Tuesday, 2 April 2013

Why did the NFL Fail in Los Angeles (and Could it Succeed There)?

Los Angeles is the second largest city in the United States, home to over 17 million people in the greater LA area. The NFL is the most valuable sports league in the world, accumulating over $9.5 billion dollars in total revenue in 2012. The match of the world’s biggest sports league and the second largest city in America seems like an obvious one. However, since 1995 when they lost not one, but two NFL franchises, Los Angeles has been without pro football at its highest level. Why has the NFL been unable to achieve success in its second largest market, and what needs to be done differently in the future to allow the NFL to flourish in the City of Angels?

Case 1: The Rams

In 1946 the NFL champion Cleveland Rams moved to Los Angeles. For the first 33 years of their stay in LA, the Rams played at the Los Angeles Memorial Coliseum, a carnivorous 90,000 seat stadium originally built to host the 1932 Summer Olympics. The Rams had to share the Coliseum at times with both the USC Trojans and the UCLA Bruins of the NCAA. Although a 90,000 seat stadium works extremely well for events like the Olympics or college football bowl games, it was difficult for the Rams to sell out on a regular basis. The television broadcasting rules of the NFL state that if a team fails to sell out a home game, then it is prohibited from airing the game on local TV. In a 90,000 seat stadium, the Rams had frequent TV blackouts as a result of their home field disadvantage. In the late 70s, the Rams had grown frustrated with the size of the stadium, and its location in dangerous South Central Los Angeles, and moved to Anaheim in Orange County.
Angel Stadium configured for a Rams game
For the final 14 years of their stay in the LA area, the Rams played at Angel Stadium in Anaheim, also home to the Los Angeles/California/Anaheim Angels. The stadium was retrofit to accommodate football, new seating was added and brand new luxury suites were built. However, the stadium was owned by the city of Anaheim, and the Rams were a tenant there, meaning that they did not receive all of their gate revenues or cuts of the revenue from other events held there, such as concerts. By the early 90s, the renovated Angel Stadium had once again fallen behind the rest of the NFL stadiums in terms of shared revenues and luxury boxes. Georgia Frontiere, the owner of the Rams, began to shop the team around to other cities, mainly St. Louis and Baltimore, hoping that she would be able to use the rumours to leverage Orange County into building a new stadium for the Rams. However, Anaheim was going through a budgetary crisis at the time and refused to fund a new stadium. Fans, bothered by the talk of relocation, coupled with the team’s poor performance on the field, abandoned the team, who ultimately moved to St. Louis.

The Rams were the victim of an oversized stadium in the first part of their run in LA, and then of a failing economy and poor football stadium during the latter half. The Rams did not necessarily need to move out of the LA area, but ownership had decided that their stadium deal was no longer sufficient for an NFL team of their caliber, and ownership played the game of “stadium or we’ll move” which has become all too familiar to modern sports fans.

Case 2: The Raiders

The Raiders during their time at the Coliseum
In 1982, the ever controversial Al Davis moved the Oakland Raiders to LA to play at the Coliseum without the consent of his fellow owners. The Raiders were well aware of the flaws of the Coliseum as a football stadium, but were under the impression that a forthcoming NFL broadcast deal would allow for pay-per-view broadcasts of games, which would open up an extremely lucrative TV monopoly in the second largest market in the league. Davis also hoped that he would be able to convince the owners of the Coliseum, the LA Coliseum Commission, to renovate the facility, specifically through the addition of luxury suites. To Davis’ dismay, the NFL pay-per-view contracts never emerged, and although renovations to the Coliseum began in 1993, they were halted following the extensive and costly repairs that had to be made to the stadium following the 1994 Northridge earthquake. The Raiders were plagued by many of the same problems as the Rams were during their stay at the Coliseum and they ultimately returned to a renovated Oakland-Alameda County Coliseum after the 1994 season.

