That’s the Ticket

If everyone loves a winner, well, from May 13 to May 19, the Cincinnati Reds gave fans every reason to come to a game. The team won five of seven at Great American Ball Park, swept the St. Louis Cardinals, slid briefly into first place, and became the talk of the baseball world. On ESPN, Tony Kornheiser marveled at the emerging rivalry between St. Louis and Cincinnati: “These are the two best baseball cities in the National League.”

Good news, right? The only place where things went wrong was in the stands. Against St. Louis, the Reds drew so poorly that they ended up finishing 11th out of that weekend’s 15 series in attendance. Against Chicago, Cubs fans seemed to outnumber Reds fans—and certainly out-sang them, channeling Harry Caray during “Take Me Out to the Ballgame.” Against Pittsburgh, the crowds felt so small that you began to wonder if you were actually in Pittsburgh, where the Pirates recently set a professional sports record with 18 straight losing seasons.

And yet, in terms of ticket sales, this represented an improvement. At the end of the homestand, the Reds ranked 18th out of 30 MLB teams in attendance—five spots better than the same time last year. But that’s still not great, especially when you consider that in 2010 the Reds made the playoffs for the first time in 15 years. So if the team is finally winning again, why aren’t fans supporting it? To answer this question, I undertook an exhaustive, comprehensive, damn near ethnographic investigation into the relationship between the Reds and their fans. I attended all seven games in the May homestand. I interviewed 173 Reds fans. I talked with Phil Castellini, the Reds’ Chief Operating Officer (and son of owner Bob Castellini). I even submitted myself to the relentless pessimism of local sports radio.

Want to know what I found? Well, there’s no end to the list of reasons fans offer for not showing up. Which is why the Reds are working incredibly hard to market themselves and sell tickets—because they know what will happen if fans don’t soon change their minds.

In order to understand the Reds’ conundrum, you need to understand the history. Which can get pretty complicated since, when it comes to Cincinnati and baseball, history and myth tend to mix.

The biggest myth is that Cincinnati is a “baseball town.” Baseball towns earn this label through a blend of history, civic identity, and fan interest. On the first count, of course, Cincinnati can’t be beat. In 1869, local businessmen assembled the first all-pro baseball team—in part to introduce and legitimize Cincinnati to the East Coast. The Red Stockings carried the city’s name far and wide and kept local fans glued to their telegraphs. But it didn’t last. First, those East Coast cities decided to pay their players, pricing Cincinnati out of its own game. Second, and more important, the Red Stockings lost a few games, and fans stopped showing up.

In 1935, Cincinnati celebrated another baseball milestone: the first night game. In truth, this event was equal parts innovation and desperation, as the Reds had finished next-to-last in attendance for two years running. The problem was not always the team on the field. From 1956, the year Frank Robinson won Rookie of the Year, to 2000, the year Ken Griffey Jr. debuted in center field, Reds fans never suffered through four consecutive losing seasons. Still, other than a few bumps for World Series wins—and, again, we’ve been blessed: 1919, 1940, 1975, 1976, and 1990—the Reds’ attendance has been consistently poor. Oh, and about the Big Red Machine: those years did produce the franchise’s best attendance figures, with 2,629,708 fans showing up in 1976. But the Reds are now the only team in baseball to have set its attendance record before 1988.

City apologists might point out that, with a population of just under 300,000, Cincinnati remains baseball’s second smallest market. But that’s not quite right since it leaves out the additional 1.8 million people living in and around the metropolitan area, according to the U.S. Census. They might also point to some recent owners. Marge Schott never skimped on player contracts or autographs for kids, but she nearly destroyed business operations, trimming her staff to 41, the smallest in baseball. When Carl Lindner bought the team in 1999, he bumped that number to around 95, but no higher. “I don’t want to make money,” Lindner admitted, “but I don’t want to lose money, either.”

Great American Ball Park ended up drawing the smallest first-year crowd of any of the 22 stadiums that have opened since 1989. Things bottomed out in 2009, the Reds’ ninth-straight losing season, when they finished with their lowest season attendance in 23 years. It’d be easy to blame this on Schott and Lindner, but this baseball town has offered up a lot more years like 2009 than 1976.

The Reds’ current ownership knows all this. When Bob Castellini took control in 2006, he promised to “bring championship baseball to Cincinnati.” One of his first steps was splitting the baseball and business operations in two—and committing to take the second part as seriously as the first. He increased the business staff to 143 and set about rehabbing the team’s image.

One afternoon during the Reds’ homestand, I learned about these changes from Phil Castellini, Karen Forgus, and John Davis. Castellini had just returned from Major League Baseball’s quarterly owners meeting, where he’d given a presentation as part of the Ticket Review Committee. It turns out teams that would never swap info on a pitching prospect share plenty about the business. “With the exception of the couple markets that have two teams,” he said, “there’s open dialogue, bench-marking, and best practices exchange.”

