Bringing a Major League Baseball

¶ … Bringing a Major League Baseball Team to an Area

With each new stadium proposal, one question always arises -- Is it worth it? So many factors need to be taken into consideration. There are the direct costs of building the stadium, the costs of acquiring a franchised team, the costs of maintaining a large municipal facility, and the indirect costs to the surrounding properties. However, there are obviously benefits as well. Whether it is increased tax dollars for a community, increased tourism, an opportunity to revitalize an otherwise declining neighborhood, or the enhancement of community spirit, bringing a major league team to a city certainly has its advantages. Weighing these costs against the advantages is the most difficult part. This study will evaluate the benefits and costs to the local government, local community, and the extended community of bringing a Major League Baseball A-League team to an area.

Santo (2007) studies whether or not public consumption benefits justify the investment of a municipal stadium. Satno notes that previous empirical studies have not found a significant impact on income or employment, in metropolitan areas, when stadiums or arenas have been built. Santo theorizes that there are tangible and intangible consumption benefits generated that support the investment of hosting a major league sports team. The researcher uses a contingent valuation survey to quantify the consumption benefits associated with relocating a major league baseball team to Portland, Oregon. Santo finds that the consumption benefits would only support a capital investment of $74 million, far smaller than a typical municipal stadium. Since the projected benefits are associated with public goods and externalities, However, he notes that concerns about the current tax climate tempered the responses of his survey regarding community members willingness to pay for stadium construction.

Poitras and Hadley (2006) notes that in recent decades billions of dollars have been allocated to the subsidization of major league baseball facilities. Covering major league baseball teams from 1989 to 2001, the researchers use panel data to find that a typical new ballpark generates enough revenue to cover most of its capital cost. In addition, there are external benefits that are had with ballpark construction. Sidlow and Henschen (1998) agree. They find that cities and states were spending at least $1 billion on new sports facilities for major league baseball, in order to lure professional teams into their cities. They find that bringing a major league baseball team into town can mean millions of dollars to the local economy, hundreds of jobs, and a catalyst for economic growth. When built as part of an entertainment complex of a city center, bringing a major league baseball team to town can lead to urban revitalization. Baade (1990) also explores the impact of bringing a professional sports team to a city and the impact on area development. Using regression analysis with census data, for nine metropolitan areas, the author builds a case for publicly subsidizing stadiums, including indirect benefits.

Turner and Marichal (1998) looks specifically at the public positions of officials and newspapers, in the 1980s and 1990s, regarding the economic benefits of building a sports stadium. The researchers found that those who were for the new stadium often presented it as a solution to economic development, for an area. Challenges to these projects most often came from those who could gain politically by opposing the project. Pelissero, Henschen, and Sidlow (1991) also investigate the politics surrounding the development of sports stadiums. These authors focus specifically on the policy agenda of Chicago and the intangible benefits of new stadium construction.

Despite the research found, there are deficiencies in the literature. Much of the research previously performed centers on building a new stadium for an existing team. There is very little research regarding bringing a new team into a city. Much of the small amount of related research found was based on the assumption that a team was already in place, in the city. There was also only one piece of research (Santo, 2007) that specifically discussed bringing a major league baseball team to an area. Clearly more research is needed in order to not only confirm Santo's findings regarding the public consumption benefits of bringing a major league baseball team to an area, but to expand the research as well.