Pros and cons of professional sports

Which cities are economically suited for pro franchises?

By G. Scott Thomas
BIZJOURNALS.COM

Nov. 29 "” Los Angeles and Phoenix are located in adjacent states, but they're worlds apart in terms of sports economics. Los Angeles is the nation's most appealing site for an expansion or relocated team, says a new study by American City Business Journals.

THE NO. 1 ranking is based specifically on Los Angeles' ability to support a new franchise in the National Football League.

Phoenix, on the other hand, is the most overextended market in the nation, according to the study. That means its income base is insufficient for its current teams, let alone new ones.

The study analyzed 172 markets across America to determine their economic ability to support additional professional teams in baseball, football, basketball, hockey and soccer. The study focused on markets without a team in at least one of the five major sports. American City Business Journals publishes business journals in 41 markets across the nation.

See how your city rates

Los Angeles ranks first because of its economic power. Its income base is 13 times larger than required to adequately support a franchise in the NFL, the only league in which L.A. is not represented.

Following Los Angeles on the list of best sites for new teams are Philadelphia, Portland, Ore., Orlando, Fla. and Houston.

The study found:

Philadelphia, the nation's sixth-largest metro area, is the biggest market not in Major League Soccer.

Portland could back a team in any of four leagues, including the NFL, MLS, the National Hockey League and Major League Baseball.

Orlando has more than enough economic clout to support a franchise in either the NHL or MLB.

Houston, with a population of nearly 5 million, could easily add either a hockey or soccer team.

At the opposite end of the spectrum is Phoenix, which has franchises in four of the five major sports, as well as in second-echelon leagues playing arena football and women's basketball.

The study estimated that Phoenix would need another $54 billion in total personal income (TPI) to comfortably support all six teams. TPI is the sum of all money earned by all residents of an area in a given year.

The shortfall does not necessarily mean that any of Phoenix's teams will move or fold. But it is a fairly reliable sign that they can expect continued volatility in attendance and revenues.

Two of Phoenix's franchises, in fact, are finding it difficult to stay above water in their overextended market. The Arizona Cardinals were dead last in the NFL in attendance as of Nov. 11. The Cardinals were averaging 39,200 fans per game. All other teams in the league are above 56,000. The Phoenix Coyotes ranked next to last in NHL attendance as of the same date.

After Phoenix on the list of overextended sites are Tampa-St. Petersburg, Fla., Pittsburgh, Kansas City and Denver.

The study focused on cities without a team in a given league. The New York City area, for example, could support additional teams in every league, but it's highly unlikely that it would be granted any new franchises.

Major League Soccer has the widest range of expansion or relocation options among the five big leagues, according to the resulting market capacity ratings.

Ninety-four areas are rated as strong candidates for MLS, which means they are above the league's minimum income threshold. The list of qualified sites for soccer ranges from Philadelphia to surprises such as Billings, Mont., and Roanoke, Va.

Thirty-six markets have the economic capacity to support a new National Football League franchise, as do 26 areas for the National Hockey League and 20 for the National Basketball Association.

Orlando is the only area to meet the income requirements for Major League Baseball. The Washington portion of the Washington-Baltimore economic area would also have a sufficient base if it were considered a separate entity from Baltimore, which already has a team.

The 10 most appealing new sports markets
"¢ 1. Los Angeles
"¢ 2. Philadelphia
"¢ 3. Portland
"¢ 4. Orlando
"¢ 5. Houston
"¢ 6. Charlotte
"¢ 7. Grand Rapids, Mich.
"¢ 8. Washington, D.C.
"¢ 9. Las Vegas
"¢ 10. Rochester

The 10 most over extended sports markets
"¢ 1. Phoenix
"¢ 2. Tampa-St. Petersburg
"¢ 3. Pittsburgh
"¢ 4. Kansas City
"¢ 5. Denver
"¢ 6. Milwaukee
"¢ 7. Cincinnati
"¢ 8. Buffalo
"¢ 9. Indianapolis
"¢ 10. Raleigh-Durham

The Best Markets

Los Angeles
Potential league: NFL
Existing leagues: MLB, AFL, NBA, WNBA, NHL, MLS
Los Angeles can't get its NFL act together. It lost the Rams and Raiders, fell to Houston in the subsequent expansion derby, and still lacks a first-class stadium. But Greater Los Angeles has 17 million residents, and it has enough surplus income for 13 football franchises. If an NFL team were run well, it could easily succeed in L.A.

