AS PIRATES’ LOSSES MOUNT, BUSINESSES TAKE A HIT
MONEYBALL REALITIES: City’s revenue, vendors and even PNC Park itself feel impact of team’s slump
The Pittsburgh Pirates are mired in a miserable season, something that can affect far more than the city’s psyche. It also can impact the bottom line — and not just that of the team itself.
When the Pirates lose, attendance plummets, and city amusement and parking tax revenues tumble, according to a review of a decade of data bythe Pittsburgh Post-Gazette.
And it can even affect the amount of money available for capital improvements at the North Shoreball park, the analysis found.
Likewise, vendors typically don’t sell as many jerseys, caps and other souvenirs when the team is losing. Restaurants and bars around PNC Park don’t serve as many guests.
The Pirates have heard it before. They counter that even in the bad years they pack an economic punch for the city and the region.
In a statement, the team said the fact that “more fans equal more economic impact is, quite frankly, old news. There is nothing magic to that theory.
“The newsworthy item here really is that, even in our lowest overall attended season in
2019 (1.5 million fans), we saw more fans attend Pirates games than Steelers and Penguins games combined in that same year (1.26 million fans),” it said.
“That really showcases just how great of an impact the Pirates have on bringing business to and driving revenue for our city.”
One caveat: The Pirates play 81 regular-season games at 38,362-seat PNC Park, compared to 41 by the Penguins at 18,387-seat PPG Paints Arena and eight by the Steelers at 68,400-seat Heinz Field.
The Pirates’ statement might be of little solace to vendors such as Jim Coen, owner of Yinzers in the Burgh souvenir stores in the Strip District. He estimates his Pirates’ sales are off 20% to 30% since the team’s big years of 2013 to 2015.
With no quick turnaround in sight for a team that might lose 100 games this season, he plans to preorder 20% to 40% less Pirates’ merchandise for next year than he did this year.
“There’s no excitement,” he lamented. “The problem is, the fans aren’t loyal to the team now because the team hasn’t been loyal to them.”
By the numbers
Perhaps there’s no better bellwether for how the Pirates’ performance affects the economics off the field than the city’s amusement tax. The 5% tax is levied on every ticket sold for a game at PNC Park.
In 2015, when the Pirates enjoyed their best regular season record (98-64) since 1991, theygenerated $3.94 million in amusementtax revenue.
By the time they staggered to a 69-93 record in 2019 — the year before the pandemic — tax revenue had plunged to $2.2 million. That’s nearly $900,000 less than it was in 2018 when the Pirates finished an 82-79 record.
The same pattern existed earlier. In 2010, when the Pirates were 57-105, they paid $1.4 million in amusement tax revenue. A year later, when the team posted a 72-90 record, it was even lower at $1.3 million.
But as the Pirates improved, so did the tax revenue — to $2.1 million in 2012 when they were 79-83; to $2.7 million in 2013, when they finished with a winning record (94-68) for the first time in two decades; to $3.3 million in 2014, whenthey ended 88-74.
It’s the same with parking tax revenue collected by Alco Parking at lots and garages on the North Shore.
Tax revenue reached a high of nearly $1.3 million in 2015 before plummeting to $926,661 in 2018 and $899,827 in 2019.
Revenue also can take a hit in other ways.
State Sen. Wayne Fontana, board chairman of the Sports & Exhibition Authority, which owns PNC Park, said the team’s play can affect the amount it pays into a capital reserve fund for ballpark improvements.
The fund is financed through a 5% surcharge on each ticket sold for a Pirates game. The team gets to keep the first $1.5 million generated by the surcharge. The SEA receives the next $625,000, with at least$375,000 of that required to gointo the capital fund.
If fans stay away, it can matter. The SEA must deposit $650,000 into the fund each year regardless of the amount of surcharge revenue the Pirates produce.
In three losing seasons — 2009 to 2011 — the surcharge didn’t generate much more than the first $1.5 million kept by the team.
In all other seasons it has toppedthe $650,000 threshold when coupled with the $100,000 base rent the Pirates pay each year. The rent also goes into the capital fund.
Nonetheless, after reaching a decade-high of $780,847 in 2018, surcharge revenue fell by $152,217 to $628,630 in 2019, the lowest point since 2012, when the Pirates finished close to .500 at 79-83.
When surcharges don’t produce enough to help maintain the ballpark, the SEA has to find other sources, including taxpayer-funded grants, Mr.Fontana said.
