MLB STADIUM MODERNIZATION: IS THERE A BETTER WAY?

PART 3: MLB, NFL COMPARISON; RECOMMENDED CHANGES

By: Jeffrey Schlerf

This series began with a description of Major League Baseball franchises looking to replace or upgrade their ballparks.? Highlighted were the challenges faced in Oakland and Tampa Bay.? How Commissioner Rob Manfred has approached stadium issues in these situations was chronicled.? In addition, a newer MLB lending program for venue construction was summarized.? The second installment of this article looked at the experience of pro football in dealing with venues since the NFL-AFL merger.? For two decades the NFL confronted franchise movement prompted by subpar facilities.? As taxpayer subsidies became increasingly controversial the League began to incrementally support private financing.? At first the NFL’s initiatives were directed at use of the visiting team share of gameday revenue (“VTS”) as a funding source.? Soon its efforts expanded with the adoption of a facilities lending program, which evolved over time and led to a wave of new venues.? Finally, the second part examined the NFL’s process for selecting competing stadium development proposals in Los Angeles and the resultant team relocations. ?This final segment will compare the approaches of the two leagues and provide recommendations on how MLB can improve how it handles stadium modernization.?

Commissioner Visibility:

MLB’s Manfred has made publicized visits to home cities of franchises looking to build a new facility.? During those trips he has spoken in favor of taxpayer funding. ?Since subsidies for sports venues remains a controversial subject, this approach exposes the sport’s leader to criticism. ?This is one example of why these League visits need to be reassessed.?

By way of comparison, NFL Commissioner involvement with stadium issues has at times been significant, albeit for different reasons. Pete Rozelle could hardly avoid the public eye in the 1980s given the League’s legal battle with Al Davis.? Early on his successor Paul Tagliabue was at times in the spotlight in the midst of several relocations and expansions. ?For both men, the circumstances necessitated a public presence. Roger Goodell has enjoyed relative calm on the venue front as teams continue to benefit from NFL lending initiatives, with the exception of how the situation in the LA market was handled. ???

Commissioners in professional sports typically are not beloved figures.? It comes with the territory.? Rob Manfred is no exception.? That said, he should reconsider his public approach with respect to new ballparks.? This recommendation is not made merely to bolster the Commissioner’s image, but rather to actually improve how MLB handles stadium modernization.? As a casual observer it seems that when the heads of the NFL and NBA visit one of their league markets, the image projected is largely as a fan of their sport. They tend to avoid inserting themselves into local issues, especially venue funding.? As does MLB, at league-wide media events in connection with the draft or an all-star or championship game Adam Silver and Roger Goodell do have scheduled public appearances.? However, in these settings Commissioners tend to speak to “big picture” league issues, not local controversies.

Typically in the markets needing a new ballpark or substantial renovations where these MLB “landings” take place public financing has become controversial.? In some instances, such as currently in Kansas City, additional issues like location and small business impact have become hot button topics. Local officials or taxpayer advocacy groups and others are staking out their opposition to a team’s current plans and funding. ?It would be a better practice for the League and its Commissioner to avoid being thrust in the middle of local disputes.? Public comments which appear to be “jawboning” create the perception MLB is siding with a wealthy owner. ?If the Commissioner is viewed as favoring one position, this risks alienating others in the community including MLB’s own fans.?

To be very clear, there is nothing wrong with League representatives visiting home markets.? The question is how to better orchestrate these trips.? They should be “events” involving greater planning and marketing which invite fan participation. ?The occasion might be located at a popular downtown park or other popular area or even planned as a pregame event near an existing ballpark.? The overall theme should be a celebratory “rally” with an optimistic look towards the future. ?A positive message embracing the team, city, MLB and the game of baseball should be conveyed. ?Inclusion of special guests such as current and former players would add to the attraction.? Participation by youth and other community groups – along with local officials - should be encouraged. ?The event’s agenda would include the subject of a new or upgraded stadium and proposed plans.? Those in attendance can be urged to reach out to their elected officials to voice their support for a new venue. ?There will be a risk of protests taking place, which means contingency planning is required.? In any event, the creation of an overall more festive atmosphere is a better option with League visits. ?They should not engender resentment or uncertainty but instead positivity about the MLB team, its home city and hopefully achieving a common goal of an updated local ballpark.? ?