After the Raiders and Rams

After the loss of the Rams and Raiders, NCAA football continued to thrive in the LA area, with USC and UCLA continuing to be two of the most popular programs in the entire nation. LA is frequently mentioned as a possible relocation destination for Cincinnati, Cleveland, Buffalo, Seattle, and Tampa Bay, amongst others. LA actually was granted an NFL expansion franchise in 1999, on the condition that they could agree on a new stadium site and financing plan. Ultimately the city did not, and the expansion franchise became the Houston Texans. The NFL is happy with their 32 team setup at the moment, and would not likely expand into LA without having at least two, and possibly 4, new teams added to the league. Los Angeles has not been home to professional football in any league since the 2009 collapse of the Arena Football League.

The Future

Without a new stadium, the NFL will not return to Los Angeles. The State of California is broke, and will not spend a single cent on building a new football stadium while they cannot afford to repair their highways and pay their public sector workers. Originally, there were plans to extensively renovate the LA Coliseum to make it home to a new NFL team, but the plans were deemed too costly to proceed, at an estimate of over $650 million. In 2008, the Coliseum Commission chose to sell naming rights to the Coliseum, further dampening any hopes of an NFL franchise making it their home, as naming rights usually provide a significant source of income to a team. Fortunately for the NFL fans in the greater LA area, two privately financed plans exist to build facilities that would enable an NFL team to return to the city.
A proposed design for Los Angeles Stadium
The first proposal is for Los Angeles Stadium, which would actually be built in the City of Industry, 22 miles east of Downtown LA. The $800 million, 75,000 seat stadium would be entirely privately financed by LA real estate billionaire Edward P. Roski, who helped build the Staples Centre. Roski’s plan was approved by the city council in a 5-0 vote in 2009. Roski refuses to build his stadium until he is guaranteed an NFL tenant, in which he wants to own at least a 30% share. Without a plan of expansion or a team that may move soon, Roski’s plan has entered a period of stagnation, approved in theory, but never to enter reality.

An artist's concept of Farmers Field
The second proposal is for a $1.2 billion dollar, 72,000 seat stadium, with a retractable roof, to be built next door to the Staples Center. This would create a sporting complex home to LA Lakers, Clippers, Kings, and the NFL team. Naming rights to the proposed stadium were sold to Farmers Insurance in 2011, in a deal worth $700 million over 30 years. The value of the naming rights contract could rise to $1 billion if the stadium were to attract two teams. Anschutz Entertainment Group (AEG) the owners of the Staples Center, London’s O2 Arena and a minority shareholder in the Lakers, has agreed to finance the stadium in whole. The proposal was approved by a 12-0 vote of the LA city council in September of 2012. The stadium would take close to three years to complete, and construction will not begin until a tenant is guaranteed. This means that a new NFL team would need to have either a long divorce with its current city, or make use of a temporary stadium in either the Coliseum or the Rose Bowl.

Under either of the proposals, LA would be in a much better position for its team(s) than it ever was for the Rams or the Raiders. Either stadium would be state of the art marvels, comparable to the new Cowboys Stadium, or Metlife Field. These brand new, smaller stadiums, would be equipped with every modern convenience, from cutting edge workout facilities to suites that rival the levels of luxury afforded to Roman emperors. The smaller capacities would hopefully ensure no more blackouts, and once again Los Angeles, could call themselves home to an NFL franchise.

Wednesday, 27 March 2013

What Else Could Atlanta buy for $200 Million?

On March 19th, the Atlanta City Council voted to approve $200 million of spending to help fund a $984 million replacement for the soon to be 21 year old Georgia Dome, home of the NFL’s Atlanta Falcons. Thanks to a recent influx of new stadiums, the Georgia Dome is now the 10th oldest  full time use field in the NFL (Toronto’s Rogers Centre, home of the Buffalo Bills one game a year is also older). In 2008 the Georgia Dome underwent a $300 million renovation to help bring the stadium into the modern era. As part of this renovation, the exterior of the dome was repainted to match the team colors, all of the seating was replaced, the concourse was widened and entrances expanded. During a subsequent renovation which took place in 2009 new HD video boards and a brand new sound system were installed. In light of these recent face-lifts to the stadium it is extremely misinformed to assert that the team would move without a new state of the art venue, since the Georgia Dome is once again state of the art. This statement becomes especially silly once one considers that the stadium proposal was put forward by the Georgia World Congress Center Authority, the owner of the Georgia Dome and not the owners of the Falcons. The only argument that could be made for the new stadium is that the Georgia Dome features a fixed roof, and the new proposal features a retractable one. However, since the cost of a new roof for the old stadium would be approximately $200 million, as estimated by the very same Georgia World Congress Center Authority who own the stadium, the question begs asking, how else could the City of Atlanta spend their $200 million?