Civic duty
Mr. Fontana, a Democrat from Brookline, said he hears from people who want to know whether he can force Pirates owner Bob Nutting to sell or require him to spend more money to field a competitive team.
The short answer is no. But given the public investment in PNC Park, Mr. Fontana feels the Pirates have a civic obligation to field a competitive team.
The Bucs’ struggles over much of the past two decades not only are frustrating, they’re not “good for the economy,” he maintained.
Mr. Fontana understands that Mr. Nutting has hired a new management team to try to turn around the franchise with a strategy of acquiring topprospects and restocking a depletedminor league system.
He hopes it works. But it’s arefrain he has heard before.
“How long are we going to have to wait [for a winning team]? I have no idea. It’s not helping our economy. It’s not helping our maintenance fund.”
Like Mr. Fontana, Mayor Bill Peduto believes the team has a civic duty to look at more than profit margin.
“There’s no question there’s a civic obligation that comes with the ownership of any major league sports team. And in the case with the Pirates, certainly with the way baseball has revenue share, there’s a way to make a profit. But it’s not a single bottom line, nor should it be looked at [as] how much money can be made. It’s the pride in the history of one of baseball’s longest-existing teams.”
Mr. Peduto said he had discussions with the Pirates a couple of years ago when there was talk that Mr. Nutting should sell the team.
“I stood ready to put together a group, but it never got to that point because there was absolutely zero interest from Bob Nutting to sell the team,” he noted.
“Hewas, as recently as this April, committed in believing that he does have the right people in place to build a winning organization, even without the salary caps that arenecessary in baseball.”
Winning isn’t the only factor
One expert who isn’t surprised that city revenues sag and vendors can suffer when the Pirates lose is Dave Synowka, head of the sports management department at
Robert Morris University.
“Winning drives attendance, rule No. 1,” he said. “Part of it is that people want to see a winner, particularly if they are in a pennant race because they want to root their home team on.”
But winning isn’t the only factor, he said.
When the Pirates trade some of their best players — as they did with Adam Frazier recently and Andrew McCutchen in 2018 — it can impact the local economy.
“It’s the end of July and, OK, it’s the trading deadline. All of the sudden, your favorite players are starting to leave town. That, in turn, gets thefans discouraged,” he said.
At North Shore Tavern on Federal Street across from PNC Park, the walls are adorned with Pirates memorabilia, from pennants to portraits of team greats Roberto Clemente, Willie Stargell, Honus Wagner and Pie Traynor.
But it’s not so much the atmosphere as it is the team’s performance that drives sales, ownerMike Sukitch said.
Mr. Sukitch bought North Shore Tavern right before the pandemichit and the adjacent Mike’sBeer Bar in 2017.
He said there was a significant difference in business during the years the Pirates were in the playoffs than at any other time.
“The business did drop off through the year before the pandemic,” he said. “Again, those were years before I owned it, but business was on a steady decline.”
These days, Mr. Sukitch is building his business model and profit structure for both restaurants “around the Pirates having a bad year.”
That’s not a dig at the team. The idea is to not be dependent on the baseball season to turn a profit. That, he said, has been the downfall of a slew of bars and restaurants on Federal Street that have gone out of business since the Pirates moved to PNC Park in 2001.
To that end, he has added a kitchen, beefed up the menus at both places, started a loyalty program and brought in entertainment on weekends.
“The number of businesses that have come and gone down here is the cycle I’m trying to break. That comes back to if the Pirates are having an extraordinary year, I should have an extraordinary year. If they have a bad year, my objective is to have a good year,” he said.
So far the strategy appears to be paying off. Even though his Pirates’ business at Mike’s Beer Bar was down in 2019, his overall take increased 30% for the year.
Mr. Sukitch likes the rebuilding strategy the Pirates’ new management has put in place. “I look forward to having six or seven extraordinary years where they’re always in contention,” he said. “But I can’t count on that to meetthe payroll.”
Becoming vendors
The Pirates soon may find out for themselves how performance affects economics as it relates to vendors.
They have partnered with the Nutting-owned Seven Springs Mountain Resort to fill the three restaurant spots on Federal Street that are part of the ballpark.
Batty’s Pizzeria, which opened last year, and Taps and Taco and Allegheny Grille, both of which debuted this season, are part of North Shore Food and Beverage Co., formed to independently operate the locations, according to the Pirates.
In its statement, the team said Travis Williams, the new team president, “reached out to the hospitality experts from our sister companies to ask for their help in bringing Federal Street back to life for our fans.
