Answer to Question #50633 in Economics of Enterprise for Christoph Liquor

Question

How can the San Diego Padres, one of the weakest teams in the National League from a wins-losses perspective, be one of the most profitable?

Answer 1

You may be thinking that the ticket sales must be low for a crummy team. And that IS generally the case. But teams have revenue sources other than ticket sales. So if you combine the revenue, and then don't spend much of it on players and other expenditures, then the team could well be very profitable. Also, remember that owners care come about operational profit/loss, but if an owner eventually sells a team, they generally make a huge profit because of the increase in the value of the team over time.

The average cost of a ticket to a Padres game last year was $16.37. The team drew 2,195,373 fans so the gross revenuw from ticket sales was almost $36,000,000. The team also has a local TV deal that pays $60,000,000, and an additional $51,670,000 from MLB's national TV deal. That's almost $148,000,000 from those three sources of revenue for a team that had a payroll of $90.636,600 last year. They're over $58,000,000 in the black before you factor in other debits and credits.