When the Twins take the field for the home opener this afternoon at Target Field, the team will be playing in a new league when it comes to finances.
At the new stadium, the Twins have many more ways to rake in cash than they did at the Metrodome. They also have bigger expenses, but the team looks like a clear winner--financially--in its new home.
The Metrodome was not only a lousy place to watch baseball; it was also a tough place for the Twins to try to make money. Twins President Dave St. Peter said the Twins didn't get to tap revenue sources available to other baseball teams.
"We were playing baseball in the corner of a football facility. The team had limited control over advertising and signage rights in terms. We had no suite revenue," he said.
"Target Field provides the team with control over all those areas, which is the norm now in professional sports and certainly [in] major league baseball," St. Peter said.
Naming rights could bring in as much as $6 million a year by some estimates. Luxury Suites will bring in additional millions.
Based on deals other teams have cut, the Twins may be getting a nice slice of of food and beverage sales--perhaps a third of what fans pay for hot dogs, beers, turkey legs and other ballpark fare.
And then there's the Twins' retail shops at the park, the sale of ads within the stadium and not least of all, ticket revenue, from a ballpark that may sell out every game this season.
During legislative hearings on the stadium, the Twins said a new ballpark would probably generate $40 million to $60 million in new revenue for the team.
The Twins could really use that money. The team doesn't reveal its total revenue, but Forbes magazine last year estimated the Twins brought in about $158 million a year. That was good enough for 27th place among the 30 major league baseball teams.
A $60 million annual revenue boost would put the Twins into sixth place in the Forbes rankings, but the Twins won't say how much they expect to come out ahead financially at Target Field.
Craig Depken, a University of North Carolina-Charlotte economics professor who has studied the value of new stadiums to baseball teams, said the Twins should see a boost.
"If we just went with the historical averages, it would be somewhere between $10 million and $15 million of bottom line profit," Depken said.
But St. Peter notes the team also has some substantial new expenses at Target Field.
The team is kicking in nearly $200 million, about a third of the cost of the stadium. The Twins are also responsible for the cost of operating Target Field, about $20 million a year. And the Twins' improving finances means they'll be weaned from baseball's revenue sharing program. That's another $20 million hit.
And St. Peter notes the Twins' payroll has soared by about half.
"Let's remember our player payroll has gone from about $67 million to $96 million," he said.
And that doesn't even include Joe Mauer's $184 million contract, which kicks in next year. The Twins once let players go when they got too expensive to keep, such as center fielder Torii Hunter and pitcher Johan Santana. But Target Field means the team has more money to put into players. This year, the Twins have the tenth highest payroll in baseball.
And spending more on players is likely to help the team's finances in the long run.
Andrew Zimbalist, an economics professor at Smith College, has long studied the impact of stadiums on teams and said smart teams maximize the financial kick they get from a new stadium by committing more money to fielding a winner. That's what the Indians, Orioles and other teams did when they moved to new ballparks.
"If you put out more money for your payroll, you hold on to your good players, make a few trades, maybe sign a free agent or two, then you have a good team," Zimbalist said. "Then the stadium and the performance of the team enter into a positive cycle with each other, a reinforcing cycle."
It's a cycle Zimbalist says can easily last five to ten years. The Twins and their fans certainly hope it does for them.