Sports round up

1.  Is the move of the University of Maryland to the Big Ten sports league an indicator of broader changes, a sign that Maryland the state is no longer part of the south?  The Post had a piece, "Coach K says Maryland will be 'outsiders' in the Big Ten," about this. From the article:

This discussion came on Krzyzewski’s SiriusXM radio show, “Basketball and Beyond.” And it followed a news report on the show by Chris Spatola, who argued that Maryland’s decision to leave the ACC was made by men who were relative newcomers to College Park, and thus lacked an appreciation for the tradition of the ACC.

“What Chris brings up is an important aspect of this,” Coach K then said. “A lot of these decisions are based on college presidents, chancellors and athletic directors who do not have a depth of understanding of the tradition of the institutions that they are leading, the athletic programs of the institutions that they are leading. And they’re making what I call current business decisions, without the knowledge of what they’re giving up for what they think they’re going to make.

“If you’re running a business for a long time, you would be interested primarily in what is your brand,” Krzyzewski continued. “For us, we have a good brand at Duke University, but we also have a good brand because we’ve been in the ACC. We benefit from that brand. And people who have gone to school here, played sports here, they are not only Duke people; they’re ACC people.

And when you give that up, what price is that?” he asked. “What does that do? The fact that they’ll never be a Duke-Maryland game again. ... And in Maryland’s case, that’s the only conference they’ve known. And they’re right in the middle of the ACC. And now their fans, they don’t have a place. They’re outsiders. They really are outsiders. What price? What price is paid for that?”

So this makes me assert (and I went to a Big Ten school in Michigan, so it took me years when reading the Washington Post to start thinking University of Maryland when I saw UM in the paper, and not the University of Michigan, and I'd guess that alumni of the University of Minnesota have a similar "problem") that maybe this change is part of a broader trend of Maryland the state and the DC metropolitan area more generally shifting its economic interests more northward, away from the south, and to the Northeast and Midwest.  The ACC is dominated by teams based in the South.  Maybe the South matters less to Maryland going forward?

2.  Some minor league sports teams can be very successful and it's a lot cheaper than paying for a major league team.  Last year, the Washington Times had a great series about the then coach of the Washington Capitals hockey team, Dale Hunter, and his ownership and success in London, Ontario with his junior league hockey team, the London Knights.  ("Hunters turned London Knights into community passion," "Hunters enjoy relative success running junior-league London Knights").

The team gets attention, it's a key element of community building (not unlike how high school football can be in smaller towns, for good and sometimes bad), and they get more than 9,000 patrons per game.

3.  Yes, minor league sports teams can be cheaper, and have local economic impact, albeit much less than the volumes generated by big league teams.  More more recently I read about about the Hershey Bears hockey team, which draws about 9,000 fans.  But considering that the town has a population of 17,000, and therefore draws fans from surrounding communities, that's quite high.  And the team has similar impacts on its community comparable to the London Knights in Ontario.

(Some students did an economic impact study of one game of the Hershey Bears team, which is interesting, The Economic Impact of the Hershey Bears versus WilkesBarre/Scranton Penguins on March 27, 2010.)

I imagine that there are a fair number of similar examples across the country.

This weekend, The Bears are playing in the minor league's version of the Outdoor Classic, outdoor hockey game.  See "Sunday's Outdoor Classic hockey game puts economic spotlight on Hershey Bears as region's wintertime tourism magnet" from the Harrisburg Patriot-News.

It's too bad that to be "big league," cities compete for the top professional teams, not the minor league teams, and the cost by comparison is hundreds of times greater in terms of providing stadiums and arenas.

4.  Getting a big league team is expensive and creates terrible competitions between cities.  For example, now the tug is between Sacramento, which has the basketball team the Kings, and Seattle, which had the Supersonics, which decamped with great success to Oklahoma City, but more recently a hedge fund operator has agreed to build a new arena in Seattle and aims to buy the Kings.  (For citations, check out the coverage in the Seattle Times and the Sacramento Bee.)

And for a brief moment, Virginia Beach was toying with the idea of getting the Kings, and spending more than $200 million on an arena.  But VB had to drop out of the race because their arena building group wasn't ready with a complete proposal in time for the city to request $150 million in funding from the state.  See "Va. Beach mayor says arena project is dead for now" from the Norfolk Virginian-Pilot.

And now counter proposals are arising from groups in Sacramento, committed to keeping the team there, with new proposals for an arena in a different location. See " Sacramento arena at Downtown Plaza now part of Kings courtship" from the Sacramento Bee.

Even so, we are talking big numbers--upwards of $400 million to build an arena and $400 million or so to buy the team.

5.  Congress should step in and forbid the economic competition between cities to land or retain major league teams.  Like with the issues of Los Angeles trying to get a football team (see "Is LA closer to regaining NFL team?" from the San Diego Union-Tribune, which is concerned because of talk that the local team could move to Los Angeles), why don't the leagues just expand (even though it could create a scheduling problem), rather than force this kind of competition between cities?

It's obvious of course why they don't.  Without suc competition between cities, there would be significantly less motivation to provide millions and millions and millions and millions of dollars of public funding to attract and/or retain teams.

For years, I've argued that only Congress could put a stop to this, by passing legislation that puts more requirements on the professional sports leagues to do self funding.  But since Congresspeople sit in the owners boxes and suites when they go to games, that's not likely to ever happen. See the 2006 blog entry, "Baseball, hotdogs, Congress, and misplaced priorities."

At the very least, communities paying towards stadiums and arenas ought to get an imputed ownership interest in the team, so that when it sells, the value provided by the public gets monetized and returned to them.

The way it works now, all the public value that is created is captured by the owner in the price and value of the team as an saleable asset.  (It works similarly by the way, for transit.  All the value of being located by transit is captured by the owners of nearby real estate, without contributing money towards the transit system.)

6. Economic impact of the hockey shutdown. So as much as economists and people like me say that sports teams don't significantly add to the local economy, it's true that businesses located immediately by the arena do benefit. Apparently hockey fans spend the most of any fan base on team-related merchandise. So those sales dropped while hockey was shut down.

And the restaurants in the vicinity of arenas, especially in those places where the arena is the driving force for patronage in the surrounding area ("Hockeytown once more: Biz owners are thrilled" from Crain's Detroit Business) lost a lot of business during the lockout. According to this piece from NBC4, "NHL Lockout Could Cost Some Local Businesses Big Money," the estimated loss is at least $100,000 per game, and for the city, $10,000 in lost tax revenue.

(Small change in a way, which shows that it isn't all that much revenue considering, but it sure matters  for the individual businesses.)

7. ... although there is local economic impact of significance from sports team related spending, even if it just switches spending around from one element in a household's spending to another.  In Maryland state, Peter Franchot says that each playoff game for football teams based in Maryland adds $2.5 million in state tax revenues. (Maybe they could sue the Redskins, based in Landover, Maryland, for losing to Seattle, as the loss was likely due to poor decisionmaking by the coach and lead quarterback, who played hurt, even though the back up quarterback probably could have preserved the lead and the team could have won.)

See "The Redskins and Ravens: Great for taxes" from the Washington Post.