Philadelphia
Potential league: MLS
Existing leagues: MLB, NFL, NBA, NHL
Philadelphia, the nation's sixth-largest metro area, is represented in every major sport but soccer. MLS would be well advised to correct that oversight, given Philly's ethnic diversity, large television market and healthy economic base. The region's available income is 11 times larger than the amount needed to sustain the typical MLS franchise.

Portland
Potential leagues: NFL, MLS, NHL, MLB
Existing leagues: NBA, WNBA
The NBA has been in Portland for more than 30 years. The simple question is who will get there next. Portland has more than enough money to support a football, hockey or soccer team, perhaps even two of the three. Baseball might be too pricey, but remains a possibility. Portland would be the best choice to beef up MLB's presence along the fast-growing Pacific Coast.

Orlando
Potential leagues: NHL, MLB
Existing leagues: AFL, NBA
Orlando is appealing in two ways. The first is that its residents have enough money to comfortably support another team besides the NBA Magic. The second is that Orlando attracts millions of tourists who have even more millions of dollars to spend. The less-costly NHL would be the best fit for the region, but MLB might also take an interest.

Houston
Potential leagues: NHL, MLS
Existing leagues: MLB, NFL, NBA, WNBA
The NFL returned to Houston this year, but there's still space available for another newcomer or two. The NHL and MLS are intrigued by the large size of the market, which has 4.8 million residents. Each league believes a distinct group within the Houston area would passionately embrace its sport: Northern refugees for hockey, Hispanics for soccer.

Charlotte
Potential league: NBA
Existing leagues: NFL, AFL, WNBA
The NBA Hornets were wildly successful from their opening tipoff in 1988. Nearly 24,000 fans crowded into the Charlotte Coliseum game after game, year after year. But the Hornets' owners, in a fit of demographic heresy, fled to New Orleans after failing to get a new arena. Expect the NBA to rectify its mistake by sending a new team Charlotte's way.

Grand Rapids, Mich.
Potential leagues: NHL, NBA
Existing league: AFL
Yes, Grand Rapids. Michigan's second-largest city is unknown to the big leagues, but it has made its mark in the minors, supporting farm teams avidly in baseball and hockey, and adequately in basketball. Also impressive is Grand Rapids' income base, which is 80 percent larger than an NHL team would need and 70 percent above the NBA's threshold.

Washington, D.C.
Potential league: MLB
Existing leagues: NFL, NBA, WNBA, NHL, MLS
Baseball suffers from a lack of good expansion sites, but Washington (part of the Washington-Baltimore economic area) is the exception. It's true that two sets of Senators fled town, but the D.C. area is much larger and more affluent than it was in those days. Its Virginia suburbs now boast some of America's highest income levels. A new franchise in, say, Fairfax County could do well indeed.

Las Vegas
Potential leagues: NFL, NHL, NBA
Existing leagues: none
Las Vegas is America's fastest-growing metro. Its population soared 83 percent in the 1990s, and now stands at 1.7 million. Topping 2 million by 2010 is almost a certainty. Las Vegas clearly has the money to support a team in almost any sport. The issue is who will take a gamble (weak pun intended) on a city dominated by the gaming industry.

Rochester
Potential leagues: MLS, NBA
Existing leagues: none
Rochester dropped out of the spotlight in 1957, when it lost the NBA Royals to Cincinnati. But the region has more than 1 million residents, a strong income base, and it's home to major corporations like Eastman Kodak, Xerox and Bausch & Lomb. It also is soccer-crazy, making it especially attractive to MLS. The return of the NBA would be a longer shot, but doable.

The Worst Markets

Phoenix
Regional income deficit: $54 billion
Existing leagues: MLB, NFL, AFL, NBA, WNBA, NHL
NBA's Suns had Phoenix to themselves for 20 years. Their peace was disturbed when football's Cardinals arrived, followed by a host of others. Phoenix now has six franchises in everything from Major League Baseball to arena football. The area's residents would need an extra $54 billion in annual income to comfortably support all six teams.