This change in MLB’s approach alone is not enough, but it is a positive step. ?Improving how MLB handles stadium modernization requires multi-faceted change. ?Funding is a critical element.? After all, construction of a sports facility requires substantial sums of money.? The next section advocates for a greater emphasis on MLB’s private financing initiative as a part of the solution.? ??

League Sponsored Private Financing: ?

Professional baseball recently enacted a program to assist teams in funding stadium construction.? Yet, few details are available publicly.? It seems that only MLB insiders who closely follow its business have even general knowledge of the initiative.? There are occasional press releases by the credit rating agency Fitch, but little has come directly from MLB.? The sport’s image can only improve with a greater flow of information so there is a wider awareness of this plan.? ??

From what can be gleaned from research, the overall availability of this financing is modest, with limited usage by teams.? According to a Fitch report, as of last June there was just over $500 million in availability, with only around $100 million in outstanding borrowing.? The program was implemented in 2017, seven years ago.? By comparison, approximately $1 billion had been borrowed by NFL teams over a comparable period of time after G-3 lending began.? During a critical juncture for professional football, twelve different stadium projects benefited from a funding initiative of that scale.? MLB should learn from this example.? ??

Professional baseball is at an important moment, like the NFL was a quarter century ago.?? Until recently at least eight franchises, representing more than one-quarter of league teams, faced uncertainty about replacing or upgrading their ballpark.? Only Brewers and Orioles have formally resolved all or most of their issues.? The apparent solutions reached by A’s and Rays are not yet official, while the situations faced by the Royals, White Sox, Angels and Diamondbacks are far from being settled. Of this group of eight clubs, the outcome for one (the A’s) and potentially a second (the White Sox) will involve a relocation. We can expect more teams will face facility funding challenges in the coming years.? Private financing must be more of a point of emphasis in these situations. ?

Since details of MLB’s program are so limited, it is unclear why usage seems low.? Whether any incentives are offered is not known, but something more is needed to boost participation.? Over the past decade MLB has been willing to expend significant resources to construct or upgrade venues for single-game, special themed events including in Fort Bragg, Williamsport, Iowa (Field of Dreams), Omaha and Birmingham.? The League should be commended for those efforts. ?But there should be an even greater emphasis on financial support for the everyday ballparks of MLB franchises.? Over time the magnitude and participation rate in this League financing initiative should be closer to that of the NFL’s lending program.?

New Approach to Revenue Sharing:

While MLB and the NFL each have revenue sharing regimes, there are distinct differences.? In the NFL, home teams share thirty-four percent of each game’s receipts with the visiting team (as described in Part 2, there are various carveouts).? In MLB, each team contributes forty-eight percent of all of its local revenue for a season to a league pool, which is then reallocated among clubs after adjustments for competitive balance purposes. ?More data along with a detailed description of the intricacies of each league’s system is necessary to make an in depth comparison of the shared local revenue in each league and its relative overall impact. However, from a big picture perspective, “national” revenue (shared equally) is a significantly greater portion of overall revenue in the NFL than is shared “local” revenue. ?National revenue constitutes about two-thirds of total NFL revenue, while in the MLB it is only about one-quarter of the total. ?Therefore, the design of baseball’s local revenue sharing framework is more impactful on the finances of clubs.?

Those differences aside, how each League’s respective revenue sharing system impacts stadium financing is instructive.? ?For the NFL, in the decade before G-3’s adoption there were evolving changes in the calculation of VTS.? Specifically, the League began allowing certain revenue sources to be carved out by the home team if applied to funding ballpark construction.? MLB should consider a similar approach.? Specifically, in computing the forty-eight percent local revenue share to be pooled with other MLB clubs, luxury seating receipts could be excluded if applied towards stadium construction costs.? A change like this would free up an internal income source for financing that would otherwise be taxed by the League, with the added benefit of lessening pressure on public treasuries.? This would require replacing or modifying the League’s current revenue sharing system.?

