27 February 2006

Sports Marketing

I found a fascinating little thing today from BizJournals about sports markets. The company did a study that matches a metro area's total combined income against the cost of running a major sports team--costs not including building a new stadium or offering incentives every few years so the team doesn't threaten to move. To no surprise the study concluded that LA has a huge amount of extra income to support any new sports franchise in any league, and probably two.

Several interesting findings. One, a MLB franchise costs over twice as much to maintain as a team in any other league. Over twice as much! How can that be? NFL tickets are as expensive or moreso than MLB tickets. Granted, you have to sell tickets to about 80 games a year in baseball, as opposed to 7-10 games in football. I guess that's part of it. And baseball teams seem to cost more to run, so they'd have to take in more in ticket revenue. Still, it's a shock to me.

Though, as a result, none of the 179 metro areas in the study (including Aberdeen, SD, but not San Juan, PR, which surprises me) except LA and New York can afford to support a new MLB team. Just as well, frankly. MLB is big enough and has too many other problems (*cough* revenue sharing, anyone?) to consider expanding.

The big surprise, here, is that there is apparently so much available space left in America for sports expansion. According to the study, there are 75 metro markets in America that could support a new MLS team; 23 that could support a new NHL franchise; 19 with room for an NBA team; and the biggest surprise, 30 cities that could do with an NFL team.

Think about that. If we can believe BizJournals, there's room in America for a whole new NFL. And that doesn't include cities that already have an NFL team but could support another one. Among the metros with income to spare for the NFL are Greenville-Spartanburg, South Carolina (!); Des Moines, Iowa; Tulsa, Oklahoma; Jackson, Mississippi (wtf?); Birmingham, Alabama; Grand Rapids, Michigan; and Little Rock, Arkansas. There are plenty of other surprises on the list.

BizJournals kindly gives us a list of their top ten cities that could support a new franchise, among them (of course) LA, which they think needs an NFL team (I could agree, though I could also care less) plus a baseball team in Riverside, Oklahoma City (basketball), Norfolk-Virginia Beach (basketball), Las Vegas (also basketball), Philadelphia (soccer), and northern New Jersey (baseball).

They also point out that all is not sunshine and roses; 16 markets are overextended on sports teams already. At the top of that list is none other than sunny Tampa Bay. With baseball, football, and hockey in town, and a local total gross income of only $75 billion, we're overextended by more than the cost of a baseball team (so we shouldn't really be surprised our baseball team can't put fans in the seats--although I maintain that if they put together a team that wouldn't lose to a local high school squad people would go watch). Phoenix, Denver, and Pittsburgh are the other worst offenders, although I'll note that Pittsburgh teams seem to do okay despite the small market, and I just can't imagine the Penguins or Pirates leaving town (though if they were to do so, Harrisburg just across the state has plenty of income space for a new team). Not to say that any teams in overextended markets are about to flee for greener pastures, though perhaps it wouldn't come as a great surprise.

All of the foregoing aside, the only league I'm aware of that actually has expansion plans (recall MLB was planning to contract only a few years ago) is MLS, which has a desire to expand into more "multi-ethnic" markets. The league has 12 teams at the present, and should give this study a serious look before finalizing their decisions. They expanded into Salt Lake City last year, which had just $2 million over the needed local cash to support a team, and which in no way qualifies as "multi-ethnic." In 2007 the league expects to expand into Toronto (I say let the Canucks field their own dadgum soccer league as long as we have 75 metro areas that could support a team), and one of six other cities.

The thing MLS should be looking at is that five of the six candidate cities (St. Louis, Milwaukee, Cincinnati, Cleveland, and Seattle) are already overextended. Only Tulsa remains. But Tulsa's not what you'd call multi-ethnic, as major metro areas go. Just look at this list of cities that would make great soccer markets: McAllen-Brownsville, Texas (more Spanish radio stations than English, and really fast growing); San Antonio, Texas (they'd rather have a football team, though); El Paso, Texas (bigger and more dense than McAllen-Brownsville, and less humid); Albuquerque; Indianapolis; Toledo, Ohio; Fresno, California; and the list goes on. BizJournals recommends Philadelphia. I'd recommend El Paso or Albuquerque.

