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Should Charlotte and Portland Bet Big On Major League Baseball?

While it's unclear exactly when baseball will expand next, robust conversations in Charlotte and Portland have crowned those cities the heir-apparent in MLB's future growth sweepstakes, the likely next destinations should the Marlins or Rays relocate, or baseball decide to add two more teams to its current 30-team roster.

This foregone conclusion, however, is contingent on the question of whether those cities decide they actually want a new investment in Major League Baseball. While a sizable faction in both those cities have sought to the create favorable conditions for baseball expansion, the dominant politics in both places remain tentative about the topic, with leaders stressing that perhaps other areas of focus are more worthwhile investments for now. In Charlotte, location remains a challenge, with city leaders expressing a lack of urgency about finding baseball a potential home. In Portland, a fleeting political window is open, but general pessimism suggests the city's notoriously off-the-wall politics may soon close the door.

A major argument against baseball expansion suggests that for the cost, it doesn't actually offer a very good payback to cities. A strong academic narrative has developed that sports for most cities don't offer much in the way of new economic development, and as such the scales have shifted in ways that have made thought leaders hostile to sports investment. While this is partially justified, it's a more nuanced argument than many would paint it - sports may not be a great investment at the micro-level, but there's reason to believe it's darn-near essential at the marco-level. To clarify the dilemma, some points from our recent feature piece, The Corporate Art of the Baseball Stadium.

#1: Supporting baseball is more expensive for cities today than it was in the past.

The average inflation-adjusted construction cost of all baseball stadiums in service today is about twice as much as it was in 1990. Parks that have opened since 2000 are about twice as expensive as those that opened in the ‘90s. Those parks in turn were nearly twice as expensive as those that opened in the ‘50s and ‘60s, and those in turn were about twice as expensive as those that opened in the first few decades of the 20th century. Stadiums have grown exponentially more elaborate, more baseball-focused, and are designed to outshine competitors that predominately today are of a similar vintage.

As the parks get more sophisticated, cities are increasingly being asked to pay for them. Not only has the price of a ballpark doubled now that football and baseball teams require separate digs, but the price has in fact escalated more times than that since the per capita price of the new facilities has itself escalated so dramatically.

#2: Sports investments rarely provide the neighborhood development returns once promised

As cities are asked to shoulder increasingly more of the burden for ballparks, more and more are asking themselves whether it’s worth it. While many early storylines from Baltimore, Cleveland, and Denver pointed toward the discovery of a new value proposition for stadiums – the rejuvenation or sustenance of downtown neighborhoods – most academic research that has evaluated the subject has concluded that what appears may not actually be so. While it’s true that Coors Field has propelled growth in LoDo in Denver, that growth hasn’t been organic. Rather, primarily it’s come at the expense of other neighborhoods in the city. Baseball stadiums work like a lot of subsidized real estate in the United States: more often than not successful neighborhood development simply attracts development from one place to another, rather than catalyzing new development altogether. While a case can be made that saving certain neighborhoods is an economic necessity, the turbulence Cleveland has experienced with its downtown momentum since Jacobs Field opened has made it clear that any gains, net-neutral as they may be, may not even be permanent.

While the experience of a stadium is usually better when the stadium is part of a larger entertainment destination – a mixed-use neighborhood with bars, restaurants, and other additive elements, such as in San Diego, Cincinnati, or Washington, DC – the creation of neighborhoods is hardly justification for a city to build a new stadium or to try to attract a team. That is unless politicians are comfortable explaining to bastions of business owners in other parts of town why they’re less important to the city than new ones that might be conjoined with a stadium.

#3: Despite this, cities really don't have a choice - to be a "real" city, you MUST have Major League sports.

While the economic development case against the use of civic funding for stadiums is overwhelming and clear, cities often find it harder to justify the alternative: while funding a stadium is bad business, so too is not funding one. If stadiums are the key to keeping a team that can be successful, then stadium funding is an invariable outfall of the argument that a successful team is a critical component to being a world-class major league city.

While a few cities in America are recognized within the public consciousness as successful cities without major league baseball, there are none that have achieved world class status – say, as measured in national breadth of their draw to graduates or of Alpha status on the Alpha World Cities Index – without it. Like many core cultural components – such as a strong parks system, adequate transportation options, or a thriving corporate community – professional sports, and in particular professional baseball, are core elements of the equation for civic success. They are critical “romantic blather” for a city.

While the proof for this is hard to discern and to distinguish from studies suggesting a city would lose no economic development capital from losing a team, this impact is wholly independent from economic development as conventionally defined. How many people and companies, for instance, might pick Tulsa as a place to land over seemingly similar Oklahoma City if Oklahoma City weren’t distinguished as a major league city by virtue of its relationship with the NBA? In the case of baseball, a look at the last five major expansion moves – in 2005, 1998, 1993, the 1970s, and the 1950s – suggests there has been a difference in the years following the move between the cities that got teams in each instance and those that didn’t. Aggregately, cities that successfully landed expansion teams grew more quickly over the one to three decades after acquiring a team than those that they beat out, and also grew more quickly relative to their prior growth rates. While a city is only usually even considered for a major league team after a period of rapid growth, cities that have landed teams have generally continued to grow, while those that lost out often saw their growth trajectories cool. While the numbers aren’t eye-popping, they are noticeable. A city that grows its population by 9% in a decade, as have cities on average who landed a team in the decade after they landed it, is generally adding hundreds of thousands of new residents more than a city that grows by 4%, the typical rate for cities have tried, and subsequently failed, to attract a major league team. Such growth differences are often key in attracting other civic “wins”, including conventions, artists, and cultural leaders.

While it’s not exactly an airtight piece of math, there is a case to be made that keeping up with the Joneses when it comes to baseball is critical to urban success more generally. Consider, on the whole, the economic fortunes of those that have sought baseball and won – Denver, Washington, Miami, Phoenix, Tampa, San Diego, Toronto, San Francisco, Los Angeles, Dallas, Houston, Seattle, Minneapolis, and Atlanta – with those who were considered but failed – Norfolk, Oklahoma City, Las Vegas, Sacramento, Charlotte, Buffalo, Nashville, and Orlando – over the last 50 years. While many in both groups have been successful, the former group has achieved greater growth and status on the international stage in virtually every area.

That having a team is important to civic fortunes is a tough case to argue, but not an unreasonable one. That having a team that keeps up with the Joneses also requires using public dollars to help pay for a stadium that keeps up, especially in an era when stadiums have gotten so much more expensive, is a tougher case. Despite the fact that ballot referendums on the subject typically lose, nearly every team has convinced its civic leaders that this is the way to move forward.

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