The expansion of professional sports is tied to a few very important factors, and one of them is the size of the television market that city is within, other factors are tied to population and corporate support. The first part of this series introduced those factors and the role of revenue sharing in league expansion. It then went on to look at the NBA potential expansion sites.
In this second part of the series, I will look at Major League Baseball (MLB) and the potential expansion of this top-tier sports league. I have read and researched these potential bids for years, and I have a great deal of knowledge on the subject.
Major League Baseball (MLB) consists of 30 member teams split into two leagues. Each league has 15 member teams split into three divisions. Each division consists of five teams. The league recently made the change to two equal leagues after years of the National League consisting of 16 teams.
One theory for this shift to two even leagues is that it was done to expand the league by anywhere between 2 and 4 teams. The MLB is largely recognized as the second most popular sport in TV ratings, revenues, and media coverage next to the NFL, so the league executives and owners are always looking at ways to grow revenues.
Some analysts and experts covering MLB believe that for the league to expand it would have to do it by four teams. Meanwhile, others believe that expansion by two teams is enough, and that any further expansion would further dilute the talent pool of players. This dilution of the talent pool would ultimately damage the integrity of the sport.
The MLB owners do have a system in place of revenue sharing, and if certain teams do not meet certain benchmarks, then they are entitled to additional revenue sharing funds. The owners, particularly those who own the larger market teams, will be very reluctant to share revenues with smaller market expansion franchises that will struggle initially to put a decent team on the field.
The impetus for expansion though, is that the current owners could probably obtain record amounts of money in entry fees for each expansion team, and the entry into new markets will grow the media revenue streams as well.
One final note on the background for the MLB to keep in mind is that, similar to the NBA, they have a couple of teams that are struggling which could be relocation candidates. This could impact the expansion process as well because if a current franchise is relocated, then that ownership group does not have to pay an expansion entry fee, which is lost revenue for the league. Moreover, the relocation of one or both franchises to another city could eliminate a very viable market for future expansion.
Relocation for the A’s and Rays?
The two teams that are involved in potential relocation discussions at this point are:
- Oakland A’s
- Tampa Bay Rays
The situation in Oakland is a very long and convoluted story, but basically it boils down to this: the A’s play in a very old stadium (the Coliseum) and they would like to move to San Jose. The city of San Jose has a stadium site set aside and ready to be sold to the A’s ownership group. MLB has stated that the A’s cannot move to San Jose because it is within the territory belonging to the San Francisco Giants. The Giants have been unwilling to negotiate a deal with the A’s to allow them to move to San Jose (www.mlb.com).
Recently, San Jose filed a law suit against MLB saying that they have delayed making a decision on the A’s relocation. The delays by MLB have hurt the city of San Jose because they have set aside land that they cannot sell, and they are not collecting any tax revenue on the vacant land (www.cbssports.com). This issue has been lingering since 2009.
The most recent development with the A’s is that their lease has now expired with the Coliseum and, according to several reports, the team wants a 2 year lease extension (www.cbssports.com). The Oakland Stadium Authority wants the team to sign a 5 year lease. The A’s obviously do not want to play there for another 5 years in a stadium that has a lot of current issues.
The MLB main offices have interjected and said that if the A’s do not get a 2 year lease in Oakland, then they will play their home games in 2014 in San Francisco and share AT&T Park with the Giants (www.cbssports.com). The situation is a mess, and MLB has to determine a way forward with the A’s very quickly whether it is San Jose or elsewhere as the future home of that franchise.
The Tampa Bay Rays have a stadium and attendance issue as well. The current stadium, Tropicana Field, is in St. Petersburg and some fans complain about the location and distance from downtown Tampa to get to the ballpark. The Rays are locked into a lease there until 2027, and the Mayor of St. Petersburg will not allow the team to even discuss other stadium sites outside of the city limits.
The Rays ownership maintains that they need a new stadium to gain increased revenues so that they can stay competitive with other teams. Others believe, myself included, that the stadium is fine and that the real issue is that the current ownership group does not have the money to compete and that they hoard the revenue sharing money they get from the league. The struggling economy is the other issue effecting attendance in that market. The ownership should sell to a new group that has the money to keep the team competitive.
