Term Paper on "Baseball Facilities"

Term Paper 9 pages (2885 words) Sources: 1+

[EXCERPT] . . . .

Baseball Teams and Facilities on Neighborhood Economies new ball park represents an investment in the future. It becomes a matter of good business practice. A state-of-the-art facility reflects a community's confidence in its potential. Cities want to be regarded as big league or first class. It is a matter of pride. Major league baseball remains a significant factor in the quality-of-life equation. No community today wants to lose a franchise. It would send the wrong message to business and industry that might have an interest in it. -- Gene Budig, American League President, 1999

The epigram above is reflective of just how important baseball is to the American economy and its culture. Professional baseball in general has experienced some difficult times in recent years, with fan attendance being adversely affected by skyrocketing ticket and concession prices and repeated strikes by players who already enjoy exorbitant salaries. Nevertheless, the sport of baseball remains America's pastime, and studies have shown time and again that there are a wide range of benefits to be gained whenever a community makes an investment in bringing a baseball team and their associated facilities to their neighborhood. To this end, this paper provides an overview of the rationale for communities wanting baseball teams and their facilities in their neighborhood, followed by an analysis of some typical examples from recent years. A discussion of current and future trends in the impact of baseball teams and their facilities on neighborhood economies will be followed by a summary of the research in the conclusion.

Review and Discussion

Background and Overview. According to Rich (2000), today, the United States is the unrivaled center of a multi-billion-dollar sports business. "The transmutation of sports into a billion-dollar business is one of the true epics of American capitalism. Professional athletes can now make millions of dollars playing a game they learned as a child. They are performing in stadiums that would be the envy of the ancient Greeks and Romans" (1). Many of the newer sports facilities go far beyond the traditional concepts, and now comprise mini-cities that feature a wide range of activities besides merely watching the ball game. In fact, Rich points out that these new stadiums are a signature of their host cities, but it seems no one is satisfied yet. "Even as these stadiums are getting bigger and fancier, no one associated with professional sports seems to be satisfied. Cities are now competing with each other to build elaborate and more expensive stadiums and arenas. These structures are monuments to the centrality of sports in American culture and to how wealth is expressed through sports" (1).

There are a number of other indications of the continuing popularity of sports and those who play them as well. "Since the beginning of the twentieth century," Guthrie and Jozsa report, "sports have assumed a growing role in American culture" (3). Millions of Americans watch and listen to daily broadcasts of baseball games and their results, as well as the minutiae involved in the sport. Millions of other fans enjoy their weekly games at ballparks located in cities, towns, and suburbs across North America (Guthrie & Jozsa 1999). Other examples include America's fascination with sports figures and their peccadilloes that continue to dominate American headlines, and a more recent trend has avid fans discussing a vast array of sports topics on talk radio and prime-time television programs. "Even minute changes in the operation and ownership of teams receive top billing in the press. Small wonder then, that reporters, analysts, and scholars contribute to the popularity of sports and stimulate the public's seemingly insatiable appetite for information concerning the conduct and decisions of athletes, team owners, and league officials" (Guthrie & Jozsa 1999:3). Based on the above, it is little wonder that there is such a prevailing spirit of "build it and they will come" dominating the American landscape today. "If new stadiums and arenas have economic value -- and I believe they do -- the market will see that they are built" (Keating 1997:55). As it turns out, though, there are some very good reasons for a community wanting a baseball team besides its popularity rating; these are discussed further below.

Sports Team Facility Financing: Is it Worth the Taxpayers' Money? The manner in which the sports facilities have been financed in the United States has been highly varied, but of the thirty National Football League (NFL) teams, for example, twenty-seven play in publicly owned stadiums. "This paradox of a privately owned enterprise that is subsidized by taxpayers will most likely continue" (Rich 2000:1). It will likely continue because not only is there a lot of money to be made, Americans love sports - especially baseball -- and probably always will. In fact, even the critics of taxpayer-financed baseball stadiums admit that there is much to be gained if a community approaches the project right: "Indeed, prior to the 1960s, privately built and owned facilities were the rule. In 1950, just one major-league baseball park was government-owned. Today, only seven ballparks are privately owned, and even some of those received government subsidies" (Keating 1997:54).

Because there is a lot of money involved in enticing a professional or amateur sports team to relocate to a community, it is important to identify what is at stake before community leaders will be able to make an intelligent decision as to whether such an appropriate is appropriate for their unique requirements. Certainly, beyond the added prestige that a winning professional (or amateur) baseball team brings to a community, there are also some sound business reasons for a municipality to want a baseball team and their associated facilities located in their neighborhoods. The willingness of some cities to subsidize sports facilities was clearly reflected in the campaign slogan for a new stadium for the San Francisco 49 ers: "Build the Stadium -- Create the Jobs!" (Noll & Zimbalist 1997:35). The proponents of locating baseball teams and facilities in local communities point to four primary reasons for doing so:

1) Simply building the facility creates new construction jobs;

2) There is a significant positive impact associated with sporting events and the people who attend games or work for the team will generate new spending in the community, thereby helping local employment;

3) a baseball team can help attracts tourists and businesses to the host city, further increasing local spending and jobs;

4) the total of this increased new spending has a "multiplier effect" as this additional local income causes still more new spending and further job creation. According to Kelly and Shropshire, the multiplier effect is a figure that represents the number of times that a single dollar spent in a specific geographic area will be spent again or "rolled over" in that same area.

The multiplier effect model assumes that subsequent recipients of the initial dollar are somewhat more likely to spend it again in that same region than elsewhere. Consequently, the more spending that occurs, the more employment and other economic measures improve, thus increasing the value of the indirect impact. The multipliers are usually developed through statistical estimates based on annual state and regional employment changes; the multipliers used in the past to calculate indirect economic benefit have ranged widely from approximately 1.5 to 3.2 (Kelly & Shropshire 1995).

The proponents of baseball teams and their associated facilities therefore maintain that these initiatives inevitably result in a sufficient amount of economic growth for the community that they are virtually self-financing; the initial subsidies for these incentive programs are later offset by revenues from ticket taxes, sales taxes on concessions and other spending outside the stadium, as well as additional property tax increases resulting from the stadium's economic impact (Noll & Zimbalist 1997). According to Gene Budig, president of the American League, "A new ballpark means security for many working men and women. It provides needed jobs and has a direct impact on the local economy. Major league baseball means millions of dollars for its member communities" (in Rosentraub 1999:130). Although estimates vary from region to region, most baseball clubs place their economic impact at well over $200 million a year. Budig suggests that, "This, in fact, is a conservative number" (in Rosentraub 130). The direct benefits of locating a baseball team in a community include revenue from stadium rent, concessions, parking, advertising, and luxury boxes. "Indirect economic benefit is determined by estimating the indirect impact of those direct revenues on the geographic region" (Kelly & Shropshire 1995:14). According to Chapin (1999), Seattle, Detroit, Washington, DC, and a number of other cities throughout the country can attest firsthand as to the economic benefits of sports teams. Most American cities have invested heavily in large, recreation-oriented projects, including sports facilities; these initiatives are designed to bring millions of visitors into their cities. "This activity drives the economy with spin-off businesses in the form of restaurants and retail stores. In addition, it usually brings vitality back to districts that were perceived as unsafe after dark just a few… READ MORE

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