In calculating shared local revenue, right now MLB franchises can deduct stadium-related expenses including construction costs.? For the latter expense, the “big ticket” item would typically be repayments under a loan – debt service. ?Big market clubs like the Yankees, Dodgers and Cubs who can afford to incur substantial expenditures in building or upgrading their venue in a high cost metropolitan area are able to deduct the significant borrowing costs before arriving at what they owe for shared local revenue.? Such debt repayments might span twenty or even thirty years. On the other hand, lower revenue teams (for instance, Oakland and Tampa Bay), who have had less capacity to privately finance, remain in much older, originally publicly funded stadiums without use of that deduction (or not at anywhere near the same scale as the larger clubs). The net effect of this disparity is that, while obviously larger market franchises do still share significant amounts of revenue, their “wealth transfers” are less than they otherwise would be due to their ability to deduct significant construction debt over an extended period of time.?

An alternative to the current system is exchanging (or reducing) this deduction from calculated local revenue for an income carveout for luxury seat receipts – provided that such receipts are utilized to fund a ballpark’s construction-related costs. This change would more closely mirror what the NFL adopted when that League struggled with outdated stadiums and relocations three decades ago.? Similarly, this framework would incentivize MLB clubs to rely more upon private sources of funding.? Phasing out (or limiting) the current deduction would counteract the aforementioned advantage that wealthier teams with newer or more recently upgraded venues have over smaller market clubs in ever-aging facilities.

Predictably, skeptics will likely argue the change would substitute one advantage in favor of big market clubs for another: that is, these teams already generate significant luxury seat revenue which can serve as a source for funding construction.? By comparison, they would argue, this income for smaller market teams is at a much lower scale even in a newer facility.?How this revamped system might alter the overall net distribution of local revenue among smaller clubs as compared to the current regime is a fair inquiry, and will be addressed below.? ?But it is important to keep in mind this proposal is intended to serve as both an “incentive” and a financing source for clubs.? If such a change alleviates the challenges faced by many MLB clubs – especially smaller market teams - in obtaining sources of funding for new or upgraded ballparks, that alone would be a win.? Modern facilities translate into greater attendance and thereby enhanced overall game day and related revenue.?

How this would impact the parsing out of shared revenue is a complex question.? A substantial amount of data and sophisticated modeling would be needed to make an overall projection of the net effect.? The exercise should be dynamic, looking at not just the short term but also projecting into the future.? It is conceivable that the analysis will lead to the conclusion the change’s net impact would tend to favor larger market franchises (i.e., less revenue on average would be shared with smaller market teams than under the current system which allows a deduction for stadium expenses).? Again, if smaller market clubs are better positioned to construct new venues and thereby increase revenue, that alone would be a very good development.? That said, the purpose of revenue sharing is to maintain competitive balance within the League.? Even if this new approach alleviated chronic venue issues within MLB, it would not eliminate the need to address revenue disparities between teams.? If the change favored big market clubs, adjustments can be made.? For example, there could be an annual maximum for the luxury seat receipt carve out.? Or, only smaller market franchises would be able to fully offset local revenue and larger market teams would be limited to a percentage cap.

One complaint about MLB’s current revenue sharing system actually could favor this proposal.? Detractors point to payee clubs who do not spend the money distributed to them on a higher payroll.? MLB’s Collective Bargaining Agreement requires that teams use “revenue sharing receipts .... in an effort to improve its performance on the field.” ?While the Commissioner has discretion in enforcing that provision, critics argue this requirement should be enforced more vigilantly.? Looking at this from a purely economic perspective, a contrary view is that since the local revenue share is close to fifty percent, there is not sufficient incentive for payee teams to spend more (i.e., their return on that expenditure is too low). ?Naturally that argument does not satisfy critics.?

But besides the potential benefits relating to new stadium construction, the design of this proposed change could act as a middle ground on the touchy subject of small market team spending on payroll.? Through this revenue share carveout for funding construction costs, smaller market clubs get a “tax cut’ - they earn a greater net return from increasing payroll. ?So through greater incentives to privately fund ballpark construction, in theory it should also give a boost player spending.? Economic theory aside, an added design feature could be penalizing smaller market teams for non-compliance with the CBA’s payroll rule by restricting their use of this new local revenue exemption.?

