The Health of Minor League Baseball

Earlier this week, McHenry County Blog re-printed academician Richard Vedder’s comments on how McHenry County College’s push for a minor league baseball stadium might be a leading indicator that community colleges were losing their way.

Today begins a two-part series on what others have learned about minor league baseball teams and stadiums.

The following is adapted from an email received by McHenry County Blog:

McHenry County College Officials are telling taxpayers that the baseball stadium will pay for itself along with a portion of the Health and Wellness Center.

If not, why would they need the stadium?

And it won’t cost taxpayers anything. That’s what college officials are telling the public.

In 2002, according to CFO.com article, “Diamonds in the Rough,” Minor League Baseball president Mike Moore warned his colleagues that “this industry is headed down a road of potential self-destruction if changes are not made.”

“Cash calls, reorganizations, and distress-type sales are not signs of a stable situation,” Pat O’Conner, COO of Minor League Baseball continued. “The popularity of the minor leagues has introduced new owners, more-complex financing, and a new level of risk that the traditional world of baseball views with a mix of awe and concern.”

And this isn’t the only story:

Investing in minor league ball is risky.

This topic has been covered extensively in the media.

And it’s been covered extensively in academic journals as well.

In 2004 the “Journal of the American Planning Association,” published a meta-analysis finding,

“Almost all of the existing literature concludes that these projects are poor investments, unworthy of public sector efforts and dollars.”

Indeed, scholarly studies by Review of Policy Research, Managerial and Decision Economics, Indiana University, University of Maryland, Baltimore, and many others that all agree that minor league baseball stadiums are risky, and should be considered potentially worthwhile cultural expenditures, not income streams.

The questioner asks,

“Does MCC have independent scholarly studies that contradict the existing literature, and if so, by whom, and how can they be obtained?”

Sample of scholarly findings and recommendations:

1 “Local officials should be aware of the risks that accompany hosting professional sports teams and understand that minor league teams will not be economic growth engines,” Review of Policy Research findings.

2 “Baseball is a form of escapism and publicity. If these are valued ideas it remains for city councils and voters to decide if the ‘Boys of Summer’ really define a community’s image, culture and placement in the fabric of American society,” Indiana University.

3.“Enhancement of community image, and recreational infrastructure improvement… outcome goals such as these, rather than debate over a team’s economic impact should shape policy decisions,” University of Maryland, Baltimore.

4. “The results of the study ‘suggest that economic development arguments’ for public subsidies ‘should be carefully evaluated,’ (501)” Managerial and Decision Economics.

Tomorrow some more outside observations to chew on.


Comments

The Health of Minor League Baseball — 1 Comment

  1. Indeed MCC officials were asked this question at the final “informational meeting.” Here is Walt Packard’s answer (quoted verbatim from audio recording:)

    “I know, I’ve looked at those same studies and I would say: check out the Kane County Cougars. Schaumberg is having some problems because they overbuilt their stadium. But if you look at the teams that are in this league in the state of Illinois, they’re doing very well.”

    The Kane County Cougars, however, do not seem to be an appropriate comparison, as they are in an affiliated league, which is backed and heavily subsidized by Major League Baseball. Additionally, Kane County is larger (480,000 vs McHenry’s 300,000 [wikipedia]) and may support a larger fan base.

    The other Frontier League teams in Illinois that Mr. Packard alluded to are:

    The Rockford River Hawks. In Rockford since 2002, previously in Springfield from 96-01 and previously elsewhere from 93-95.

    Windy City (since 2004) Previously relocated after just 4 years in their previous location.

    Marion Miners — just started in 2007

    The Gateway Grizzlies– founded in 2001. They set the League-wide attendance record (217,000) in 2001– league wide attendance has stagnated since.

    Obviously none of these teams can be used to demonstrate the long-term viability of a MiLB investment (remember 20 year bond!) Team relocation, as explained widely in the media, is normal, as attendance generally drops after the “honeymoon period.” Teams are frequently shifted to new stadiums and new cities in order to maintain profitability.

    MCC officials have explained that this is not a problem, because their contract with the league requires the league to replace the team if it fails.

    However the records of the Frontier League do not support the assumption that such a replacement scheme would be beneficial.

    When asked (at the final information meeting) if they had any evidence or studies to refute the literature on MiLB, Len Walker admitted that they did not. But then reaffirmed that this was the reason for the “multiple revenue streams.” Then he stated that they found 1 study that backed the feasibility of the Health and Wellness center, and demonstrated that such an addition would likely be able to pay for itself and help subsidize the ballpark if it came into trouble. (Kind of makes me wonder why the ball park is necessary “to help pay for the HWAK” in the first place….)

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