That’s actually how these Reds employees talk. All three come from backgrounds in business, not baseball, and our interview felt as buttoned-down in dress—shirts and ties for Castellini and Davis, a navy suit for Forgus—as in demeanor. It’s a classic case of the business taking on the personality of its bosses. Bob and Phil Castellini both seem tough, fair, and very, very involved. “Being nice to fans is free,” Phil says.

Or close to it. Here’s one very specific example: In 2007, a fan named Chad Dotson posted a comment on the independent blog Redleg Nation about the frustration of loading his family into the minivan and driving to watch a team that at that point had the worst record in baseball. The Reds maintain their own blogs, Twitter feeds, and Facebook pages, but they also monitor those of fans, and Forgus, who had just started as the team’s senior vice president of business operations, took Dotson’s post to Bob Castellini. “Can’t you get him up here?” the owner asked. Forgus ended up giving the Dotsons a tour of everything from the playing field to the radio booth.

While the Reds can’t do this for every bummed out fan, they have found other ways to reach out. Perhaps the most important change has been the Reds’ new philosophy of segmentation. “From a consumer-analytic side,” Forgus explains, “we had to get a marketing strategy that would be more specific.” So the Reds divided their potential customers into four categories: casual fans, avid fans, entertainment seekers, and families. Forgus can expand on these categories (“Mom’s looking for a value, and she wants to make a memory”) or subdivide them (the technologically-inclined casual fan). The Reds now key their advertising and parts of the in-game experience to each one.

Davis, the vice president of ticket sales, uses segmentation to guide his work as well. Under Castellini, the Reds increased their number of fan giveaways from eight to 26 a season—and started making sure they had giveaways the fans would actually like, such as this month’s Dusty Baker bobblehead, which doubles as a working toothpick holder (and features a prominent logo for the Ohio State Lottery). The Reds also focus their giveaways on popular games—the Baker bobblehead drops during a Saturday game against Cleveland—because they want to maximize their impact. “When you’re a smaller market team,” Davis says, “you have to be more lethal.”

Things can still go wrong, as I learned when asking about The Cincinnati Enquirer’s recent report that the Reds would soon switch to “dynamic pricing,” in which ticket prices rise or fall based on numerous factors, instead of being set all season. “That was erroneously reported by John Fay,” Forgus sharply replied. Forgus had talked to Fay for his story and hinted that dynamic pricing seemed inevitable. “I don’t think there’s a baseball team that won’t [adopt the practice],” she told him. Fay proceeded to write a piece suggesting dynamic pricing was right around the corner. It’s not, and the Reds had to send Davis out to do damage control, explaining that the team is just analyzing the practice.

Which is exactly what they’ll do. They will also continue to view their organization through the latest corporate lens—Forgus mentions “consumer buckets,” Castellini “internal data-mining.” They will continue to distance themselves from the era of Farmer’s Night and Klosterman Reusable Bread Bags. And this will continue to make sense, because they’re running the Reds the way you’d run any customer-driven company valued at $375 million.

The big question remains: How are Reds fans responding? I decided the best place to start would be with the ushers, many of whom date to the Schott era. But Castellini got to them first. The Reds now train their ushers, along with the stadium’s other 900 employees, in the “Reds Way,” a customer service protocol that borrows from Delta, Disney, and Ritz-Carlton. The Reds also drill them not to talk to the media. I tried six ushers until I found one who shook his head no, then winked at me and started pointing to various seats.

That’s how I met Calvin Hutchens and Vada Young, an older couple who walk to games from Covington. Hutchens has owned season tickets (and kept score) since 1979. Young’s connection goes back even further. She grew up near Crosley Field and remembers watching Reds games through a small hole in the left field fence. The local kids took turns at this—until Frank Robinson figured out what was happening and decided to have some fun. During breaks in the game, Robinson would amble over and cover the hole with his thumb.

Just about everyone I talked to—the autograph hunters lurking near the players’ entrance, the Suzuki Co-op kids waiting to play the national anthem, the former president of the Versailles, Indiana, branch of the Pete Rose Fan Club—offered a similar conversion story. Baseball fans don’t appear to have free will. They come to the game, and to their favorite team, through family, location, and circumstance. And for this reason, the things they like most about baseball are its clichés, its history, its pre-industrial pace. The thing they like most about the ballpark—and I heard this word again and again—is its “atmosphere.”

But that atmosphere hasn’t drawn as many as you’d expect. I asked why. Many mentioned the economy—and the price of gas. A few blamed the weather, which stayed so nasty that, for most of the homestand, the sky and the Ohio River seemed to be the same color. (The Reds analyze this, of course, and their models suggested they had already lost more than 30,000 walk-up sales due to rain.) But another frequent point was the overabundance of entertainment options. Right at the end of the Big Red Machine era, QUBE and its 30 channels of cable TV arrived in Ohio. Today there are thousands of channels, many of them in high-def—along with video games, movies, and the Internet. At home, people observed, they had cheaper, colder beer, a more comfortable seat, and more control over who sat next to them.