It's worth pointing out that when MLS opened its doors several years ago there were teams in Tampa and Miami, both of which are overextended even now after those teams shut their doors, and the league still has teams in Kansas City and Denver, both also overextended. MLS, in other words, maybe isn't paying very much attention to a market's capacity to support a new sports team--and they have an uphill battle anyway since Americans just don't watch much soccer when their kids aren't on the team.

The league is said to be impressed with the Cleveland bid, which includes a shopping and entertainment district around a new soccer-only stadium. But Cleveland is not a growing city and is already overextended by more than the cost of an MLS team; they can put together the greatest package in the world, but if they can't put butts in the seats that's a bigger problem for MLS than a lower-grade stadium would ever be. Case in point: the Tampa Bay Devil Rays. The market was nearly overextended when it bid for the team--in fact, each of the three times it bid for a team--and now that we have it we can't get fans to pay to see the games, because they'd rather spend money on a Bucs or Lightning game. Why would MLS not consider that a Cleveland soccer team would be in the same boat? Ah, but a Tulsa (or El Paso!) team--that would be a smart move.


scanime said...

(Wow, I previewed this and it's a long comment.)

I'm kind of surprsied Greenville/Spartanburg made that list. We've got a minor league baseball time starting here very soon (The Greenville Drive) and there's our minor league hockey team, the Greenville Grrrowl. I can't imagine an NFL team in the area. It gets to the whole "butts in the seat" premise you mentioned. The Grrrowl has been having problems getting people into the Bi-Lo Stadium. It's not that their a bad team... from what I understand, they're actually really good. (I don't follow much hockey at all, so I can't really tell you.) To try and fill the seats this season, they've reduced ticket prices, and convinced some local parking garages in downtown to offer free parking for games (some garages already have free weekend parking, which is very nice). I'm not sure how effective it's been, though.

As for MLS, I've never watched a game. I have, however, seen one game of soccer over TV while in Europe. The whole first half was pretty slow with no score, but the last ten minutes of the game were amazingly intense, with the Dublin team making a fantastic goal towards the end of the game for the win. All in all, it was a great game to watch.

But it just wouldn't work here in America. There were no TV timeouts of any sort, no commercial breaks except when the game itself stopped, which was hardly ever. And I don't see that as something that our TV industry would be willing to do.

JTL said...

Actually an NFL team would do quite well in Greenville, SC even though other minor league teams may have struggled. Greenville/Spartanburg is the largest market in the entire country that does not have a major league sports team in it. Nobody wants to go to any of the minor league events that currently exist in Greenville because nobody wants to go see a bunch of no name athletes in a sport that most people in town don't care about. The South-Eastern United States is where football reigns supreme. Jacksonville, Florida isn't a very big market for any professional sports team, but they got an NFL team because people in the south are nuts for football. San Antonio, Texas and San Jose, California are larger markets than Jacksonville but they could never get as many football fans into a stadium as Jacksonville could or Greenville/Spartanburg. When the New Orleans Saints left town after Hurricane Katrina it was rumored that they would move to San Antonio or Greenville/Spartanburg. San Antonio didn't get as much public support as the owner of the Saints wanted so he reluctantly stayed in New Orleans. The owner of New Orleans threw out South Carolina right away just because he wanted to move to Texas if he moved at all. Don't be surprised if the NFL decides to bring in any expansion teams in the near future and Greenville/Spartanburg is on the list of prospects. Currently the only cities in the country that could make a somewhat stronger case for a team would be San Antonio, Los Angeles, and Portland, OR. Although the NFL will never go to Portland, Oregon unless the state stops letting people bet on NFL games through the state lottery. South Carolina may get skipped on the next expansion but eventually they will be the best option left. As far as any other sport goes, they'd do best to keep clear of South Carolina.