Benefits Of Minor League Stadiums

Benefits Of Minor League Stadiums

Preferable Methodology. ASF

Third, the minor league baseball context extends the current major league literature to a new and relevant segment of U.S. sports. Although there were several critical, but non- econometric, studies on the potential for minor league teams to affect local economics in the mid-1990’s (Baade & Sanderson, 1997b; Colclough, Daellenbach, & Sherony, 1994; Johnson, 1995; Rosentraub & Swindell, 1991), it is only in recent years that econometric interest in minor

league baseball has begun (e.g. Cebula, Toma, & Carmichael, 2009; Gitter & Rhoads, 2010, 2011; Winfree, 2009) although none of these studies focus on economic impact. In 1997, Baade and Sanderson claimed that econometric analysis of minor league baseball was not possible because of the non-existence of data for small communities. Fortunately, the opposite is now true and data is so freely available, even for small communities, that this research contains all but five minor league teams that played in the U.S. in a 22-year period.

Finally, this research also helps inform the current debate on public funding for minor league stadiums by evaluating the veracity of claims made by stadium proponents. With hundreds of millions of public dollars spent each year on minor league baseball stadiums, the economic effects of teams on communities have important policy implications.

This is the most inclusive and conclusive study on public subsidies in relation to minor league stadiums. It analyzes 269 stadiums (all but 5 teams from 1991 – 2013) with data that has only recently become available. It answers criticism of previous studies because data was not available. It also directly addresses public subsidies and gives a direct comparison to major league stadiums.

Minor League stadiums cause communal benefits. ASF

Arthur T. Johnson, University of Maryland's professor emeritus in the Fishell Department of Bioengineering at the University of Maryland, says Minor League Baseball can be an economic driver for a community if it meets the community's strategic goals.

“If it's going to be a successful economic driver, the location of the stadium is going to be very important,” Johnson said. “Communities have used the stadium to bolster a dying downtown or as part of a redevelopment project or to open new lands for development.”

“It becomes a community forum,” Johnson said.

He said people may travel distances to see a Major League team's spring training games, but they will not for minor league games.

“So you are not going to get 10,000 people a game. They're not going to spill over to the bars and restaurants. A lot will be families that go to the game and then go home,” Johnson said.

He said communities will not get a return dollar-for-dollar on Minor League Baseball.

“That doesn't mean it's not worth it,” Johnson said. “Elected officials should be making decisions whether or not, in their strategic vision for the community, this is going to bring something that meets one of their strategic goals.”

“That's the type of thing that can happen, even in a small community,” Johnson said.

Minor league baseball is major league baseball on a small scale. Teams play shorter seasons in smaller ballparks that tend to be located in smaller cities with lower per capita incomes. Minor league teams have operating budgets that pale in comparison to their major league affiliates, they employ fewer people, the salaries they pay are much smaller, and the jobs are mostly seasonal (Johnson, 1991, 1995). Although major leagues often import over 50% of their total budget from revenue sharing and lucrative national television contracts, the only financial inflows attributable to minor league teams are the player salaries paid by major league affiliates. Even these payments are absent in the case of independent leagues. In addition, the minor leagues have lower levels of media exposure and brand association, decreased league longevity, more frequent team moves, shorter seasons, and lower quality players producing lower quality contests. If the effect of a major league team on income is insignificant or negative, the minor league results should be more so.

In spite of this inauspicious expectation, it is important to note that minor league baseball is not a homogenous product. Affiliated teams should have a more positive effect than independent teams because of higher quality players, stronger history, fewer league and team movements, and the benefits of affiliation in branding, increasing attendance, and generating media exposure. Likewise, within classifications the quality of play, season length, population, substitutes, and longevity in a market are distinctly different. For example, AAA and AA teams benefit from large populations (as a proxy for demand), little competition from MLB, and longer seasons in larger stadiums. Given these conditions, it is expected AAA and AA teams will have the least negative effect while A and rookie teams are expected to have a more negative effect on local per capita income.

Finally, minor league team owners routinely claim that their product is a local leisure activity, not a sporting contest (Johnson, 1995). If this is truly the case, then a comparison to MLB may be less

appropriate than a stand-alone evaluation of the degree to which minor league baseball can generate new visitor spending. (pg. 8-9)
Because there is such a wide variety of Minor Leagues in baseball, and the teams participate on such a small and local scale, the activity is not comparable to the Major Leagues because it lacks the competitive edge that the Majors market on. Moreover, Minor League teams affiliated with Major League teams (meaning they have subsidies; see above) do not move often, and have relatively high turnout and media exposure.
Minor League management causes economic gains. ASF

Agha, Nola. “The Economic Impact of Stadia and Teams: The Case of Minor League Baseball.” Journal of Sports Economics. 14(3) pp. 227 – 252. 2013. https://www.academia.edu/7267312/The_Economic_Impact_of_Stadiums_and_Teams_The_Case_of_Minor_League_Baseball

The results of this research highlight the positive effects of AAA teams, A+ teams, AA

stadiums, and rookie stadiums on local per capita income. The findings also indicate non- positive effects of AA, A, A-, rookie, and independent teams as well as AAA, A+, A, A-, and independent stadiums.