Overall, though, just about everyone praised the Reds’ new direction. The Castellinis got credit for the team’s community involvement, its playful social media, its constant march of bobbleheads. (One kid claimed to own “around 25.”) But no owner can fix the Reds’ small-market-ness. Obviously, that hadn’t kept these fans away. “A fact of life,” is how several described it. But four separate people mentioned having bought jerseys, only to see the Reds trade that player. That’s one way being a small-market fan feels different: Your team rarely makes the sort of splashy move that creates an uptick in interest. You accept that your best players will migrate. You find it harder to believe in your team’s rebirth.

Realizing I wasn’t going to find many baseball skeptics at a baseball game, I logged an hour on Mo Egger’s sports radio show on ESPN 1530 AM. Mike in Ross complained about the stadium sales tax. “Every time we buy something, we’re supporting these teams,” he said. “Where does it stop?” For the first time, steroids and baseball’s strike came up.

Now, a certain amount of despair is probably inherent in the medium, but these comments made me wonder if there was a large section of sports fans the Reds still hadn’t reached—or for that matter, how many baseball fans the city really had left. After we went off the air, I asked Egger for his opinion. Cincinnati has so many sports options, he explained—good college football, great college basketball, some decent minor league baseball. And then there is the NFL. Egger said call volume would have tripled if he’d talked about Carson Palmer’s status. “In this town, you either love or hate the Bengals,” he said. “You either like or dislike the Reds.”

Here we get to the Reds’ real problem. It’s not one of these reasons that’s holding fans back—it’s all of them. More than that, it’s the way these reasons create a closed circuit of excuses. The biggest excuse—winning—was neutralized last season. So people cite the economy, even though the Reds offer $5 tickets and $1 hotdogs. Or they cite the inconvenience, even though parking and traffic aren’t nearly as bad as people claim. Or they cite their fear of downtown, even though the stadium is swarming with police officers. You get the feeling many fans see the Reds as a municipal utility—something that will always be there. And nobody loves their water company, though they may like it.

This means Reds fans have a problem, too: If the team’s attendance doesn’t improve, it will revert to losing much sooner than you think. This has a lot to do with baseball’s reliance on local revenues. NFL teams earn most of their money from national sources (like network TV), whereas baseball teams get most of theirs from local sources. This doesn’t mean we should feel sorry for Bob Castellini or any other baseball owner. The Reds’ value has increased from $56 million (what Schott paid in 1984) to $182 million (what Lindner paid in 1999) to $270 million (what Castellini paid in 2006) to $375 million (what Forbes valued the team at in its most recent “Business of Baseball” report). But Forbes valued the Yankees at $1.7 billion—and that doesn’t even include the Yankees’ TV network, which often gets valued at $3 billion on its own.

Local media revenues are where market size really makes a difference. Last year, the Reds’ ratings were way, way up: fourth best in baseball on TV, best in baseball on radio. But ratings represent the percentage of an audience, not the size of an audience. The Castellinis have tried to get creative here—they expanded the Reds Radio Network to 75 stations and brought its ad sales in house—but they’ll never catch up to the big markets. In 2007, the team signed a new 10-year TV deal with Fox Sports Ohio, which means their improved play doesn’t translate into extra money. The team’s premium seating chips in another 20 percent of its revenue. But the Reds seem close to capped out on their corporate sales and synergies.

That still leaves regular tickets. Before we get to that topic, though, let’s turn to the team’s payroll. This year, the Reds committed a whopping $151 million to new contracts for Joey Votto, Johnny Cueto, Jay Bruce, and Bronson Arroyo. Add in Aroldis Chapman’s $30 million deal from last year, and you’ve got five core players. Now watch how their five salaries will grow: from $28.9 million this year, to $38.7 million in 2012, to $50.2 million in 2013. Those players form a fine core, but nowhere near a full roster. According to USA Today, the Reds’ 2011 payroll stands at $75.9 million—the highest in franchise history. So, if the Reds keep their payroll firm through 2013, it means they’ll have only $25 million to pay their other 20 players. And that doesn’t include extensions for Brandon Phillips or Scott Rolen, arbitration for Homer Bailey or Drew Stubbs, or injuries for anyone at all.

The Reds seem to be betting that they’ll grow their revenues in the next couple of years. If they succeed, it’ll have to be through ticket sales. “Our single largest growth opportunity in this market is tickets,” Phil Castellini says. According to the Forbes numbers, which Castellini admits are “close enough to get everybody’s attention,” the Reds pulled in $46 million in gate receipts in 2010. That’s a nice bump over 2009, when they earned $38 million, but it’s still well behind the Cardinals’ $95 million.

And the gap between those teams says it all. Despite the Reds organization’s intentional and intelligent marketing, a tripling of its promotional schedule, and a winning record, attendance was only slightly better in 2010 than in 2005, the year before Castellini bought the team. If you’re a Reds fan, that’s reason to be worried. Or maybe to buy some tickets.