Modifications to revenue sharing require renegotiation of the CBA, which is not an easy exercise.?? And like each of the other recommendations in this article, this change alone is not the elixir for the current stadium challenges faced by various franchises. ?The solution is only through a combination of things, including what is next described.?

League Emphasis on Development Projects:

The trend in professional sports, including in MLB, is towards the construction or improvement of a stadium as part of a larger development project.? Whether the older, iconic Fenway Park or Wrigley Field, or the more recent Braves’ “The Battery Atlanta” mixed use project, clubs look for broader profit opportunities when planning for new or renovated venues. ?The Washington Nationals, their ownership and local officials deserve credit for setting the standard back in 2008 with their multi-use development in DC’s formerly blighted Anacostia area. ?This “destination” concept is what other baseball franchises now strive for when formulating plans for their ballpark.?? ?

Part 1 of this series described how several MLB teams have plans for incorporating a new venue into a larger development.? For the Rays, the ambitious mixed-use Gas Plant District project is probably necessary to gain government support for a new stadium. ?In the case of the Orioles, acquiring development rights for the land adjoining Camden Yards remains a high priority for the franchise.?? While the status of construction of new ballparks for the Royals and White Sox is uncertain at this point, those clubs also envision a mixed use project.? The Angels’ owner’s initial efforts failed, but he sought to acquire that team’s stadium and surrounding land for broader commercial opportunities.? And more recently the Diamondbacks have expressed their desire that lease renewal negotiations include discussion of development rights.?

Commissioner Manfred believes these broad scale economic development projects are the future in MLB.? If expanded profit opportunities for owners, combined with greater tax revenue generation for government, are part of the solution for facility funding, this advocacy makes perfect sense.? The question becomes whether the League can do more to boost this trend. ?

As explained, a source for repayment of the NFL’s G-4 loan is a portion of VTS. ?With a lack of details on MLB’s program it is not known if it has a similar feature with respect to revenue sharing. ?The preceding section did recommend a similar concept by means of a luxury seat income carveout. ??In any event, since the League is encouraging larger, multi-use projects, the standard terms for MLB sponsored loans could conceivably include repayment sources beyond what is traditionally considered local revenue. ?What comes to mind, for instance, is hotel-related revenue generated from opposing team stays at destination developments like the Braves’ Battery Park.? This type of income source is in effect a direct function of a “game day.”? Initially the impact may not be material.? But it could serve as a constructive step – beyond mere Commissioner advocacy of the business strategy - in facilitating team pursuit of these larger projects.??

Setting Stadium Standards:

The most extreme example of an outdated MLB ballpark is Oakland’s Coliseum.? It is unfortunate that in a multi-billion industry a venue can be allowed to decline to this point. ?Today’s baseball fan expects more, as the League recognized at the lower levels of the sport. A few seasons ago MLB orchestrated a major restructuring of Minor League Baseball (MiLB) which included the contraction of forty clubs. Among the stated reasons for change was chronic substandard conditions at certain minor league stadiums.? The remaining MiLB clubs now operate under a licensing arrangement. As teams seek renewal of their license at the end of the term the condition of their facility will be evaluated.? Applying the same underlying policy to its clubs, MLB should create a framework setting standards and performing evaluations of major league ballparks.??

Professional baseball is not alone in facing stadium issues at this point in time.? Notwithstanding the successful initiatives the NFL has adopted in recent decades, within the League are buildings with issues.? Washington’s FedEx Field is typically at or near the bottom of various rankings of League facilities. ?Jacksonville’s owner has been looking to upgrade the team’s three-decades’ old home for a while.? MetLife Stadium is relatively new but the field conditions are often blamed for a seeming high incidence of player injuries (see e.g., Aaron Rodgers in his first game as a Jet).? In the face of these kinds of situations, it does not appear that the NFL sets specific criteria for the overall condition of its buildings or the fields on which players perform.?

