With no games played with home crowds in 2020, the Milwaukee Brewers were heading for a financial hit this season. The Brewers are dependent on the income from home games played, so losing that for a season is a big hit. The Milwaukee Business Journal reported earlier today on the projected losses, which is expected to be at $178.3 million in 2020 from having no fans in attendance. The data comes from Team Marketing Report, a group of sports analysts who produces a Fan Cost Index each year.
Around the league, the total hit is projected to be approximately $5 billion in lost revenue from having no fans in attendance. The New York Yankees lead that list with a $437 million loss. The Brewers loss puts them 13th among MLB teams. The Milwaukee Business Journal also noted that game-day revenue accounts for approximately 40% of total revenue, with that revenue more significant to the Brewers.
While a loss of $178.3 million is massive, it doesn’t necessarily mean the Brewers lost money this season. Game-day revenue is just one piece of the full picture. There are other streams of revenue, such as broadcasting deals, merchandising rights, advertising revenue, etc. While some of these may also be affected, they would still bring in some revenue to the team. The Milwaukee Business Journal notes that Forbes valued the Brewers at $1.2 billion, with $295 million in revenue and $43 million in operating income.
In addition, less games played with no fans in attendance also means the team saved some money on other costs. We know that payroll costs were reduced due to the 60-game season. There’s also costs saved from operating Miller Park on a normal game day. These will offset some of the losses from less revenue this season.
Does that mean the Brewers will make or lose money in 2020? Without open books, we just can’t know for sure. The team will say that they lost money, and that’s to be expected. However, the exact meaning of that can be obscured. Did the franchise value drop? Did they overall operate at a net loss? Or did they just not make as much profit as they did in 2019, but still make money overall? Those are questions that can’t be answered since there’s no open information to reference.
David Stearns’ comments earlier this week also suggest that payroll could be tighter in 2021. He mentioned that a tighter payroll in 2021 is a possibility, and without ticket revenue, it will be hard to post another season with the highest payroll in team history. He also said that it’s too early to tell how much finances will be affected in 2021, and that is a fair point. Depending on the current status of the pandemic, vaccine development, any ongoing outbreaks, etc., we could see some fans in the seats in 2021, or it could be another year of no fans. However, Jaymes pointed out earlier this week that the Brewers made a decision to cut payroll before anything with the pandemic happened, so it’s reasonable to see the Brewers making the same decision going into 2021.
The closest we can get to open books is with the Atlanta Braves, who are owned by a public corporation, and must post their numbers to the public. The Braves owners, Liberty Media Corporation, posted their second quarter numbers in August, and that gives an idea of what the early impact of the shutdown was. Their revenue from the Braves dropped from $208 million to $11 million, with operating income dropping from a $36 million gain to a $30 million loss. While the drop is big, it’s also worth noting the time period. This is during a period where baseball was shut down completely (April to June), so revenue was minimal. Third quarter numbers will include what revenue the team did make from playing games, and the fourth quarter revenue will also include playoff revenue for the team. To get a complete picture, we will have to wait until early next year when the other reports are released.
The Brewers lost some of their revenue in 2020, and with the current situation, that was expected. It’s understandable that the Brewers would want to keep costs down going into 2021 because of that, but the full financial impact of the pandemic is still unknown, and we won’t know unless books are opened to show it. The team has already been taking steps to help mitigate the loss, but getting fans back in attendance will be key to recovering the lost revenue.