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Why MLB Relocation/Expansion Won't Be Happening Soon PDF Print E-mail
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Articles & Opinion
Written by Maury Brown   
Saturday, 17 November 2007 21:37

Biz of Baseball articleBud Selig likes to call this the real Golden Age of baseball. We can quibble about that. The postseason is no longer the event that captivates a nation. Note that this year’s World Series was watched by an average of 17,123,000 for the four games. Compare that to the ’78 World Series between the Dodgers and the Yankees which pulled in an average of 44,278,950 for six games. But paid attendance had a fourth consecutive record year (79,502,524), baseball is awash in revenues ($6.075 billion this year), and television ratings at the local and regional level saw ratings up for 21 of the 30 clubs from the year prior.

So, against this backdrop, it’s safe to say that America is back to having its love affair with MLB, and in a big way.

With that, is it any wonder that fans in cities across the US that currently don’t have an MLB team to call their own may want one? Is it any wonder that students enrolled in sports management classes in colleges across the country write papers on this topic?

Case in point, Sam Cohen, a senior at Oregon State University, writes:

For one of my classes I am writing a report about the feasibility of bringing a Major League Baseball team to Portland. 

It seems like the push to bring an MLB team to Portland has declined since the Expos landed in DC after the 2004 season.  I've been to the news links on both the  Portland Baseball Group and the Oregon Stadium Campaign websites, but it doesn't appear that anything has been written on the matter since 2005.  I was just wondering what the  status of the issue was, whether there was still an active campaign to bring a team to Portland, the likelihood of it actually happening, and if it were to happen what kind of timetable we would be looking at?

It should be noted that I was part of the Oregon Stadium Campaign from about 2001 to 2004, and added to Portland’s submission to MLB during the Expos relocation derby. Looking over the above, and where things are now, does the healthy state of MLB make relocation or expansion possible? The answers are, in some ways, astrological.

“When the moon, and the stars, and the planets, and the money are aligned.”

I didn’t coin this phrase. MLB COO Bob DuPuy gets that distinction, with both the Expos and the Marlins stadium efforts. It outlines the extreme difficulties that are involved when MLB wants to get a stadium built, and is looking for all - or the vast majority - of the funding to come from the municipality they are looking to have host the team. The political capital it takes to get stadium funding passed is exceptionally difficult, and even more so if there is a feeling that relocation or expansion is only being spoken of conceptually. It simply makes matters extraordinarily difficult for a city looking to land an MLB team.

For all intents and purposes, the relocation of the Montreal Expos was a situation that offered the best options, should relocation as a last option be offered up for a franchise. MLB owned the club, Montreal did not have the capacity to fund a new stadium, and there were no lucrative media deals associated with them. I bring up the latter, because the notion was lofted out that contraction, not relocation, would be the order of the day for the Expos, with Carl Pohlad offering up the Minnesota Twins as the AL answer to the Expos’ NL – a balancing of the league, as it were. While the Expos were an easier team to talking about contraction with, the notion of the Twins being involved was far from it.

In 2001, the Metropolitan Sports Facilities Commission, who runs the Metrodome, filed an injunction to keep the Twins in the Metrodome through at least 2002. Judge Harry Seymour Crump ordered the injunction (read the injunction here), and in 2002 the injunction was upheld on appeal. To add to this, FOX SportsNet Minnesota sued the Twins over breach of contract, as they had a television agreement that was not set to expire until 2003.

What these issues with the Twins outline is the difficulty in relocating teams, short of some condition similar to what the Expos had. It highlights that municipalities should not be looking at any team offering up relocation to their city as anything more than a leveraging ploy to get a stadium built in the market currently hosting them.

Even with everything pointing to relocation as nothing more than a red herring, some baseball boosters can’t help but try and buy into the concept.

Case in point, the Portland Baseball Group. Although MLB relocation is a far-off notion, and Portland Mayor Tom Potter is cold to any talk of funding, Steve Kanter, President of the Portland Baseball Group was quoted in the Oct. 26, 2007 edition of the Portland Business Journal as saying:

“We're quiet now because no one's moving immediately," he said. "But we remain convinced that someone will move. And I remain in close contact with the Marlins."

I, and a great many others that follow MLB from a business perspective, simply don’t see this occurring. “Someone may move,” but not any time soon.

I followed up this story with an Op/Ed in this week’s Portland Biz Journal (Expansion, not relocation is Portland’s ticket to MLB), part of which reads:

While matters could change, officials with Major League Baseball have placed the development of a new stadium for the Florida Marlins at the site where the aging Orange Bowl now sits as one of, if not the, top priority for the league.

MLB Commissioner Bud Selig has said that he wishes to keep the Marlins in the south Florida market, and believes that only the lack of a new retractable-roof stadium is preventing the franchise from garnering the revenue needed to be successful. This hardly seems like a team ready to relocate.