There are several reasons the positive effects are particularly interesting. First, and in contrast to decades of major league results, there are no significant negative effects. All of the significant results are positive. In addition, the a priori expectations based on a thorough conceptual analysis were that all of the results would be negative.

To be clear, teams and stadiums in the majority of classifications have insignificant effects on per capita income. This is consistent with prior major league research. What is unique about the minor league context is that entire leagues of teams at the AAA and A+ levels are, for the first time, reflecting positive changes. Yet, no cost-benefit analysis was conducted so there is no implication that cities should invest in AA or rookie stadiums. What is distinctive about these results is the acknowledgement that perhaps fundamental differences in the business structure of sports can result in dramatic changes in the ability of sports teams to affect their local economies. (pg. 27-28)

Model 2 was run with a more detailed breakdown of affiliated teams to address the differences between classifications. Model 3 tested this further stratification and a Wald test confirmed (p = 0.022) that the distinction between A+, A, and A- was significantly different from zero. Therefore, Model 4 implemented this stratification at both the team and stadium level. Finally, Model 5 added entry and exit honeymoons. Model 5 is the fully specified model and is used for discussion, although the results are strongly similar between the various models. The R-squared value of 0.34 is lower than other similar major league research. But, since R- squared is simply the fraction of unexplained variance in the model, it seems unsurprising that 238 minor league metro areas that range from a AAA metropolis to an Independent village have more natural random unexplained variability than 40 nearly identical major league metro areas.

The first difference of the rate of employment is statistically significant and in the expected direction. The first difference of the percent change in population is negative suggesting, in this case, that the increasing labor supply is lowering wages. Two other control variables, the first differences of stadium capacity and the quality of the major league parent club, are statistically insignificant.

As mentioned in the previous section, although the model was first differenced, the parameter interpretations have not changed. Thus, the mere presence of an AAA franchise is associated with a $67.25 (p = 0.034) increase in per capita incomes, holding all else constant. Similarly, an A+ franchise is associated with a $117.57 (p = 0.044) increase in per capita income. The honeymoon period for stadiums at the AA (160.83, p = 0.033) and rookie level (201.99, p = 0.032) also have significant impacts on per capita income. The entry and exit honeymoon variables are all insignificant. (pg. 17)

Coates and Humphreys (1999) found insignificance for MLB stadium construction and entrance coefficients whereas the minor league coefficients are significant in four instances (see Table 6). The effect size of a minor league team is small, ranging from 0.7% of M[etropolitan]S[tatistical]A[rea] per capita income for a rookie stadium to 0.2% for an AAA team, but is similar to other minor league research (Gitter & Rhoads, 2010; Winfree, 2009) that has also found small but strongly significant effects.

Benefits of Springfield Falcons routine operating expenses, Fj

The local economic benefits derived from routine operating expenses are often overlooked. For example, the Springfield Falcons spend over $150,000 in bus transportation with Peter Pan Bus Lines, a local transportation vendor. The team also retains a variety of local medical providers, including physical therapists, MRI centers, and other sports-related treatment specialists. Baystate Health System, a local hospital network, also enjoys related ancillary benefits, using team endorsements to drive other users to the facility. Additionally, the Falcons spend approximately $150,000 a year on local media buys, or advertisements.

Springfield Falcons impact on local businesses, Fj

According to Mr. Denver, this direct and measurable benefit to the local economy is supplemented by economic spin off in terms of fan-related spending. The Springfield Falcons compete at the recently renovated MassMutual Center in downtown Springfield. On game nights, fans patronize local restaurants and bars. Mr. Denver reports that at Samuel's Sports Bar and Tavern, located one block from the MassMutual Center, business increases by 65 percent on nights when the team plays at home. Mr. Denver also offered the example of a downtown restaurant, The Student Prince, which serves an additional sixty-five to seventy-five meals as a direct result of Springfield Falcons fans being in the downtown area.

Mr. Denver notes that the city itself benefits from game night fan spending. The Springfield Parking Authority (SPA) reports an additional 150 to 375 parked vehicles on nights when the Spring field Falcons play at home. The added revenue generated from forty home-game nights each year contributes to the SPA's ability to pay off its bond obligations.

Visiting teams, Mr. Denver adds, also make important contributions to the local economy. For example, Mr. Denver noted that a local hotel reports that visiting teams book approximately 1,500 room nights at two major downtown hotels in Springfield each season. Visiting players and team officials not only stay in local hotels, but they also eat in local restaurants and rent cars locally.

Lastly, according to Mr. Denver, the team has made a significant economic contribution to the Springfield area through its support of many non-profit agencies. The Springfield Falcons Charities, the team's charitable arm, has donated over $400,000 to the local community in the past ten years.