Astros Fan: Does Your Anger Matter?

In 2011, negativity surrounded the Houston Astros like never before in their 50-odd years of history.  The season finished with a franchise-worst 106 losses, placing the club among the worst ten teams of the last thirty years.  Astros heroes Lance Berkman, Hunter Pence, Roy Oswalt, and Michael Bourn are gone to pursue their playoff rings elsewhere.  Attendance has declined four seasons in a row due to on-field performance and an apparent lack of interest by an owner who has publicly shopped the team for several years.  The new owner of the Astros has been strong-armed into moving the team into the American League, a move that is criticized by fans, former players, and media alike.  The same owner now seems to be a mercenary for accepting a $70 million bribe to make this move.

2011 was an imperfect storm of horror in the eyes of some Astros fans.  Understanding, commiseration, and explanation has not been forthcoming from Major League Baseball or the ownership groups.

The question here is:  Does the anger of the fans matter?

Fandom, Attendance, and Financial Impact of Winning

Various online dictionaries define a fanatic as a person who is marked by excessive enthusiasm and often intense uncritical devotion.  The word uncritical is misleading, because I could name at least a dozen commenters on this website who would claim that they are being critical, therefore the definition does not apply to them.  I disagree.  Die-hard Astros fans are not critical of the players actually performing on the field, as evidenced by a constant (in my opinion) over-valuing of the skills of both the Astros' major- and minor-league players. Rather, fans are critical of the ownership group, the General Manager, the on-field staff, and the commissioner.  Fans see these individuals as people who prevent the players from reaching the greatness stored within.

I have read many people lately claiming to swear off the Astros for good.  "I'll never watch the Astros again," some say.  "I'll find another team to root for."  "I'm an NL fan, not an AL fan."  Unfortunately for these people, they are not in the majority of paying customers.  Research shows that attendance increases as a team's winning percentage increases.  Therefore, it stands to reason that attendance will increase when the Astros are winning again, regardless of the league they play in.  So if a relatively few die-hard fans swear off the Astros because of this league change, the long-term impact on the franchise is almost nil.  Especially considering that only a small fraction of die-hard fans themselves will actually follow through on threats to abandon their hometown team.  Perhaps 75% of die-hard fans are angry about this move, but it's reasonable to assume that 1% or less will actually never watch another Astros game in person or on TV (where the real money is!).

Below is a pie chart that represents what I think is close to the breakdown of people who have increased the Astros' revenue by either going to games or increasing television ratings:

If my suspicions are correct, the amount of revenue lost by the "jump-ship" fans is negligible compared to the whole pie.  But that won't make the fans feel better.  And that lost revenue will be overshadowed by the gains made by turning the ship around and setting off on a winning course.

WARNING:  FUZZY MATH AHEAD

Alan Greenspan, I am not.  Forbes reports that the Astros earning's in 2010 led to an operating profit of $14.4 million, with a player payroll of $109 million, which includes bloated contracts to Oswalt, Berkman, and Lee accounting for about 40%.  Assuming the revenue stays constant (it won't, but if anything, it will increase due to the new Comcast contract), the table below shows what Operating Income the Astros could be with a player payroll of just $60 million, which is below average but not nearly the lowest in baseball.

Reducing the payroll alone gives the Astros over $64 million with which to pay off additional debt, increase salaries, and buy tastier hot dogs for Minute Maid Park.

Let's pretend that Jim Crane and co. did not accept the $70 million bribe to move the Astros to the AL, but somehow were allowed to buy the team anyway (a doubtful scenario).  The difference this $70 million makes to the franchise is substantial.

According to astros.com, the ownership group has about $300 million in investor pledges in bank loans to pay off from the $680 million purchase.  When randomly picking a 6% annual interest rate and a debt duration of 10 years, the impact of the $70 million begins to show itself.

So, by accepting the bribe, the Astros are either able to pay off their debt faster, allowing them to get back to the point where they are able to sustain $100 million payrolls again, or they have an extra $10 million in cash to spend annually on improving the team immediately.

Applying this to the 2012 Projected Fuzzy Income above:

So by accepting the bribe, it leaves more than $32 million on hand to improve the team.  Reinvesting this into player salaries boosts the payroll to over $90 million, which is well over the MLB average.  Teams often make the playoffs with a $90 million payroll, or even $75 million.

Conclusion

Taking the points above and the fuzzy math into consideration, one can see why the Astros care very little for a vocal fractional minority of fans who say they will never support the team again.  In the face of long-term prosperity, investment, and future winning, the impact of those fans leaving means nothing. 

This is not to say that those fans are wrong in their emotions, or that they are not justified in abandoning the team.  Rather, the above should illustrate that the Astros are not ignoring the fans' anger.  Rather, they have considered it and have determined that it is negligible compared to the long-term health of the organization.  As businessmen, they are making the right decision.  It's a shame that none of this appeases the club's most ardent supporters.

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