The following cities have the potential to be expansion locations for MLB in the future: (all TV Markets data courtesy of www.stationindex.com all Fortune 500 corporate info courtesy of www.money.cnn.com and all metro area population info courtesy of www.census.gov )
- Sacramento, CA – location in Northern California is an asset that could be used by MLB and the A’s to relocate the A’s or expand the league.
TV Market Rank: 20
Metro Area Population: 27
Fortune 500 Companies: 0 (several large companies in area)
Synopsis/Outlook: Sacramento has several positives for an expansion bid including a very good TV market ranking, strong metropolitan population ranking, and demographically it is a very diverse city. Baseball has fans across the spectrum of ethnic groups so that is a big positive. It could be a solution to the before mentioned A’s situation as it is a 90 minute drive from the Bay Area. The city has only one major professional team, the Kings of the NBA, so the corporate sponsorship dollars would not be spread among multiple major teams. The stadium situation would entail renovating and expanding a very nice facility they currently have for their AAA team, Raley Field, which was constructed in 2000.
- Portland, OR – A good strategic location in the Northwest, and a previous contender for MLB expansion, but the bid could have some issues.
TV Market Rank: 22
Metro Population Rank: 24
Fortune 500 Companies: 2
Synopsis/Outlook: Portland has been in the running for an MLB expansion/relocated team in the past, most recently losing out to Washington, D.C. when MLB relocated the Montreal Expos. After they lost that bid, the city decided to not fight the relocation of their current minor league baseball team which moved to Arizona. The city government then converted the baseball stadium to a soccer specific stadium in an ultimately successful bid to land a Major League Soccer franchise (the Timbers began play in 2009). The city has one other pro team, the NBA’s Trailblazers, and the fan support is very good. They would have a regional rival with Seattle, though the two cities are further apart than most people think: they are the approximate distance between New York City and Baltimore. The question would be whether the population base can support another team over the long term, the corporate sponsorships are more limited than in other cities, and the biggest issue with the bid is a stadium. Now that the other stadium was converted for soccer, a new stadium for baseball would need to be built. The climate there has several days of rain in the MLB part of the calendar, so a retractable roof could be a needed element for a winning expansion bid which is very expensive. I do not believe the political or public will is there to approve money for use in a stadium construction project. Unless that issue is resolved, Portland is an unlikely choice for an expansion team.
- Nashville, TN – An interesting contender in a city that is experiencing growth and is located in an area where MLB has a limited presence.
TV Markets Rank: 29
Metro Population Rank: 36
Fortune 500 Companies: 3 (along with numerous large corporations)
Synopsis/Outlook: Nashville is experiencing tremendous growth and would be an intriguing bid for an MLB expansion franchise. The issues here though are the population rank is still a bit low when compared to other cities, and the stadium is a big problem. The AAA team in Nashville plays in a very old stadium, so a new facility would definitely need to be built for an MLB team to play there. It is unclear whether the state and county government would support a stadium referendum, and whether the public would divert tax dollars to that endeavor. Due to the high tourism there for music, they could use the model of Atlanta and other cities and approve new tourism and hotel room taxes to cover the outlay of the public contribution to finance a new stadium. They do have several sites under consideration for a new AAA facility at this time, land is not an issue. The city supports two major sports teams at this point (NFL’s Titans and NHL’s Predators) and the corporate sponsorship support should definitely be robust. They would have regional rivals with Atlanta and Cincinnati if they were in the National League. It is an interesting potential bid but much of it would depend on the viability of the stadium being constructed and if MLB feels the population could support the team over the long haul. Ownership groups could be an issue here as well.
- Charlotte, NC – This is also a very interesting potential site for MLB, it fills a void in their current franchise makeup between the D.C. area and Atlanta in a growth region in the Southeast.
TV Market Rank: 25
Metro Population Rank: 23
Fortune 500 Companies: 11 (plus numerous Fortune 1000 companies)
Synopsis/Outlook: Charlotte is an excellent potential contender for MLB expansion. The city is in the Top 20 fastest growing metro areas in the U.S. and it is the second largest financial center (next to New York) in the country. The population demographics, the TV market in the top 25, and the immense corporate sponsorship support potential are very attractive attributes for a Charlotte bid. The city is just finishing construction of a brand new baseball stadium for the AAA Charlotte Knights which will open in April 2014 (www.charlotteknightsuptown.com). The city supports two major sports teams and could definitely support a third team. The stadium would need to be expanded and renovated to MLB standards but the political support would be there and corporate support as well. I see it as a great fit for an American League expansion city with so many transplanted people from the Northeast living in Charlotte. A berth in the AL East would bring the Yankees and Red Sox in regularly which would create tremendous attendance nights for an expansion team, similar to the effect it had initially with the Tampa Bay Rays drawing very well on nights where those teams visited.