A New Roof for the Old Field
Vancouver's BC Place - pre- roof replacement
A new roof for the Georgia Dome would cost $200 million according to a 2011 report from the stadium’s ownership group. This estimate lines up nicely with the amount that the city is comfortable with spending on accommodations for the Falcons. However, since the city is only responsible for 20% of the cost of the new stadium, it is not realistic to think that they would put up the entire cost for a massive renovation to the old stadium. Were they were to contribute in the same proportion as they are to the stadium project, they would spend approximately $40 million dollars, leaving $160 million to spend on other civic projects. Turning a fixed roof stadium into a convertible is not unprecedented, most recently BC Place in Vancouver underwent a similar procedure, replacing the old air supported roof with a retractable cable drawn one.

BC Place - post roof replacement

Build a Cultural Instillation or Two
Although Atlanta is by no means lacking in cultural attractions, boasting an Opera company, a ballet, four museums of art and design, a botanical garden and a world class zoo to name a few. The city was ranked as the ninth best city in America for the arts in 2010 by American Style Magazine. Atlanta is home to several performing arts centers, but some are aging and in need of renovations or new facilities to replace them. An investment of $60 million into arts would help provide the citizenry with a much appreciated renovation to one of their main theatres, or allow the city’s cultural board to undertake a new construction project.

Expand Public Transit
MARTA in action

Metro Atlanta’s rapid transit system, MARTA, is the eighth busiest transit network in the USA, carrying over half a million passengers every day. MARTA is also frequently ranked as one of the worst systems for transit accessibility and commute times. Plans for the expansion of MARTA were scuttled after voters rejected a ballot measure in July 2012 which would have instituted a 1 cent sales tax in order to fund the proposal. However, with $100 million in extra funding from not spending the money on New Falcons Stadium, the city could afford to proceed with some of the expansion. At an average cost of $35 million per mile, the new funding could provide the city with just under 3 miles of new light rail, or 8.3 miles of new streetcar tracks at a cost of $12 million/mile. With these much needed expansions starting, the level of gridlock on Atlanta’s streets would be greatly reduced and Atlanta would hopefully remove itself from the top-25 in the list of most polluted American cities.

The Georgia Dome is far from the decrepit, run-down venue that its owners would love you to believe. With little chance of the Falcons bolting Atlanta for greener pastures, and a recently upgraded stadium, the City of Atlanta could spend their money in a much more diverse manner, aiding a far larger portion of their population than a new football stadium would. Spending the same amount of money, Atlanta could rectify one of the biggest complaints regarding the Georgia Dome, the roof, expand their public transit infrastructure and renovate or supplement their cultural scene. Instead Atlanta will spend $200 million taxpayer dollars replacing a stadium that doesn’t need to be replaced.

Tuesday, 19 March 2013

Could the MLB go to Las Vegas?

Las Vegas, Sin City, Lost Wages. Call the biggest city in Nevada whatever you want but it wants to become a big league sports town. Whenever talk of a major league team, in any sport, relocating comes up, Las Vegas’ name is in the mix as a possible destination, helped along by the activities of former Mayor Oscar Goodman and MLB Commissioner Bud Selig. In the past, Vegas has been connected to the possible relocations of the Expos, Marlins, Athletics, Rays and White Sox, but never successfully. As a hotspot for gambling, issues of organized crime can be raised, and the city has no stadium of which to speak that could hold a MLB team. Could the Marriage Capital of the world make its way down the aisle with an MLB team, or is the opportunity for the city simply a desert mirage?

The City
The Las Vegas metropolitan area is home to 1.95 million individuals, ranking it 33rd in Canada and the USA combined. This ranking would make Las Vegas one of the smallest markets in the MLB, second only to Milwaukee. This does not meet the rule of thumb set down by the Conference board of Canada for market size to sustain an MLB team, that the number of seats available for sale should roughly equal the population of the city (30,000 seats * 81 games per year = 2.43 million fans). Unlike most major league cities, Las Vegas has little to no metropolitan area. Without the presence of suburbs, where more affluent families with the disposable income to spend on attending sporting events tend to live, the potential to make up for a smaller municipal population is diminished.

