Posted by John Vrooman on Thursday, February 1, 2018 in Major League Baseball.

Interview with AL.com.

Plenty has been written about and discussed on how relocations are often not a bad thing for the losing cities, but what about minor league relocations? Are these often a bad deal for the winning cities because of the expectations of economic development and synergy that supposedly accompanies a new stadium? Or, should losing a minor league baseball team be considered a psychological loss for the city losing the team – especially if that city is considered a major metropolitan area?

The economic spread or multiplier effects for sports venues at any level are usually exaggerated by local suburban satellite city politicians and team owners/developers because they are the ones who enjoy the benefits without bearing the costs. 

So the good news and the bad news are usually the same: if the positive spinoffs of attracting a team for Madison/Huntsville are negligible in the end then the negative effects of losing one for Mobile are too. South Alabama and Mobile will be fine without the BayBears.

Ironically, the only real impact of attracting or losing a sports franchise at any level (including AA) is an intangible “water-cooler effect” of networking sports throughout the respective communities.

Although sports venues are historically bad anchors for economic development, there may be some positive synergies with surrounding private development. But that creates the fundamental asymmetric equity distribution problem. The City of Madison gets stuck with the $50 million stadium bill, while most of economic spinoffs go to the private developers of Town Madison and/or owners of the minor league club, or they are simply dissipated throughout the greater Huntsville economy.

In the end, successful private developers usually internalize almost all of the synergistic gains derived from their developments. That’s what they do.

It is altogether likely that the economic development impact of the larger retail and commercial development of Town Madison will have a greater impact than the ballpark itself, with or without a ballpark that will be used at capacity less than 70 times a year.

The mechanics of the franchise-relocation venue-extortion game are basically the same at the major league or minor league level. The monopoly driven relocation gambit in the quasi-public funding of professional sports venues is like an unstable game of musical chairs, where there are always more empty markets than there are available clubs.

Professional sports leagues maximize the public subsidization of a largely private business by pitting potential markets against one another (Mobile v. Huntsville v. Savannah v. Baton Rouge) and the winners curse is to systematically over-subsidize in order to win. In the advanced stages, the relocation–extortion game usually plays satellite suburban cities of larger markets against one another because the political outcomes are easier to manipulate and control.

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Follow-up

Most of the academic studies on relocation and stadium extortion are at the major league level. The classic reference is this a book by these sports economists:

https://www.brookings.edu/articles/sports-jobs-taxes-are-new-stadiums-worth-the-cost/

but it is now 30 years old. The book includes a good analysis of minor leagues:

Baade, R. A., & Sanderson, A. R. (1997b). Minor league teams and communities. In R. Noll & A. Zimbalist (Eds.), Sports, jobs and taxes: The economic impact of sports teams and stadiums (pp. 452-493). Washington, DC: Brookings Institution.

But it is hard to find .

There is a more recent study that claims to show that minor league teams and stadiums have modest positive economic effects, but that is because minor league teams are usually situated in mid-markets that have naturally higher growth rate than larger MLB markets anyway.

The problem with these results (other than methodological) is that even modest positive effects are outweighed by the negative stadium costs.

The overall multiplier (big private bang for the public buck) effects of sports venues are usually negative sum, or positive sum at best, particularly when you consider the asymmetric redistribution of the cost-benefit effects of stadium subsidies—especially at the minor-league mid-market level of Mobile and Huntsville/Madison.

The floating relocation stadium extortion game in minor league baseball is constantly in circular motion. If Mobile wants a replacement franchise one will soon become available—but for a considerably higher price. That is the no-win nature of dealing with the monopoly cartels of professional sports leagues.

V