- Montreal – The MLB bid to potentially return to this city in Canada is interesting.
Synopsis/ Outlook: The other market data is not applicable in Canada so I will summarize this bid quickly because it is an outside choice, but it has been discussed within MLB as some media outlets have reported. The strong points for a Montreal bid are: population size in line with Portland and Charlotte, a built in fan base with the former Expos fans, a history to jump start the “new” Expos franchise, and strong corporate support potential. The downsides are the media rights deal locally would be smaller than a U.S. based expansion team, the right ownership group might be an obstacle, and the stadium: Olympic Stadium was constantly being renovated when the Expos played there. It will be next to impossible to get funding for a new stadium but it may be cheaper than overhauling Olympic Stadium to get it to current MLB standards. The other sign that MLB is testing the waters in Montreal: the Toronto Blue Jays are going to play exhibition games there in 2014 at Olympic Stadium (www.mlb.com).
- Hartford, CT – Intriguing location between New York City and Boston but too many issues to be a real contender.
TV Market Rank: 30
Metro Population Rank: 46
Fortune 500 Companies: 4
Synopsis/Outlook: Hartford has been mentioned in other sources I researched as a potential candidate for MLB because of the location and TV market size. The city is the insurance capital of the U.S. and corporate support would be robust since this MLB team would be the lone major league team in the city. The population demographics are small by MLB standards but the fans would be baseball savvy due to the Northeast region being very strong in that regard. The city has no stadium for baseball and would have to build one which would be difficult in the economic climate today, plus the right ownership group is problematic. This bid is a long shot.
- San Antonio – A city that has been mentioned often as a relocation potential location when the Marlins had stadium issues. A growth area both economically and demographically.
TV Market Rank: 37
Metro Population Rank: 25
Fortune 500 Companies: 5
Synopsis/Outlook: San Antonio is the second largest city in the country without another major sports team, and is the largest city in the country without an AAA or MLB team (www.census.gov). However, the biggest issue they have they have is the small population of their metro area. San Antonio has almost no suburbs, so the population is packed within the city limits. The TV market rank is not great either, and they have one major sports team (NBA’s Spurs) which receive excellent fan support, but it is well known that when the Spurs play on national telecasts that the ratings suffer. The economic growth and the corporate support would be strong points for a bid, they would have no issue getting an ownership group together. The government support is excellent as they were very willing to put up funding for a new stadium, which would be absolutely critical, since the baseball stadium for the AA Missions is not suitable even as a temporary home. San Antonio served as the “stalking horse” by the Marlins to get a new stadium built in Miami. One last interesting note, the Texas Rangers played two exhibition games at the Alamo Dome in San Antonio in 2013 (www.espn.com). The dimensions were strange because the dome was built for football, but it could prove to be a useful experiment should the dome have to serve as a temporary home for an expansion team.
- New Jersey – A very interesting potential target for MLB. It is a longshot but it is potentially plausible given the right ownership group.
TV Market Rank: 1
Metro Population Rank: 1
Fortune 500 Companies: 21
Synopsis/ Outlook: The New Jersey bid is a stretch because of the anti-trust exemptions which place it within the territory of the Yankees and Mets. However, an exception to that rule was worked out when the Nationals moved to D.C. which was within the Baltimore Orioles territory. MLB did a study in the year 2000 which concluded that New Jersey was the top expansion location because of the population, the TV markets, the revenue from cable television to broadcast games, and the population size. The government would be very willing to partner on building a stadium in Northern New Jersey, and the right ownership group would be needed to pay an extra fee to the Yankees and Mets for territorial rights infringement up to estimates of $100 million. That would be on top of the expansion entry fee, but the cable networks could pay a huge sum of money to televise games for a third team in the New York metro area.
The next article in this series will be much shorter in length as it will cover the expansion potential of the NFL, which does not have many viable avenues for expansion.