The same can be said of the current situation with the Tampa Bay Rays. While the team's current stadium, Tropicana Field, is a substandard domed facility for baseball, ownership has invested in capital improvements to make the "Trop" more attractive.

I go on to talk about MLB’s incredibly robust finances these days.

While I say that expansion, not relocation, is what Portland should be thinking of, it is not something that will be happening any time soon.

If you look closely at the last two expansions by MLB, they came at a time of the league being in a depressed state financially. Also, in late 1991, the players and the owners reached a settlement: the owners would surrender $280 million, with the money then distributed to affected players via a complicated (and often lengthy) process over the collusion rulings (see my essay from Rob Neyer’s Big Book of Baseball Blunders on Collusion I, II, and III).

Expansion fees helped off-set the payments on collusion. Those in the Commissioner’s Office would scoff at this (heck, they don’t even acknowledge that there was collusion in the ‘80s), but look how the commissioner of baseball at the time of the collusion rulings (Peter Ueberroth was at the helm when collusion occurred) addresses the issue when I posed the question to Fay Vincent, part of which reads (read the entire Biz of Baseball interview with Fay Vincent):

Q: There is the perception, real or otherwise, that expansion was done to offset the losses incurred over collusion in the ‘80s. What is your perception of that issue?”

Vincent: Well, I think it’s absolutely correct. Indeed, I don’t think there’s any doubt about it. Look, each owner had a $10 million bill and there were about 26 clubs before expansion and 30 at the moment, then $280 million, let’s say $10 million a club – they didn’t have the money. So they did what most would business do, they sold stock, they sold interest in the clubs, in the expansion clubs. In my day two of them - Miami and Denver. And that money, which was vital, paid off their collusion debt. Without it I think baseball would have had a very serious time.

[...] 

I remember one of the owners said, “That’s the single dumbest idea I’ve ever heard!” But what he was really saying is, “We need the money to pay off the union because we colluded.”

Flash forward to 2007, and there is no need for expansion fees. Sure, it wouldn’t hurt, but it hinders more than helps.

Short of northern New Jersey, any other location would be small to mid-market in size. That would most likely mean a taker of revenue sharing, not a payor (or at least not initially).

You also have to account for how a new team, or teams, impact television territories. As I wrote in Television Territories Impact Relocation/Expansion:

When I interviewed Mariners President Chuck Armstrong in Dec. of 2005, he was non-committal on one hand, but clearly the issue of Portland, and the surrounding area needed to create a broadcast territory for Portland, would be something of keen interest. "I really haven’t studied [the issue of relocation or expansion] to Portland", said Armstrong. "We have specifically stayed out of that issue. That’s up to the Commissioner’s Office and the Relocation Committee. I’m sure if that time comes, they would talk to us about it. No one here is on that committee and we’re not involved in that decision."

And all of the US is like this. No team would be impervious to a new, or relocated team anywhere in the US, as all of it is covered by one team or another (in some cases, as is the case with Las Vegas, multiple teams claim television territorial rights. Vegas deals with 5 teams: Angels, Dodgers, Athletics, Padres, and Giants).

For relocation or expansion to happen, teams impacted by the dilution of their television markets would look for compensation. The best example would be how Peter Angelos and the Baltimore Orioles were compensated by the Expos relocating to Washington, D.C. In an article in 2004 on how territorial alignment would prevent the A’s from moving into San Jose – something that did happen (Expos Relocation: No A’s to San Jose), I wrote:

The Orioles’ vast cable market would get sliced up like a Thanksgiving turkey with the addition of a Washington team. That’s the key factor. The Orioles won’t divulge what they currently net with Comcast, but USA Today estimates their total revenue from all local broadcast sources at $21 million for 2002.

To placate Angelos, baseball is reportedly negotiating the following (subject to change):

  • A guarantee that will keep Baltimore’s annual revenues no lower than $130 million. If they do drop below that threshold, MLB will make up the difference;
  • A minimum franchise value for the Orioles at around $360 million; and
  • A 60-percent equity in a proposed new regional sports network (RSN) to the Orioles while the Washington franchise would receive only 40 percent.

So, to the fans and students looking for answers on possible relocation or expansion, the answer is: don’t look for it anytime soon. Relocation seems more remote than expansion, but either way, nothing now seems to point to any cities clamoring for an MLB franchise to land one. The need isn't currently there (read, owners are making a healthy profit, which minimizes talk of expansion), and the political and legal difficulties make relocation even less appealing.

Just go back to DuPuy’s saying. The moon, and the stars, and the planets, and the money just aren’t aligned… right now.


Maury Brown

Maury Brown is the founder and president of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football and The Biz of Basketball (The Biz of Hockey will be launching shortly). He is also an author for Baseball Prospectus, Basketball Prospectus and is an available writer for other media outlets.

Brown's full bio is here. He looks forward to your comments via email and can be contacted here.

 
 
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