David Fettig - Editor
Published January 1, 1994 | January 1994 issue
In Connecticut, the state Legislature wants to spend $252 million dollars to build a football stadium hoping that Hartford might someday lure a professional franchise.
In New York, city and state officials may float $1 billion in bonds to keep baseball's Yankees in the Big Apple.
In Minnesota, residents are told that the future of the Minnesota Timberwolves and the return of a National Hockey League franchise are contingent on their willingness to invest up to $100 million.
Those large expenditures for major league sports often generate the big headlines, but a similar rush for minor league sports franchisesknown as secondary sportsis occurring on a smaller scale in the Ninth District.
Just two years ago, a baseball fan had to drive over 800 miles west of Minneapolis to catch the next available professional game in the Ninth Districtin Billings, Mont. If all goes as planned, by this summer, there will be 20 venues for professional baseball in the district, not to mention the Minnesota Twins.
And the Timberwolves aren't the only professional basketball team in the region. The past decade has seen the arrival of the Continental Basketball Association (CBA) in five Ninth District cities. And the league hopes to add new franchises in the area in coming years: Bismarck, N.D., will host a CBA tournament this spring to help gauge the city's support for a possible franchise.
Professional football is also leaving its mark on the district, although not with the addition of new franchises. Summer training camps have become important for university towns in the district, and competition among potential sites has intensified in recent years, especially in Wisconsin.
Of professional sports, hockey in the Ninth District has been most notable for its failures. Not only did the Twin Cities lose the North Stars at the big league level, but three smaller district cities and St. Paul also lost secondary hockey teams when the American Hockey Association started and folded in just three months during the 1992-93 season. However, the International Hockey League will enter the Twin Cities for the 1994-95 season and is expected to play at the St. Paul Civic Center, with some dates in Minneapolis.
To lure a sports franchise, the district's mid-sized communities have been willing to spend tax revenues or issue bonds, often with uncertain expectations of economic return. Most often, though, the expenditures are small and the community hopes to cash in on such quality-of-life benefits as civic pride, increased family entertainment and the chance to burnish a town's image for tourist and convention promotions.
Arthur Johnson, professor of political science at the University of Maryland Baltimore County, doesn't mince words about the proposed economic impact of minor league baseball on a community: "There is no evidence that a minor league team, especially at the lower levels of competition, has a significant economic impact," he wrote in the November 1991 Economic Development Quarterly. In an interview, Johnson, who has written extensively on sports and public policy, says the same is true of other secondary sports like basketball and hockey. (Studies of major league sports have reached similar conclusions, he notes.)
The conventional wisdom that a sports team has significant economic impact is balanced by the reality that most sports-related jobs are seasonal and low-wage, Johnson says, and most spending on sports teams is just a transfer from other entertainment options. For example, $10 spent on a baseball ticket is not $10 that was created for that event, it is $10 less for the local movie theater; and $20 spent at a restaurant near a stadium is $20 less for one at the other end of town. The only new spending is that which comes from outside the community's normal retail market, and most secondary sports aren't big enough attractions to draw significant numbers from great distances, he says. Also, public costs, such as stadium renovation and infrastructure improvements, are often incurred.
Besides, Johnson says, what is often overlooked during such debates is that many people are not sports fans, so who is subsidizing whom? A 1989 Harris poll shows that eight of 10 Americans don't follow hockey, about six of 10 don't follow basketball, half aren't baseball fans and four out of 10 don't care for football. Could public funds be better used on schools, roads or to create higher-paying jobs?
The problem, then, especially for cities committing public funds, is how to calculate the economic impact of a sports franchise. It isn't easy, say Robert A. Baade and Richard F. Dye, professors of economics at Lake Forest College in Kentucky. "This information is extremely difficult to obtain ... and the common technique is to proceed by making assumptions about the sources and uses of spending," Baade and Dye write in the spring 1990 issue of Growth and Change. "Not surprisingly, those who get the greatest impact of stadiums on local economies assume that all the initial spending is a net increase in local spending ... and all the respending stays inside the area."
In other words, cities employ multipliers, those oft-quoted, much- debated figures which assume that for every $1 spent at an event, x amount of additional spending and output is generated. For example, in Sioux Falls, S.D., the Parks and Recreation Department, which spent about $950,000 to renovate its baseball field for the Canaries of the Northern League, estimates an economic return of $2 million for each three-month season, according to a report from the team; while the city's $1.5 million investment in its basketball arena for its CBA team, the Skyforce, brings in anywhere from $2.5 million to almost $9 million during its five-month season.
The Skyforce's figures are based on an operating budget of $1.25 million and on multipliers ranging from two to seven, with the larger number representing spending from outside sources, according to the Maryland Economic Impact Plan, the model used by the team to calculate its economic impact.
William Colclough, associate dean and director of the University of Wisconsin-La Crosse's MBA program, who wrote a paper two years ago on the economic impact of building a minor league stadium, has doubts about such a high multiplier. "Multipliers of six or seven are overstated," he says.
For his paper, Colclough used multipliers lower than two, as suggested by the Bureau of Economic Analysis, U.S. Department of Commerce. "The actual level is something that's much debated," he says, with proponents sometimes overstating benefits and opponents perhaps undercutting real benefits. People get passionate about sports and taxes, says Colclough, who maintained a neutral tone in his paper. "It becomes a delicate issue, to say the least."
But that doesn't mean cities shouldn't seek franchises, says the University of Maryland's Johnson. Indeed, he says that the main criteria should not necessarily be the bottom-line considerations of cost and revenue project, but rather the related benefits of such a project. Johnson stresses the need for a "development logic" when a community considers building or improving an athletic site.
Community image, civic pride, increased use of the stadium or arena for other events, and expanded recreational and entertainment opportunities, are what should drive a city to pursue a sports franchise, according to Johnson. "A stadium must be part of a larger development plan," he says. For example, some communities have used sports facilities to attract people to an otherwise neglected area, usually in or near a downtown.
However, Baade and Dye of Lake Forest College warn that often attempts to encourage outlying residents to visit a stadium's neighborhood can backfire. Building stadiums near highways, at the edges of a downtown, with easy ingress and egress, for example, may lure people to the area, but it doesn't necessarily encourage spectators to spend extra time and money in the city. Rather, such efforts may simply allow spectators to get into and out of the city as quickly as possible.
That's not a concern in Sioux Falls. The city had a development plan in mind when it decided to improve the baseball and basketball facilities, according to Patrick Davis, special events director for the Sioux Falls Convention and Visitors Bureau. Because of the improvements to the baseball field, for example, the state amateur baseball tournament visited Sioux Falls, and other local amateur teams have also benefited from the improvements, Davis says.
As for Sioux Falls's basketball arena, a new 125,000-square-foot convention center that is attached to the arenaand was approved by the votersopened this fall. In addition, the arena and convention center are located near the baseball field and the local football field on the north side of town, which is also near the airport. This "special events area," as Davis calls it, has attracted new hotels, restaurants and retail stores, he says.
While no city official interviewed for these stories has suggested that a company would make a location decision based on the presence of professional sports teams, those officials say the teams still enhance a community's image. Sioux Falls, like other cities, promotes its professional sports teams to convention planners and tour groups as another entertainment option. The teams themselves become a form of advertisement for their communities when they visit other cities and receive media attention.
"Nobody's going to argue against the intangibles," says the University of Wisconsin's Colclough. "But you can't put a dollar figure on that. It's difficult to associate dollars with a sense of community."