Economic Effect:The Relocation of Professional Sports Teams

Abby BertschDaniel BrodnikRussell BurgettTiffany Arnold

Our Teams…

Opening Day 2005

The Decision to move…

• Major League Baseball in charge of new Location:– Various Virginia suburbs– Portland, Oregan– Arlington, Texas

• Largest advantage –> boost expected for the local economy

Concerns:• Peter Angelos, Baltimore Orioles Owner• Lack of baseball interest from African American’s • may be a factor of the past

• Washington Senators – (1901-1960)•Moved in 1960 & 1972 - What makes Nationals different??worst percentage of any team in Major League Baseball history that played for more than two seasons - including the Expos

• Fear of increased taxes

Where will they play?

• D.C. Mayor, Anthony Williams, helped convince MLB to relocate to Washington D.C. in exchange for the city’s building a new ballpark – 2/3 of D.C. residents - opposed to the new Stadium– Financed through the city – no state or county support

• Much of the fan-base comes from the Maryland & Virginia suburbs

– First 2-3 seasons would be played in RFK stadium• $14 million in renovations

Nationals Park: Opening DayMarch 29, 2008Attendance: Sold out

Economic Effects:

• Expected Totals:

• Over the next 30 years, the stadium is expected to generate $2.5 billion in tax revenue that would not have otherwise been created

Nationals Park vs. RFK•Not only would the development bring in more economic growth, but it would help increase the development rate in the surrounding community.

•Because of the location, it would turn a neglected area, into a thriving one. Surprisingly, each ballpark’s “hard costs” are the same.

Montreal…

•“It almost seems the Expos never left” – Journalist Stephen Ellsesser.• weak baseball fan base in Canada.• Suprisingly, not a large impact on local economy as one might expect

•Attendance totals exceeded the Expos’ 2004 attendance• final attendance for the 2005 season (2,731,993), exceeded the previous three seasons in Montreal combined, and was 11th in all of MLB.

Positives:

The Charlotte Hornets: 1988 – 2002• Strong Early Interest

• Basketball Hotbed

• Cornered Market

• Faltering Record

• Wavering Attendance

• Failure

New Orleans

• A City waiting

• $84 Million stadium

• $40 Million contract

Tragedy

• Hurricane Barrage

• Expensive Move

•Shrinking City 500,000 to 158,000

Cleveland Browns

Cleveland Browns Move to Baltimore

• 1995: Art Modell’s announcement• City of Cleveland vs. Art Modell & the NFL• Unique compromise– Move the team to Baltimore– But unable to take the Browns history

• Baltimore considered new team• Cleveland received a new franchise

Cleveland Browns Move to Baltimore

• Cleveland’s uproar from the Browns departure– Fans & Businesses

• Advertisements & promotions were cancelled– Papa John’s Pizza pulled radio advertisements and

promotions that would have provided $50,000 to the Browns

• Estimated that the Browns generate $47 million in economic activity

Cleveland Browns Move to Baltimore

• Nonlocal fans spend on average $43.95 in restaurants

• Browns games brought in 4,700 visiting fans and 65,000 local fans in 1994

• Overall, quite a large economic impact on the city of Cleveland

Cleveland Browns Move to Baltimore

• Impact on Baltimore:– Browns would generate $54 million in direct

economic impact– Off-site direct spending, including retail and

restaurant sales, would reach $21 million

Cleveland Browns Return

• Cleveland Browns Stadium – Groundbreaking on May 15, 1997– Cost of Construction: $283 million• Cost to the public: $212 million

• 1999 Browns return to Cleveland

The Creation of a Franchise

• The city of Phoenix grew from 99th to 9th largest

• Since 1946, Arizona has housed many spring training teams

Early Attempts

• First attempt by Elyse Doherty and Martin Stone

• 1980 approached St. Louis Cardinals owner about sharing a stadium

• Deal failed, and Stone’s bid was effectively ended

Arizona Baseball, Inc.

• Started in 1993 by Jerry Colangelo• Received support from Chicago Bulls, Chicago

White Sox, Milwaukee Brewers• March 9, 1995 awarded a franchise to begin

play at a fee of $130 million

Arizona Diamondbacks

• 20th most valuable team• Value has increased 12% over the last year• Revenues exceeding $164 million• Total value of $379

4 Valuation Categories

• Sport valuation• Market valuation• Stadium valuation• Brand management

Conclusion… Studies have shown that when franchises are brought into a town, there is a direct economic impact on the surrounding area. This includes the creation of jobs, increased tax revenues; an overall increase in the state of the economy can be increased with visitor team spending and with fan spending outside the park.