiums: Both teams currently play in tradition soaked stadiums that are amongst the three oldest stadiums in the country. With Fenway Park the Red Sox have the smallest capacity in the major leagues. However, they have increased their capacity in recent years with the addition of premium seating above the Green Monster as well as the .406 club. The Red Sox are currently on a stretch of 370+ sellouts and as a result have the demand to charge a higher ticket price than any other franchise. Meanwhile the Yankees lead baseball in attendance and eclipsed 4 million tickets sold in both 2005 and 2006.
The Red Sox with their additions to Fenway have made it clear they plan on staying in the historic park for the foreseeable future. In contrast the Yankees have begun developing a new Yankee Stadium to be opened in 2009. The resulting stadium, which is being built at an expense of 800 million to the franchise, is expected to increase luxury box revenue from 157 million in 2005 to an estimated 253 million in 2009. In addition the Yankees rent fee will be lowered from 10 million per season to 10 dollars per season. The Yankees may also take over the concession system or offer advertising of plazas within the new stadium to garner more revenue.
Fenway Park and the current Yankee Stadium have more prestige than other ballparks around the country. In reality though the team is what brings people to the stadium, and not the stadium itself. For the Red Sox their attendance restrictions drive up ticket demand, however it limits them hitting their top capacity, as if the stadium had more seats more tickets would be sold.
TV Networks: Both the Yankees and Red Sox ventured into the cable TV business which the staple point is their baseball franchise. The Yankees own a 37 percent share in the Yankees Entertainment and Sports (YES) network which was recently valued at a price of 3 to 3.5 Billion dollars. The Red Sox own an 80 percent share of the New England Sports Network (NESN). Both Networks provide a large revenue stream per season from cable fees and advertising.
Only a few other major league baseball teams have ownership in a television network.
Additional TV Revenue: Both franchises are commonly featured on nationally televised games by the FOX network and ESPN. This furthers brand image as well as generates additional revenue. Also, the Yankees currently have a licensed deal with local UPN networks to show Friday night games, allowing non-cable subscribers in the tri-state area to watch games. Meanwhile, the Red Sox left their former agreement with UPN 38 this season and all games are broadcast on NESN with the exception of national broadcasts.
Because the Yankees and Red Sox show most of their games on NESN and YES respectively their additional TV Revenue is lower than other franchises.
Outside Ventures: Currently the Yankees as an organization have focused on baseball operations and the YES Network. Meanwhile, the Red Sox have begun to diversify and look for additional revenue streams. Earlier in 2007 the Fenway Sports Group purchased a 50 percent share in the NASCAR Roush racing team to create the Roush Fenway Racing team. Fenway Sports Group is also branching out into other businesses such as Fanfoto a project, which sells photos of fans at games.
Conclusion
The Yankees and Red Sox have significant advantages when it comes to revenue sources than do the other major league baseball teams. By having the additional revenue the Red Sox and Yankees will continue to be able to have a salary structure much higher than the typical franchises that allows them to purchase high priced free agents to bolster the current squad as well as improve the farm system coaching staffs. If the Red Sox find high success rates in their outside ventures they may be able challenge the Yankees in the near future for the largest payroll. However, if these outside ventures are not highly successful the Yankees may be able to widen the gap when they begin gaining additional revenue with the opening of the new stadium in 2009.
Yankees vs. Red Sox Sources
Red Sox expand reach through Fenway Sports Group, Sporting News. http://www.sportingnews.com/yourturn/viewtopic.php?t=258640
Home Base for Mets and Yankees Fans, NY Independent Budget Office
http://www.ibo.nyc.ny.us/iboreports/stadiumsurvey.html
New England Sports Network, Wikipedia
http://en.wikipedia.org/wiki/New_England_Sports_Network
YES Network, Wikipedia
http://en.wikipedia.org/wiki/YES_Network
Roush Fenway Racing Homepage
http://www.roushfenway.com/
New York: Godzilla to the Rescue?, Business Week
http://www.businessweek.com/magazine/content/03_09/b3822075.htm
Matsuzaka Factor Mobilizes Boston, The Boston Globe
http://www.boston.com/sports/baseball/redsox/articles/2007/02/11/matsuzaka_factor_mobilizes_red_sox/
The Yankees face life after George, Fortune
http://money.cnn.com/2007/08/03/news/companies/yankees.fortune/index.htm?postversion=2007080313
The Yankees Stadium Windfall, Fortune
http://money.cnn.com/2007/08/10/news/newsmakers/yankees_stadium.fortune/index.htm
The Business of Baseball, Forbes
http://www.forbes.com/2007/04/19/business-baseball-valuations-07mlb-cz_kb_0419baseball_land.html
Red Sox Nation new king of the road, USA Today
http://www.usatoday.com/sports/baseball/al/redsox/2007-08-22-Roadattendance_N.htm
Yankees' Chinese players are meant to be start of something bigger, Yahoo Sports
http://sports.yahoo.com/mlb/news?slug=ap-yankees-chineseplayers&prov=ap&type=lgns
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