Major League Baseball could become a model in professional sports by adopting stadium standards.? After all, the conditions of its minor league ballparks – where untested young players in the developmental stages play - are now evaluated by MLB. ?There are consequences to MiLB clubs if requirements are not met.? It is logical that the big league stadiums of already developed, highly compensated talent should also be required to meet certain criteria.? As such, MLB should develop its own evaluation process, with accountability.? One possibility is a reward-penalty approach involving revenue sharing.? Compliance would mean a team’s benefits under the system are maintained or even improved; the opposite would occur where a ballpark is adjudged subpar and not corrected.??Whatever specifics are collectively bargained, the concept of setting standards for the quality of stadiums and enforcing them is a rational policy which should not be controversial.?MLB could experience significant improvement adopting this kind of policy in combination with other changes. The next section explores a potentially more revolutionary path which could be a real difference maker.?

MLB-Driven Process – Stadium Replacement & Targeting New Markets:

Part 2 of this article described how the NFL adopted a top-down approach to gain entry into the second largest U.S. market and at the same time resolve long festering facility situations for two teams.? The process and outcome were controversial, and led to a casualty and subsequent litigation (St. Louis lost a club and its stadium authority sued the League). ?But it did result in two franchises moving into an impressive state of the art venue in Los Angeles, and another (the Raiders) relocating to a brand new building in the Las Vegas market.? The question now posed is whether MLB in the future should consider more league-orchestrated practices to address intractable stadium issues and fill new markets.? ??

In fact, twenty years ago the League did seize control of a difficult situation involving a struggling Montreal Expos franchise playing in an inadequate venue. ?The process entailed MLB acquiring the team, moving it to Washington DC and soliciting stadium proposals and a buyer.? Although this approach involved just one club (albeit it impacted the nearby Orioles), arguably this was as radical as the NFL’s actions in LA.? In any event, the process was a means to both address a franchise’s venue issues and its overall financial health without contraction (a prospect Bud Selig had raised) as well as enter an attractive open market.?

Several seasons ago Commissioner Manfred began to bring up the subject of future expansion.? That led to speculation about potential markets.? Las Vegas was thought of as an early frontrunner but it appears the A’s will relocate there. Nashville is seen by most as at or near the top of the list of likely candidates. ?Salt Lake City, Montreal, Mexico City, Charlotte, Raleigh, Orlando Austin/San Antonio, Portland and Sacramento are often mentioned.? The Commissioner previously estimated the expansion fee could be as high as $2.2 billion. ?Yet, he stated the stadium situations in Oakland and Tampa Bay needed to be resolved before MLB added any franchises. This position suggested that a failed effort by either team could lead to it moving to a market otherwise targeted for expansion.?

It makes good business sense for the League to adopt contingency planning whereby underperforming markets with an obsolete ballpark might be replaced with cities with promising growth prospects. ?But it also worth exploring how long MLB should wait before driving that change, as well as considering a possible overall framework for handling these scenarios. A second issue to examine is whether league expansion should be put on indefinite hold because of the venue struggles of certain franchises, or looked at independently.?

For the first question, we are reminded of the long festering situations of the A’s and Rays.? It has taken them two decades to arrive at a resolution (it appears).? There are very real economic consequences arising from lengthy delays like this.? Professional baseball is not just a sporting enterprise but also a multi-billion dollar business.? Inadequate stadiums translate into less revenue, to the financial detriment not only of a team but the entire league. Inadequate ballparks impact, among other things, attendance and related game day revenue, sponsorships, merchandise sales and media rights values.? Overall, when conditions become as deplorable as the Oakland Coliseum, MLB’s “brand” is tarnished.? Quite simply, it is not a good business practice for the League to allow these situations to fester.?

MLB needs to change its approach by not just establishing and enforcing stadium standards, but also implementing consequences and enforcing them.? A formal framework would include specific time frames for teams to correct their ballpark issues, and a process overseen by the League if they do not. ?Even if the A’s and Rays have finally found solutions, there will be another wave of franchises seeking new or upgraded venues and MLB should not risk history repeating itself.? Formal procedures like those set forth below should keep that from happening. ?They will also complement baseball’s handling of expansion, which as will be explained should be approached in a more dynamic way.?

A Formalized Stadium Replacement Process.?? A new template would start with subjecting all League facilities to a comprehensive assessment every five years. These inspections would not begin until the fifteenth or twentieth year after a ballpark is constructed or substantially renovated.? After examination the building will receive an overall score.? Those venues with a failing grade will have a set amount of time for remedial action, followed by a reevaluation.? If the venue still does not achieve a passing grade, then the team will have two years to obtain a fully committed plan to build a new stadium (for completion within a set time - perhaps five years).? In addition – and this is important - during that two year window MLB will formally invite facility proposals from other markets.