“Despite the current economic environment and the high likelihood of operating losses, we partnered together to find a consistent Federal Street experience for our fans,” it added.
The team stated, “With so many restaurant operators struggling this year coming off the pandemic, despite our best efforts to find local operators,we were faced with some, if not all, of these locations beingempty for the 2021 season.”
They indicated they’ve had trouble in the past keeping the spaces filled with private operators. Slice on Broadway closed because of the pandemic and was the third such shop before Batty’s to occupy the spot.
Atria’s shuttered in the fall of 2018 and the space had been vacant until Allegheny Grille moved in. Taps and Taco took a space held by Steel Cactus, which closed last year. Before that, two different deli operators had the spot, according to the Pirates.
When PNC Park opened 20 years ago, private operators Atria’s, Vincent’s Pizza Pub and Seattle’s Best Coffee filled the spaces. Thenowner Kevin McClatchy touted their presence as an example of the ballpark being an economic generator.
The new restaurants now employ more than 50 people, with the goal of more than doubling that “once fully operational,” the team stated.
‘A critical element’
As for their overall economic impact to the region, the Pirates insisted that it’s substantial regardless of their record.
“It is hard not to see that impact firsthand [three] weeks ago with the influx of New York Mets fans into our city, or [last] weekend with in-state rival Philadelphia Phillies. It once again points out that, just like our friends at the Steelers and Penguins, the professional sports teams are huge economic drivers forour city,” the team said.
“In addition, our game broadcasts, visiting team broadcasts, collective social media channels, video content and news coverage drive millions and millions of impressions each season. Together they showcase the Best Ballpark in America and our beautiful city like nothing else can.”
The team also believes it has helped to fuel the local comebackfrom the pandemic, which played havoc with its revenues last year when fans were not permitted in PNC Park. It also opened the ballpark at limited capacity this season before going to full capacitylast month.
“As we opened up PNC Park to more and more fans this season, you can see the North Shore coming back to life. In a period of time during which the Pittsburgh cultural district and office buildings remain mostly dark, PNC Park has been a critical element in helping to drive business back to our city,” it stated.
In 2018, the Pirates, Penguins and Steelers commissioned a study on their value to the region. It estimated the franchises generated $6 billion in direct and indirect spending between 2012 and 2016. The teams calculated they paid more than $50 million a year in city, county and state taxes and that another $25 million was generated as a result of activities surrounding sporting events and concerts.
One North Shore establishment that has seen the Pirates help drive business this year despite their record is the SpringHill Suites By Marriott.
Sandi Roberts, assistant general manager, said the hotel gets a lot of bookings from out of town fans. The hotel, for example, sold out during theseries with the Mets.
SpringHill Suites also draws Pirates fans from the Tri-State area as well as others who no longer live in Pittsburgh.
“We do have the best, most beautiful ballpark in the area and probably in the league. I’m just going by what people tell me. So we do get a lot of out-of-towners as well,” she said.
Still, Ms. Roberts has seen a drop-off in business this year compared to 2018, when she started working at the hotel. She attributed part of that to the pandemic and part to the seasonthe Pirates are having.
“We have a lot of disappointed fans out there. You know, frustration,” she said. “I love my Pirates, but they make it challenging to be a fan sometimes. I have no doubt that if we had a winning team inthis city that ballfield would besold out every game.”
At the Rally House sports apparel and souvenir store on West General Robinson Street, assistant manager John Turk said he had been surprised by the amount of Pirates gear he’s sold despite the team’s record.
“People just [buy] blindly, like zombies, because they’re going to a Pirate game, they’re going to come in to buy Pirate merchandise, not specifically like any player jersey or anything like that, just something with the logo on it,” he said.
Some will gravitate to the clearance rack for T-shirts of departed Pirates like Mr. McCutchen, Gerrit Cole, Josh Harrison and Starling Marte for a third of the price of a regular T-shirt.
Mr. Coen remembers the years between 2013 and 2015 when the Pirates won big and made the playoffs. He said he couldn’t get enough Pirates merchandise to sell.
“Everybody had a 20game package. The city was excited to finally have a winning team again. The atmosphere reminded me almost of the ’70s and ’80s — ’72 to ’79 to a degree,” he said. The Pirates won World Series in 1971 and 1979.
These days, not so much. He joked that he now puts his Pirates merchandise on sale at the beginning of the season.
“If I felt like there was light at the end of the tunnel, I wouldn’t mind taking a chance on next year,” he said in terms of ordering more Pirates merchandise. “But how can you feel good about next year with the team on the field? It’s really difficult.”