The entire state of Nevada is a desert, with over 75% of the population of the state living in Clark County. Being in the middle of the desert, Vegas is both hot and dry, averaging a high temperature of 35°C during the baseball season. A stadium in this climate would either need to host most of its games at night, like the Rangers do, or have a convertible stadium as is present in Arizona. The playing surface at Cashman Field, home of the AAA Las Vegas 51s, has been described as “baked in the desert sun”. The hard, unforgiving surface is less forgiving to knees and hips, resulting in a higher rate of injuries and shorter careers. A similar phenomenon can be observed of stadiums with artificial surfaces rather than natural grass, such as the Rogers Centre in Toronto.

The median household income of Clark County is $56258 per year. This would put them in the top third of the league in terms of household income. This high income could also be supplemented by the large amount of tourist money that comes into Las Vegas every year. However, this influx of tourism dollars also plays against the chances of a pro team. Vegas is home to a plethora of entertainment options along the Strip, all of which would be competing with the team for time, attention and money. A large percentage of the citizens work in the entertainment and gaming industries, jobs that do not hold the typical 9-5, Monday to Friday hours like most others. This difference in shift work from the rest of North America would make it much more difficult for residents to find time in their work schedules to watch the team play. The issue of organized crime and sports betting also play a role in discouraging teams from heading to Las Vegas, as the potential for players to violate their league’s anti-betting rules would be very high.

The obvious frontrunner for the ownership of a Las Vegas MLB franchise would be the current owner of the AAA Las Vegas 51s, Silver State Baseball LLC headed by Chris Milam. Milam, a Vegas area property developer, has been one of the major figures involved in the push to bring top tier sports to the city and is currently backing a major proposal to build a multi-billion dollar, sports complex in nearby Henderson, NV. Another strong possibility is outspoken internet billionaire Mark Cuban. Cuban has placed major bids in attempts to buy the Chicago Cubs, Texas Rangers, and Los Angeles Dodgers and has been quoted as saying that Las Vegas would be a good professional sports town. With the massive financial backing of either one of these individuals, or potentially even both if they can put their egos aside, a Vegas MLB team would be on strong financial footing from day one. Helping encourage the investors to put their money down would be the possibility of opening up a regional sports network in the Vegas area that would be devoted to their team. Vegas is close to 300 miles away from the nearest pro sports team, the LA Angeles, so any sort of pro sports entertainment there would hold the potential to be extremely lucrative. Were they able to grab a market share in the city, which has grown by 22% in the last decade, it could be a gold mine.

Cashman Field, home of the AAA 51s

Cashman Field, home of the 51s, could never play host to a full time MLB team. The stadium would require, at minimum, an expansion of over 20000 seats to its current capacity of 9334, the addition of weight rooms, indoor batting cages and massive renovations to their clubhouse facilities. The lack of these amenities is what caused the LA Dodgers to terminate their relationship with the 51s in 2008. Additionally, the stadium would likely need massive renovations to the playing surface, frequently described as one of the poorest in the Pacific Coast League of AAA baseball. It would be helped out massively by the addition of a retractable roof for use on the hottest days of the summer. The city of Las Vegas has been skeptical about spending public money to finance sports venues in the past and the renovations to Cashman Field would likely not be an exception. An expanded Cashman field could serve as an interim facility, like RFK Stadium did for the Washington Nationals for a few years, but a brand new facility would need to be built in order to sustain a franchise.

Proposed design of the Las Vegas National Sports Center

Fortunately for the potential team, a plan is taking root in the area to develop a massive sporting complex to the north of the Las Vegas Strip. The proposed Las Vegas National Sports Center is at the center of the latest proposal to bring pro sports to the city. The development has taken big steps in the past few months, including purchasing the land from the nearby city of Henderson and securing $650 million in funding (of a proposed $1.6 billion final cost) from a Chinese company. These strides will allow Silver State Sports to proceed with the first stage of construction on a 17,500 seat arena, 9,000 seat baseball park and 50,000 seat soccer/football stadium. Obviously the 9,000 seat stadium would be too small for an MLB team, but the second phase of the project calls for the expansion of the stadium’s capacity to 36,000 seats and 60 luxury suites as well as adding a convertible roof. The location of the stadium, just to the north of the Strip, would also allow for the easy construction of an extension of the monorail, the Strip’s main mode of public transportation, out to the complex. A unique design and well put together proposal helps pull the whole concept together. 