It is true that this approach would very publicly create the prospect of a franchise relocation. But this official posture would not be so radically different from MLB delaying expansion while waiting to see if a franchise resolves its ballpark issues.? And, in some instances proposals will come from nearby and still within a team’s existing territory, like in the Royal’s current situation where the Kansas state government recently approved funding for a new venue within its borders.? In any event, under this recommended framework at the end of two years a club will submit its preferred stadium plan to MLB for approval. ?If competing bids, the League would give greater deference to a team’s decision to remain within its current market, all other things being equal.? On the other hand, if the only viable proposal came from another city, MLB would authorize the club’s move.? Only under a scenario where a franchise does not come up with any solution might MLB have to revisit its handling of the Expos twenty years ago.?

This type of approach would avoid indefinite periods of uncertainty about a team’s stadium and the attendant negative economic consequences.? It would introduce some competition into the process, but only after a club and its current market are given a fair chance to address their venue’s failings.? Potential new MLB markets, or even nearby locales within a team’s territory, would be given a formal opportunity to showcase their viability.? A related benefit relates to expansion.?

A More Dynamic Approach to Expansion. ?? As a complement to the above process, a new ballpark proposal from a market which is not chosen may make a favorable enough impression to be given serious consideration for the awarding of a new franchise for that area. But change regarding expansion should not stop there.? Baseball can improve its overall handling of this subject, particularly when you consider how long it has been since the League last added any teams.? ?Right now there are markets primed for professional baseball and MLB should capitalize on that reality.?

Besides Las Vegas, where the A’s seem to be headed by the 2028 season, Nashville is ready for a franchise.? Initially that city had one main organizing group, Music City Baseball.? However, former All Star pitcher Dave Stewart broke away to form his own assembly of financial backers.? Competitive bidding for a club is a healthy sign of this city’s prospects.? Nashville is an established sports market as the home to franchises in the NFL, NHL and MLS.? At a minimum, the League should move forward with this one location.?

MLB in the past has added an even number of franchises at one time for scheduling and division balancing. ?But that alone should not be an excuse for further delay in adding at least one team.? It has been twenty-six years since a new club joined professional baseball, a longer period of time than with the three other major U.S. leagues.? In their last expansions the NFL (Brown and Texans) and NHL (Vegas and Seattle) added just one team at a time.? Twenty years ago the NBA added a single franchise, the Charlotte Bobcats. ?Waiting for perfect league symmetry’s sake unnecessarily delays a deserving new market like Nashville from landing a team and among other things deprives MLB owners from sharing a very lucrative fee.?

Besides, there is nothing preventing the League from adding a second city.? There are several viable candidates referenced above. ?At least one, Salt Lake City, appears highly motivated.? That area just added an NHL franchise (through a sale of the Coyotes) to its professional sports team portfolio.? There is a bill pending before Utah’s legislature to fund a new baseball venue.? Whichever markets the League chooses for expansion, just as the proposed framework for failing stadium replacement complements this process, the reverse is true as well. ??Those cities not added under an MLB expansion will be poised the next time to vie for an existing team with a subpar ballpark who is soliciting proposals.?

As with a formalized facility replacement process, under a more robust approach to expansion MLB should encourage bids which contemplate a privately-financed venue.? Granted, it is common for a primary organizing group in a city to be collaborating with government officials on a publicly financed ballpark.? In that scenario a competing proposal involving private funding may be harder to come by.? Nevertheless, a long term objective of the League should be to minimize controversy over taxpayer supported venues by encouraging private financing where it can.

Under the above League-driven approaches, MLB may risk criticism like the NFL experienced with Los Angeles. But under these recommended processes MLB would not be triggering nearly as much change.? The NFL caused two teams to relocate to share a new LA venue, and a third moved to Las Vegas. ?By comparison, where MLB oversees a venue replacement which results in a city losing its club, that would involve one relocation. A fair and open procedure allowing for a sufficient length of time for the process to play out should minimize criticism. ?In an expansion scenario, a league by definition leads the selection of a market – making it a more dynamic process should minimize hard feelings about the outcome.?

