Sports business update

1.  Women's basketball: do they play in arenas that are too large?  Reading an article recently about how the New York Liberty women's basketball team moved from the very large Madison Square Garden to a much smaller venue in Westchester County made me realize that one of the problems with the WNBA is that because they were created by the very successful NBA and franchises were originally owned by existing men's teams they played in the NBA arenas, which are very large, and created mis-matched expectations for their ability to draw patrons.

-- "The Liberty, in Transition, Make a New Home in the Suburbs," New York Times
-- "The Liberty Try to Make Westchester Feel Like Home," New York Times

Rightsizing the arenas for the patronage that the teams can realistically draw makes sense. And in that same vein, then it makes sense for the new Washington Wizards practice facility to serve as the home court for the Washington Mystics women's team. From the second article:

What constitutes a proper environment for women’s basketball? The Liberty are searching for that answer as they attempt to create a professional sports atmosphere in a facility that has a sliver of the resources and reputation of Madison Square Garden, their previous home. …

When a buyer was not found by February, the Liberty were relocated to Westchester, in a building that is not ideally laid out to accommodate basketball. That is evident from the limited sightlines from the upper deck and from the elevated wooden stage and maroon curtains behind one of the baskets, a platform usually used for concerts or judging local cat shows.

The game-day trek is difficult for longtime fans like Maria Patterson, who bought Liberty ticket plans for 20 of their first 21 seasons. Traveling to the home opener via bus and then Metro North train from Manhattan took Patterson about two hours, including public transportation delays. From Grand Central, the travel time is supposed to be around 35 minutes.

Patterson spent the second half standing in the upper deck because she couldn’t see the entire court from her seat. …

Keia Clarke, the Liberty’s chief operating officer, said one of the reasons Westchester was chosen was that it presented a more feasible long-term business model for the franchise.

“I feel playing in a smaller arena presents us an opportunity,” Clarke said. “Playing in an N.B.A.-sized building is a challenge in itself. Even when we had dynamic nights and it was loud and strong, you get this sense it wasn’t 20,000 people.”

Although it appears that the change for the New York Liberty is not optimal, and is an indicator that the current owner is no longer interested in working for the team's success.

2.  Although where these arenas are placed matters: transportation demand management.  The new Mystics facility is on one subway line, with incredibly poor road connections to the metropolitan area.  And obviously, the Westchester site is poorly located vis a vis the current fanbase for the Liberty women's basketball team.

This is out of sorts with the point made in a recent San Gabriel Valley Tribune article about stadiums, arenas, and other entertainment facilities being placed at transit nodes.  From the article:

More entertainment and sporting venues are starting to be built near train or bus stations or certainly with future public transportation plans and expansions in mind. The all-new Banc of California Stadium, located in Exposition Park next to the Los Angeles Memorial Coliseum, home to the Los Angeles Rams and USC Trojans football teams, is also a short walk away from public transportation with the Los Angeles Metro Expo Line being just a quick venture through the Rose Garden. The Expo Lines can be easily accessed by patrons coming into the Los Angeles Union Station via train.

FivePoint Amphitheatre, the temporary 12,000-capacity venue that opened next to the Orange County Great Park last year, is less than 500 steps from the Irvine station where the Amtrak Pacific Surfliner provides extended hours for concertgoers coming from Los Angeles and San Diego with several other major city stops other stops in between.

“It has been one of our priorities to partner with some of the great destinations and venues along our route,” says Michael Litschi, Amtrak Pacific Surfliner managing deputy. “There are a lot of venues in cities that are extremely walkable from the train stations and we want to offer people a unique experience on the train to get to some of those destinations and to be free of the stress that people experience while they’re stuck in traffic or running late because of traffic.”

By contrast, Madison Square Garden in Manhattan, Barclays Center in Brooklyn, and Capital One Arena in DC are all built on top of high capacity (multi-line) transit stations.

I learned that in Liverpool, Merseyrail, which has a train station within a couple miles of stadiums for both Liverpool and Everton soccer teams, has a special bus service called Soccerbus, which provides connections from the Sandfields station to the respective stadiums.  The bus ticket can be added to a train ticket.

3.  Setting expansion teams up for success instead of failure: the Las Vegas Golden Knights.  Similarly, the success of the Las Vegas Golden Knights hockey expansion team reaching the Stanley Cup finals their very first year communicates something important about "setting up for success" and building fan interest and team financial success.

Mostly, new teams pay massive fees to join a league ("Cost of NHL expansion team goes from $2 million to $500 million," Las Vegas Review-Journal; NHL expanding to Las Vegas, and it only cost $875 million," Harrisburg Patriot-News) and then they get screwed in terms of acquiring decent players at the outset, despite paying hundreds of millions of dollars to join. The attitude was that being able to join such an exclusive group was the prize, and that success would come later, if at all.

This generally consigns the team to years of middling success, making it hard to draw fans and develop a sustainable business in terms of the local audience, although they get "subsidized" by television and other revenues.

In creating the Golden Knights, the National Hockey League created an expansion draft process that protected a limited number of players, roughly 10-12, when teams have a 23-member squad.