Its lack of a stadium, it’s very small population relative to the rest of the league and the desert climate in which it is located are all major barriers to Las Vegas becoming home to a major league franchise. However, the steady growth of the city, its high median household income, massive amounts of tourist money, local government support and favour in the eyes of Commissioner Selig, play favourably towards its chances. Las Vegas is a city that is constantly talked about when relocation discussions arise and, should an ownership group and opportunity come into place, the MLB would once again take a long, hard look at Vegas as home of a franchise, with good reason.

Tuesday, 12 March 2013

Could the MLB go to Vancouver?

Canada’s jewel on the Pacific, Vancouver is the third largest city in Canada and is best known for its temperate climate, whose average temperature does not dip below freezing any month of the year. This oceanic climate has played a strong role in BC becoming the go-to location for Canadian baseball talent, turning out players such as Larry Walker, Justin Morneau, Jeff Francis, and Brett Lawrie. Vancouver has a strong baseball history, although not an MLB one, having had a team at some level in the minors fairly consistently since the 1920s as part of the Western International League, a precursor to the modern day Northwest League. Vancouver touted itself as a potential MLB destination at around the same time it hosted the world’s fair in 1986 and were promoted to MLB commissioner Bowie Kuhn at the 82 All Star Game in Montreal by Prime Minister Pierre Elliott Trudeau, so the story goes. When the question of baseball adding a second team in Canada is raised, Vancouver is always mentioned right alongside Montreal, but could Vancouver actually support an MLB franchise, or are they better suited to being a minor league destination?

The City
Vancouver is likely a large enough city to support an MLB team, their population of just over 2.3 million people ranking as the 24th largest metropolitan area in Canada and the States in 2011. This 24th place ranking would make them the 27th (26th if the team is as a result of a relocation rather than expansion) largest market in the MLB, ahead of only Cincinnati, Cleveland, Kansas City and Milwaukee and just behind Denver and Pittsburgh. All of the cities around Vancouver have experienced financial success as baseball towns, and all of them have had success as multi-sport cities, all featuring an NFL team in addition to their MLB team and all but Cleveland and KC featuring NHL teams as well, counting the Green Bay Packers as a team from Milwaukee for the purpose of market analysis. According to a recent Conference Board of Canada study, approximately 2.5 million citizens are required for a city to successfully support a Major League Baseball team, using the rule of thumb that the population of the city must be roughly equal to the number of tickets available for one season (81 times 30000 = 2.43 million). Vancouver falls just short of this threshold, but it comes very close and several MLB teams do not reach this threshold and continue to experience success.

Helping Vancouver to overcome its relative disadvantage in city size when compared to the rest of MLB is their strong economy, the median total income for a Vancouver family was $67550, which ranks them in the upper echelon of median income for MLB cities. An average Vancouverite also has slightly under $30000 of disposable income per year. Both of these figures are quite similar to those of Toronto, which as we know, has successfully supported the Blue Jays for many years now.
Vancouver would obviously be impacted by the fluxuations in the Canadian dollar that helped contribute to the demise of the Expos. However, the currently strong Canadian dollar plays in their favour at the moment and a strong, wealthy ownership group could mitigate the effects of the dollar’s changing value. Vancouver’s location on the Pacific coast has led to it becoming one of the largest gateways in North America for pan-pacific trade, bringing billions of dollars into the city annually. Vancouver is also home to 10% of all corporate headquarters in Canada, which would lend a significant boost to corporate tickets and sponsorships to the new team.

