More Studies and Observations of Minor League Baseball

Yesterday McHenry County Blog shared some research and questions from one of its readers.

With McHenry County College about to step into a $35 million debt, McHenry County
Blog is pleased to offer more findings and observations from a reader.

Today, for those interested in lessons learned elsewhere, the following is offered:

1. “Sports Facilities as Urban Redevelopment Catalysts: Baltimore’s Camden Yards and Cleveland’s Gateway.”

Journal article by Timothy S. Chapin; Journal of the American Planning Association, Vol. 70, 2004.

“Almost all of the existing literature concludes that these projects are poor investments, unworthy of public sector efforts and dollars (see, e.g., Noll & Zimbalist, 1997).”

2. “Minor League Baseball: Risks and Potential Benefits for Communities Large and Small,” T. Johnson (1998), Review of Policy Research 15 (1), 45–55.

Finding:

“The promise of economic development benefits is often put forward to justify these multi-million dollar investments. 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.”

3. “Estimating the Economic Impact of a Minor League Baseball Stadium,” William G. Colclough, Lawrence A Daellenbach and Keith R. Sherony, Managerial and Decision Economics, vol. 15 (1994), pp. 497-502.

Policy Implications:

“The results of the economic impact analysis of a minor league sports team in La Cross found ‘substantially smaller’ impacts ‘than those claimed by stadium construction proponents.’ (501) The results of the study ‘suggest that economic development arguments’ for public subsidies ‘should be carefully evaluated.’ (501)”

4. “‘Just Say No?’ The Economic and Political Realities of a Small City’s Investment in Minor League Baseball,” Mark S. Rosentraub, Indiana University.

David Swindell:

“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, placement in the fabric of American society.”

5. “Local Government, Minor League Baseball, and Economic Development Strategies,” Arthur T. Johnson, University of Maryland Baltimore County:

“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.”

6. New Jersey Star Ledger story on minor league teams:

While it’s blooming, the financial risks are looming,” 05/13/01

BY MATTHEW FUTTERMAN
STAR-LEDGER STAFF

“According to The Encyclopedia of Minor League Baseball, 13 cities had minor-league teams in New Jersey from 1883 to 1994, when minor-league baseball returned to the state after a 16-year hiatus. Only the original Newark Bears lasted at least 20 years — the typical period it takes to pay off debt on publicly issued bonds that are financing the new stadiums.

In New York, 56 cities played host to minor-league teams during that same period. Only nine cities had teams for at least 20 consecutive years.”

“Eventually, the honeymoon ends, and then it takes a lot of hard work to keep people coming out to the ball park,” said Tony Torre, general manager of the Class-A New Jersey Cardinals of the New York-Penn League, who is not related to the Yankees manager. The Cardinals moved to Sussex County in 1994 after fans stopped showing up in Hamilton, Ont.

Ever hear of the Northeast League, the Prairie League, the North Atlantic Baseball League, the Atlantic Coast League, the Golden State League, the North Central League, the Mid-American League, the Great Central League, or the Heartland League?

All were independent minor leagues founded and folded since 1994. None lasted more than three years.

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This is the type of article the Northwest Herald has not written. Read the whole article.
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7. “Diamonds in the Rough,” CFO.com.

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.”

“We see warning signs across the board, from the Rookie leagues up through triple-A,” echoed Pat O’Conner, COO of Minor League Baseball. “Cash calls, reorganizations, and distress-type sales are not signs of a stable situation.”

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.

“For every club that is profitable, there is probably a club that isn’t making money,” declares Marv Goldklang, a part owner of the New York Yankees who heads up a group of minor league baseball investors (including actor Bill Murray and singer Jimmy Buffet) known as the Goldklang Group. The group owns three affiliated teams and two independent teams, and provides consulting for three others. To truly understand baseball’s economics, says Goldklang, discount the top and bottom 20 percent of clubs. In the middle 60 percent that remains, he says, “the margin of difference between operating profit and operating loss is not all that substantial, and may depend as much on how effectively you control your costs as on how much revenue you generate.”

The affiliated Minor League teams enjoy those margins primarily because their main attraction is heavily subsidized by the Show. Major League teams pay for the salaries and benefits of Minor League players, as well as per diem when the players are on the road. The Majors even pick up most of the cost of bats and balls. Ballparks, meanwhile, are usually leased to the teams by local city or county governments, which traditionally have viewed them as a public amenity worthy of subsidization.

Kane County Cougars attendance record 523,222 was set in 2001, apparently stagnating since then.


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