Made Possible By
When it comes to guessing a person’s email address, most of us would agree that the best way to optimize your odds of success is to first assume that the person was using their actual name as part of the address. From there, your next decision arguably is whether to spell out the individual’s first name or use an initial for it.
For Tim Zue, the calculation behind one guess was a bit more nuanced because although the first name of the person he was emailing was Lawrence, the man was widely known as Larry. With little to lose, Zue addressed the email to LLucchino@redsox.com.
Sixteen years later, Zue is CFO of the Boston Red Sox, and his “initial decision” sticks with him perhaps as a reminder that every carefully built career contains serendipitous moments.
Still, the email that Boston Red Sox then-CEO Larry Lucchino received from Zue did not come from a career-minded controller or accountant, and it was not a job inquiry. At the time, Zue was teaching 8th-grade math in the Boston public school system, and with a summer break quickly approaching, he had a thought: “Hey, wouldn’t it be cool to work for the Boston Red Sox as an unpaid intern?”
Such a thought is not unlike one widely shared today by Zue’s CFO peers, but in this case, there’s one necessary modification: “Hey, wouldn’t it be cool to be CFO of the Boston Red Sox?” Meanwhile, not wanting to overstate the rewards of a correctly addressed email, it’s probably worth mentioning here that Lucchino’s unpaid intern was an MIT graduate with a prior tour of duty at Bain & Company as a management consultant. –Jack Sweeney
Guest: Tim Zue
Company: Boston Red Sox
CFOTL: It may seem obvious – but I suspect we may be a little surprised to learn how a major league baseball team generates revenues these days. Can you break things down for us? What are your top of mind metrics?
Zue: Ticket sales are certainly the most important metric for us. Ticket revenue is roughly 50% of our revenue, so #1 is selling tickets to Fenway Park. We actually use software called Tableau. I have an app on my phone, and we have all sorts of reports available. There’s a report that shows the tickets sold for every game compared to budget, and I look at it two or three times a day. It’s funny–some of the IT guys will see when I check it, and they’ll go, “Tim, what were you doing at [2:00] in the morning looking at the Tableau report?” So, that’s probably #1–just making sure that our ticket sales are in line with our expectations for the individual games. When they’re not, we can have our marketing and ticketing folks focus in on a game and make sure that they initiate some programs that might help along a game that might be struggling. But ticketing is #1.
Of course, there are other ways that we generate revenue, too. We’re selling concessions, so food and beverages, Fenway Park franks, beers, and so forth. We also have an incredibly loyal sponsorship base that supports the Red Sox, and we have a great team that’s continually reaching out to find unique, creative partnerships on the sponsorship side. We sell TV rights, so we get rights fee payments from NESN, our local broadcast partner, and from our radio partner, WEEI, but we also get payments from the league because they generate revenue from their national deals with ESPN, Fox, TBS, and so on.
So, those are really the core revenue streams. More recently, we’ve expanded our use of Fenway Park for non-baseball game events. When we got here in 2003, there had never been a concert at Fenway Park. Since then, we’ve had 75 major concerts, which have generated over $50 million in revenue, in addition to high school football, college football, Winter Classic outdoor ice hockey, ski jumping, and all sorts of other things. The use of Fenway when it’s not hosting a baseball game has been a really great growth opportunity for us.
We have a focus on providing information. We have a report that shows our game day staffing labor compared to budget that the folks that manage that can look at. We have various ticket sales reports. We have heat maps that show Fenway Park, with the areas of the park that are unsold in red and the areas that are sold in green. We try to put things in a format that is easy to digest–it’s not a massive spreadsheet with 10,000 numbers.
CFOTL: When we ask for a finance strategic moment what comes to mind?
Zue: I do recall an “A-ha!” moment way back in the beginning. I remember that as a summer intern back in 2003. I’d spent a couple of years at Bain and was sort of just learning my way around the organization, and I was really shocked at the limited use of data at that time. I’ll give you an example. I remember trying to understand the Fan Services Department. They got emails and letters and phone calls from fans every day and they had 10 to 12 people who all day long responded to these fan inquiries. That’s all they did.
I remember asking what they did with these letters afterward. “We just put them in that filing cabinet,” they said. “Well, what happens when the filing cabinet fills up?” “We just put ’em in off-site storage,” they said. I couldn’t really understand this, so I said: “But there’s no database where you track whether you responded to something or even what its category was? What the follow-up was?” Would it make sense to have a database? Then you could analyze what you know.” Okay. So we had about a hundred inbound inquiries that week. Some 20% of them were related to food quality and 20% were related to the Nomar Garciaparra trade or whatever. And they were just like, “Database, what are you talking about?” So one of the things that I did that summer was to create a database just to track these inquiries and access them. People then started saying, “Oh, this is great! Now we can run reports, and Larry can know what fans are asking about this week versus last week and how we are doing on responses and what our average response time or follow-up time or whatever was.” That is one example that I remember.
I’ll give you another example. That same summer, I remember
walking around Fenway Park and just studying the number of turnstiles that we
had at each gate. We had 10 turnstiles at Gate A and five turnstiles each at
Gates B, C, D, and E. When I was walking around, I saw these really long lines
at Gate A, while there were no lines at Gate B. So I did what I usually do,
which is to go and ask for data. I went to the ticket office and asked them to
give me the turnstile counts for the previous three years, by gate. Then I put
them all in a spreadsheet and created these charts that suggested that more
than 50% of our fans go through Gate A, and it’s very consistent. This said
that we should have 17 turnstiles at Gate A and only two at Gate B. I remember
people thinking, “Seventeen turnstiles–that’s crazy.” And I said,
“Trust me: You want to have the right number of turnstiles that aligns
with the number of fans who are coming in–that allows you to have the shortest
average lines.” Sure enough, I made this presentation and I remember
convincing them to move the turnstiles.
So again, going back to my very first summer, I would say that my strategic moment or my “A-ha!” moment was just convincing the organization on this. But I don’t want to take too much credit for this. At the time, they just didn’t have someone in the organization to focus on this. They had plenty of people on the baseball side. Theo Epstein had plenty of analysts and did a great job on the baseball side, but on the business side, they didn’t have a lot of people who were using data to make business decisions and make the business more efficient. I was able to do this early on and have made it a part of my role throughout the past 18 years.