An investment with a lot of ifs
Harper’s worth in Philly will play out over 13 years
Let’s play a round of Bryce Harper economics.
First, just how much is $330 million?
Well, for starters, it’s more than the most recent valuation Forbes slapped on three National Hockey League teams: the Columbus Blue Jackets, the Florida Panthers and the Arizona Coyotes.
Second, just how long is 13 years?
Consider this: It hasn’t even been a decade since Harper graced the cover of Sports Illustrated, then a 16-year-old capable of hitting the ball over 500 feet and gaining traction as “Baseball’s Chosen One.”
Or, as the 70-year-old Tony Kornheiser joked to open Thursday’s “Pardon The Inter-
ruption” on ESPN: “When his contract ends, I’ll be 106.”
News of the 26-year-old Harper signing with the Philadelphia Phillies broke Thursday, a major deal that ended months of speculation and is expected to be officially touted by the team during a news conference Saturday. While those in Philadelphia are rightfully excited, the debates over the deal already have begun — Kornheiser, for one, said the deal with an average annual value of $25.4 million “feels like a loss for Harper.” But, still, the total value of the deal — $330 million — is a baseball record, surpassing the 13-year, $325 million agreement that heavy hitter Giancarlo Stanton signed with the Miami Marlins in 2014.
So, is the signing of Harper worth it for the Philadelphia Phillies? Experts agree that it’s possible Harper could pay for himself via the revenue his stardom will drive inside and outside the ballpark. But 13 years is a long time, and a player’s ability tends to fade as those years drag on.
Bob Dorfman, a sports marketing expert and executive creative director at Baker Street Advertising in San Francisco, expects Harper to boost attendance at Citizens Bank Park, where revenue also will increase as a result of parking and concessions. The signing also will increase TV ratings, make the club’s local broadcast deal, a 25-year agreement worth a reported $2.5 billion signed in 2014, even more lucrative and boost sponsorship opportunities.
“He is the No. 1 superstar in the game,” said Dorfman, jealous the San Francisco Giants didn’t land Harper. “You can make a case for Mike Trout (of the Los Angeles Angels), but Mike Trout is more of a low-key guy. Bryce Harper is certainly the most exciting player/personality.”
Dorfman believes Harper’s feistiness will fit in Philadelphia, while also raising the status of the Phillies in the city, making the club more competitive with the much talked-about Eagles and 76ers.
The Bryce buzz already is happening.
The Phillies, who did not return a call seeking comment, reportedly sold about 100,000 tickets from the time the Harper news broke late Thursday afternoon to early Friday morning. In a tweet, sports business reporter Darren Rovell said the club sold about $4 million worth of tickets on Thursday. Further, as of Friday morning, the cheapest ticket for the Phillies’ opening day on the secondary market had skyrocketed more than 100 percent.
The news also has a Lehigh Valley operation ready to pounce, once the deal becomes official.
Fanatics, which operates the Palmer Township plant that makes official MLB jerseys, said in a statement Friday that its workers are waiting for the official word, at which point they will “immediately begin producing the first Harper jerseys and shirts for fans to purchase online, on their phones and from local retailers.”
The Harper hoopla also highlights the benefit of having a domestic manufacturing plant, such as the Palmer facility, that can react quickly and get products to consumers quickly.
Aside from the merchandise, Harper playing at Citizens Bank Park could even extend the business ties of Phillies ownership, considering the powerful also will be lured to the ballpark, which could translate into more revenue from corporate suites, suggested Andrew Zimbalist, chair of the department of economics at Smith College in Massachusetts. Sticking with the ownership perspective, Zimbalist said the signing of Harper also helps to awaken the Phillies fan base, which has dwindled since 2011, the last time the team made the playoffs, signaling that ownership was ready to step up to the plate and compete.
What the Phillies are betting, he said, is that Harper is going to produce more revenue than his average annual value, especially in years two, three, four and five of the deal.
“There’s a bit of a shot in the dark here,” Zimbalist said. “You don’t know if he’s going to produce that much value over 13 years, but I think it’s a reasonable bet.”
Dorfman, Zimbalist and Rick Burton, the David B. Falk endowed professor of sport management at Syracuse University, all caution that 13 years is a long time.
Harper could get hurt, or he might not perform up to expectations. He had an underwhelming .249 batting average last year, though Citizens Bank Park is known as a hitter’s ballpark, and Harper boasts a .564 slugging percentage in Philadelphia.
If things don’t go well, maybe the Phillies and Harper try to reach an agreement on a trade down the road, since the contract reportedly includes a full no-trade clause, allowing Harper to reject a trade if he wishes. Burton noted the trade in 2004 that made Alex Rodriguez a New York Yankee, after the Texas Rangers decided to move on from the superstar they had signed to a 10-year deal in 2000. Maybe Harper’s home city, Las Vegas, gets a professional baseball team down the road, Burton said, and that team becomes a potential trade partner.
Staying positive, Burton said Phillies ownership ponying up $330 million suggests they’re pretty bullish about the club’s future value and their ability to get a return on their money.
“Right now, they believe this is going to benefit the club — not only on the field but on the balance sheet,” Burton said. “Down the road, we’ll know better whether it was a great move for them or whether they got in over their head.”
In simpler terms, Burton put it this way: Harper will, on average, bat only four times a game.
“On all fronts, it probably looks like a great deal today — just an expensive one for a guy who may only go 1-for-4,” he said.