What Can We Learn about the Professional Sports `Contraction'?

By Nichols, Max | THE JOURNAL RECORD, November 19, 2001 | Go to article overview

What Can We Learn about the Professional Sports `Contraction'?


Nichols, Max, THE JOURNAL RECORD


Why is Green Bay thriving in the National Football League while the much larger markets of Minnesota and Montreal face elimination from Major League Baseball in what baseball calls "contraction?"

The answer to that question goes to the heart of the tremendous financial problems faced by professional baseball despite the tremendous excitement of the recent World Series. It's a factor we should all understand as Oklahoma City grows and seeks major-league status in hockey or basketball with our new $80 million arena.

NFL clubs share all television revenue equally and split gate revenue 60-40 with the road club getting 40 percent. The NFL also has a salary cap for each club. That allows Green Bay, with the smallest of all professional major-league sports markets, to compete with clubs in New York, Chicago and all the other larger areas. The National Basketball Association also has revenue sharing and salary caps.

Major League Baseball clubs, meanwhile, share only national TV revenues equally and have no salary cap. All local TV revenues go to the local club. Gate revenue is shared only 80-20 with 20 percent going to the road club. In minor-league baseball, there is no revenue sharing, which means the Oklahoma Redhawks must survive only on local revenue.

Obviously, the unequal revenue potential gives baseball clubs in the larger markets a tremendous advantage in acquiring the revenue to buy the best players. With the largest revenue base and no salary cap, it is not surprising that the New York Yankees have reached the World Series five years in a row.

All the other clubs are forced to compete with the Yankees by bidding for players, and taxpayers are forced to help their clubs compete by building new stadiums for hundreds of millions of dollars. Why do the taxpayers do it?

The answer is simple. The local revenue stemming from major- league franchises averaged $73.2 million for each market in 1999, and the clubs with new ballparks averaged $107.2 million. The Yankees led with $176 million. Clearly, supporting a major league franchise is worth a major investment by the people in each community, but the smaller markets are at a disadvantage once again with fewer people to share the taxes.

That is the core of the dilemma faced by the people in Minnesota, where 1.7 million fans went to Twins games this year and still face the loss of their franchise. There is a tremendous battle under way in Minnesota right now with political leaders, business leaders and the public debating whether to fight baseball's "contraction" and build a new stadium with a retractable roof or let the franchise fold.

It's not an easy decision, despite the Twins' economic impact.

Now, I have to say right here that I have a personal interest, because I covered the Twins as a sportswriter from 1961-79. I battled for the building of the Metrodome Stadium as a columnist, and I have researched the value of a major-league franchise to any community.

I also know that Minnesotans place a high priority on spending tax dollars for education and culture, and a large percentage of them object to building a new stadium for $300 million or more to subsidize the private owners of a baseball club.

They tend to question the economic impact of a franchise, though the Twins attract money from people in four other states. …

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