Tampa-St. Petersburg
Regional income deficit: $35 billion
Existing leagues: MLB, NFL, AFL, NHL
The Tampa-St. Petersburg area, with a population of 2.5 million, is a mid-sized market by current standards. But it boasts four big-league franchises, which is more than bigger places such as St. Louis and San Diego have. Competition for the sports dollar is so intense that baseball's Devil Rays and hockey's Lightning historically have suffered at the gate.

Pittsburgh
Regional income deficit: $33 billion
Existing leagues:[i] MLB, NFL, NHL
Recent years have been tough for two of Pittsburgh's three franchises. The NFL Steelers seem solid. But the Pirates, even with a new stadium, are poster boys for baseball's small-market woes. And the NHL Penguins almost dissolved in bankruptcy court a few years ago. Additional teams need not apply.

Kansas City
[i]Regional income deficit: $31 billion
Existing leagues: MLB, NFL, MLS
Kansas City officials occasionally talk about going after a franchise in the NHL or the NBA. Either would be a big mistake. K.C. already had "” and lost "” teams in both leagues. And it's overextended with the franchises it has. The NFL Chiefs are doing well, but the Royals (MLB) and Wizards (MLS) are struggling.

Denver
Regional income deficit: $25 billion
Existing leagues: MLB, NFL, AFL, NBA, NHL, MLS
Denver sports fans are rabid, to be sure. The Rockies have led MLB in attendance almost every year since 1993, and the NFL Broncos and NHL Avalanche routinely sell out. But not everyone is prospering. Just ask the NBA Nuggets and MLS Rapids, both of whom are accustomed to playing in front of thousands of empty seats.

Milwaukee
Regional income deficit: $21 billion
Existing leagues: MLB, NBA
Milwaukee is the smallest market in big-league baseball, which just happens to be the most expensive sport of all. The Brewers drew decent crowds to glittering new Miller Park in 2001, but attendance plummeted 30 percent in the stadium's second year. The NBA Bucks manage to get by, but they aren't thriving by any means.

Cincinnati
Regional income deficit: $19 billion
Existing leagues: MLB, NFL
Cincinnati has baseball and football teams, but is shut out of both winter sports. That doesn't mean, however, that it's an attractive territory for either the NBA or NHL. The Cincinnati metro has just 2 million residents, and its pool of available income is not really sufficient for the teams it has. Add a third franchise, and everyone would suffer.

Buffalo
Income deficit: $11 billion
Existing leagues: NFL, AFL, NHL
Buffalo once fielded big-league teams in football, hockey and basketball "” and dreamed of completing the set with an MLB club. Not any more. The NBA Braves are long gone, the baseball fantasy has been dismissed, and hockey's Sabres are slipping at the box office. That leaves the NFL Bills as the city's only prosperous franchise.

Indianapolis
Income deficit: $10 billion
Existing leagues: NFL, AFL, NBA, WNBA
Storm clouds are gathering over Indianapolis. The NFL Colts are rumored to be interested in moving to Los Angeles, unless their lease agreement with the city is sweetened. Negotiations are underway. The NBA Pacers, meanwhile, are not a guaranteed sellout, despite Indiana's legendary love of basketball.

Raleigh-Durham
Income deficit: $9 billion
Existing league: NHL
Perhaps the most ill-advised franchise shift of the 1990s occurred when the NHL's Hartford Whalers packed up for North Carolina. College basketball is the real big-league sport in Raleigh. Duke, North Carolina and North Carolina State all play within 30 miles of the city. That doesn't leave enough fans – or money – for hockey's Hurricanes.

Source: G. Scott Thomas, American City Business Journals


METHODOLOGY
American City Business Journals based its rankings of appealing and overextended sites on income data, as well as several subjective factors, including each market's history of involvement in a given sport and its proximity to existing teams.

The study also produced a precise score, called a market capacity rating, for each area without a pro team in a specific sport. All ratings were done on a 100-point scale.

A score of 100 points was considered a "strong" rating, 75 to 99 points was "moderate" and anything less than 75 was "weak."

ACBJ used data on team revenues and ticket prices to estimate that a market needs TPI of at least $54.1 billion to support a franchise in Major League Baseball, the highest figure for any of the major sports. The least expensive is the Arena Football League, requiring a minimum base of $3.2 billion.

The study calculated each market's remaining capacity for pro sports by taking the area's TPI and subtracting the amounts needed to support its existing teams, including those in second-echelon leagues and major-college football and basketball.