This allowed the Golden Knights to draft decent players or create trading opportunities by developing deals to not go after particular players who were still coveted by their teams, but unprotected ("How the Vegas Golden Knights became the best NHL expansion team in 50 years," Toronto Globe & Mail; "How Vegas Golden Knights became a success in first season," Detroit Free Press), no one expected them to go all the way.

Knowledgeable experts also attribute their success to the salary cap, which makes it hard for winning teams to keep all of their core players and teams can't pay the highest salaries to all of their players, they need a mix of lower and higher paid players to get under the cap.

4.  Investing in the experience around attending the game.  The Golden Knights also took special event programming to a new level ("Las Vegas has fallen in love with Golden Knights," Washington Times); "5 reasons Vegas Golden Knights hockey at T Mobile Arena is a must see," AXS), something that other teams may or may not be doing.

The Washington Redskins, which generally have looked at the fans as ATMs and nothing more, have begun to realize that with attendance dropping and their desire to get public funding for a new stadium, that they have to focus on improving the game day experience ("Redskins end their season ticket wait list, which they once claimed had 200,000 names," Washington Post), while teams like the Baltimore Ravens are lowering concession prices ("Can the Baltimore Ravens win back fans with cheaper stadium food?," Post).

Out of my point that by default cities/states that subsidize stadiums and arenas become part of a "public-private partnership," the more that the team alienates fans, the lesser the return on investment received by the locality.  But localities have little leverage with teams, even when providing free financing, tax concessions and other subsidies.

5.  Big tax break for North Carolina professional sports team in the offing?  Teams often get the use of land owned by government for negligible rents.  But they may have to pay property taxes on the value of the land, since it is not being used for a public purpose.  This is pretty typical when governments still own the underlying land but "rent it out" for a for profit use.  But a North Carolina legislator wants to exempt teams from having to pay the property taxes " ("Carolina Panthers, Charlotte Knights could get big tax breaks on land around stadiums," Charlotte Observer).

Matthews Republican Rep. Bill Brawley told fellow lawmakers the team is “paying significant property tax on property they do not own" ...
"We’re saying this is tax-exempt property, leave them alone,” Brawley said in a committee hearing Tuesday. Brawley couldn't be reached for more information Wednesday.

The bill would exempt leaseholds for stadiums. The leaseholds are currently taxed as intangible real property. Intangibles are non-physical assets such as stocks and bonds or, in this case, leaseholds. The state’s intangibles tax was repealed in 1994.

The Knights paid $171,156 last year on the value of the land they lease for BB&T Ballpark, valued at $12.5 million.

Tax records show the Panthers paid $357,166 in 2017 property taxes on the land they lease. Those taxes are separate from the $1.8 million in property taxes the team paid on the value of Bank of America Stadium, a building that the team owns. 

This is typical of the giveaways to professional sports teams.

Yes, they don't own it, but they use it. And property taxes are one of the costs of using property.

6.  Why didn't the Washington Capitals pay for late hours for Metrorail during the playoffs?  Monumental Sports, the firm that owns the Washington Wizards basketball team and the Washington Capitals hockey team is notable for its commitment to transportation demand management, in that they have a standing agreement to pay WMATA to stay open later, if a game goes late.  But apparently this agreement isn't in place for playoffs.

In round 2, Uber sponsored late night service for one game ("Uber to sponsor late|night Metro service Monday for Game 6," WTOP-radio). Comcast paid for Stanley Cup Game 4 extended hours ("Sponsor pays Metro to close later for Stanley Cup game 4," WUSA9). Although the team itself paid for extended hours for the watch party at the Capital One Arena for Game 5 ("Metro partnership with Monumental Sports will keep trains running," WMATA).

Note that the Washington Nationals baseball team refuses to sign a similar agreement, even though they get sweetheart rent on a stadium that cost the public $600 million to build.

7.  WMATA is producing a special Caps MetroCard.  Details.  During the series, a couple of Caps players, T.J. Oshie and Matt Niskanen, rode Metrorail to Game 4

This is pretty smart from a marketing standpoint ("Metro Promises Commemorative SmarTrip Card If Caps Win Cup," NBC4).

Ridership was up because of the games, a watch party when the team played and won Game 5 in Las Vegas, and the subsequent winners parade, for which WMATA was a sponsor ("Capitals winning run helps Metro's image and ridership," WUSA9).

8.  Baseball expansion.  There's talk of expanding Major League Baseball to 32 teams, with teams possibly located in Portland and Montreal, which had a team until 2005, when the team moved to DC ("Expansion Could Trigger Realignment, Longer Postseason," Baseball America).  This could result in a shortening of the regular season to accommodate a longer post-season.

I think it would be cool if Monterrey in Mexico could get a team, but I guess that's not in the cards right now ("MLB expansion? These cities in U.S. and abroad make sense," Sports Illustrated). To me it doesn't make sense to put a team back in a city where baseball already failed. OTOH, the team was owned by a "bad owner," and that can make a difference.