This last set of recommendations work in concert and serve several purposes.? First, setting standards and promoting a competitive replacement regime will improve the overall quality of MLB venues.? This result is a better business practice and in the best interests of fans of a sport which faces ongoing challenges in terms of demographics and competition from other forms of sports and entertainment.? Second, to the degree it leads to less reliance on public support and more private funding, all the better it is for baseball’s reputation in the minds of those same taxpayer-fans.? Third, MLB has not added a team for a longer period of time than any other major league in the U.S.? The bellwether sign of health in a sport is growth.? Prioritizing expansion into robust areas is just plain sound economics.?

Conclusion:

Professional baseball’s origins reach back well before other U.S. major sports leagues.? While surpassed in popularity by the NFL, MLB remains closely intertwined with American daily life.? Moreover, decades ago the sport became increasingly popular in other parts of the globe, so that now League rosters are truly international.? Yet, throughout its history MLB has displayed a resistance to change.? Maintenance of a color barrier until after World War II and then the slow integration of professional baseball is the best (and most unfortunate) historical example. That trait persists to this day.? In that context, while the League clearly faces chronic challenges with many of its ballparks, its approach has changed little.? A new way of thinking is necessary.? This article illustrates recent MLB’s actions with regard to this subject, and makes a comparison with how NFL overcame its own stadium issues.? Additionally, it describes how professional baseball appears relatively slow to cultivate new markets.? The combination of outdated facilities and excessive caution regarding growth translate into negative economic consequences for the League and its clubs. ??These factors also impede efforts to improve the demographics of the sport’s fanbase and boost its competitiveness with other sports and forms of entertainment.?

This article’s final installment offers several recommendations on how the League can improve in these areas. ?Official visits by MLB to ballparks, particularly those which need to be replaced or upgraded, can continue.? However, thoughtful planning is needed: these stops should be themed more as a celebration of the League and the sport of baseball in that home city.? The visits should be orchestrated events, marketed to attract fans and engender loyalty with less focus on taxpayer subsidies.? In addition, MLB has a relatively new private funding program in place.? As a starting point, this initiative should be better publicized.? Over time the available financing ought to be increased, and usage encouraged more. ?Further, revenue sharing is another vehicle for positive change. Currently the bigger market clubs, with greater resources for borrowing to fund their stadiums, deduct their relatively large debt service payments from local revenue they otherwise share.? Smaller market clubs more inclined in the past to rely upon public monies (or entrenched in older venues and no longer paying back debt) lack the same advantage.? A shift in the model exchanging (or reducing) this deduction for a carveout of luxury seating receipts used to fund stadium construction is one potential fix. This change would require detailed modeling to determine the overall impact on distributions under the revenue sharing system. That analysis may call for an adjustment or limitation in this carveout based on a team’s market size.? Finally, a very impactful new policy would be the adoption of quality standards together with a formal evaluation and solution-oriented process for replacing failing ballparks.? That framework would incorporate a timetable and open up competitive proposals from other markets if deadlines are not met.? A more dynamic approach would enable MLB to address stadium challenges separately from the question of expansion into new markets, but allow both processes to work in a complementary manner.? The result will be an even better product for fans, and an enhanced business model for franchises and the League.

Copyright? ?? Gibraltar Sports Advisors LLC

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Szymborski, D. (2022, March 8).? MLB’s Competitive Balance Tax is Anything But.? Fangraphs. Retrieved from https://blogs.fangraphs.com/mlbs-competitive-balance-tax-is-anything-but/

washingtontimes.com . (2004, May 28).? District vs N.Va . for the Expos?? Washington Times. Retrieved from https://www.washingtontimes.com/news/2004/may/28/20040528-122606-9369r/

Wells, A. (2021, April 27).? Rob Manfred Says MLB Will Consider Expansion Fees Around $2.2B for New Teams.? Bleacher Report.? Retrieved from https://bleacherreport.com/articles/2941528-rob-manfred-says-mlb-will-consider-expansion-fees-around-22b-for-new-teams

Other sources including from The Athletic, MacroTrends and Sports Media Watch are available upon request.?

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