As is the case with Montreal, Bell is the obvious frontrunner to own any new Canadian baseball team. Bell had net profits in excess of $2 billion last year and wants to purchase content generators for their media outlets, such as TSN and CTV. Live pro sports are most definitely lucrative TV content, as evidenced by NBC’s new contract with the NHL, valued at $200 million per year. Although the Vancouver team will not be as profitable for a TV network as an entire league is, the Colorado Rockies signed a deal worth $20 million per year in 2004, and are likely due for a large jump in value when it comes up for renewal in 2014. A national sports network owned by Bell, broadcasting the Vancouver team and as Bell would hope, Hockey Night in Canada, could be worth hundreds of millions of dollars. For reference, Rogers Sportsnet made over $200 million in revenue in 2011.
Not to be counted out is David Thompson, the 17th richest man in the world, part-owner of the Winnipeg Jets and of Thompson Reuters. Thompson Reuters is already a major media conglomerate, and its parent company The Woodbridge Company, which Thompson owns, once owned a significant portion of CTVglobemedia. If they were interested at all in re-entering the Canadian speciality TV market, a network featuring exclusive access to one of Canada’s MLB teams would be an excellent way to make an entrance. Shaw Communications could also be counted in as a dark horse candidate for ownership, with similar aspirations for a major sports network, but does not have profit margins that approach those of Thompson or Bell, making them a less likely choice.

BC Place configured for an MLB Exhibition game in the 80s

Although Vancouver is home to the lovely Scotiabank Field at Nat Bailey Stadium, which is home to the Jays short-A affiliate the Vancouver Canadians, the Nat, as it is known in Vancouver, is very much a minor league park. It’s capacity tops out at 5157 fans and in spite of its recent renovations is 51 years old. Millions upon millions of dollars of renovations and expansions would need to be done in order for it to be able to become a Major League ballpark. The question of if the Nat would even be in a good location for an MLB Park is another barrier to its possible upgrade to MLB stadium. Nat Bailey Stadium is in the Riley Park-Little Mountain neighbourhood of Vancouver, though a beautiful neighbourhood and host to some Olympic events in 2010; it is too far removed from the downtown to be a realistic choice of location.
Another possible location for the Vancouver team would be newly renovated BC Place, in the heart of downtown and easily accessible by the Skytrain and Aquabus. After the $563 million renovation that took place in 2011, BC Place is a state of the art modern stadium, complete with a retractable roof, a brand new high-definition video board, a state of the art sound system, 1300 premium club seats and 50 brand new private suites. The new roof’s height and the placement of the scoreboard could prove an issue to MLB configuration for the stadium. The roof is approximately 190 feet above the playing field, roughly the same as Tropicana Field, which has been problematic in several instances in the past. The scoreboard is only 140 feet over the playing surface, which depending on the placement of home plate could also prove challenging. When the Seattle Mariners played a series of exhibition games at pre-renovation BC Place in the 1990s, the approximate location of the new scoreboard would have been right above second base, a bad place to have low clearance. Aside from the issue of clearance, which could potentially be remedied by moving the scoreboard for baseball purposes, the stadium can configure nicely as a baseball park.
If neither stadium can be made acceptable for the residence of an MLB team, the hypothetical Vancouver team would be in a tough place. The provincial government has committed large sums of money to the construction of the 2010 Olympic venues and the 2011 BC Place renovation. Building a new, downtown stadium would be costly and finding a location for it would be difficult in Vancouver’s busy downtown core. Throw in the likely lack of funding from the provincial government and a new stadium looks unlikely.

Vancouver has a long history with minor-league baseball and has harboured major league aspirations in the past. A good sized city, with a vibrant economy, high median income and an expanding corporate presence makes it a good destination financially. The variety of potential strong, Canadian owners helps their chances. The presence of a freshly renovated, state of the art stadium in the middle of their downtown, field issues aside, makes Vancouver a strong candidate to become home to an MLB team at some point in the future.

Tuesday, 5 March 2013

Could Major League Baseball Return to Montreal?

On Labour Day, over 200 Montreal Expos fans made pilgrimage to the Rogers Centre to watch the Blue Jays fall 4-0 to the Baltimore Orioles and, more importantly, pay tribute to their dearly departed Expos, now eight seasons gone from the MLB. Although the Expos ultimately departed from the city due to a combination of declining attendance, a poor stadium and some questionable team ownership decisions made by the MLB brass, there still exists a small, but devoted group of Expos fans. The city of Montreal has a long and rich baseball tradition, beginning with the minor league Montreal Royals who began play in 1897, and the success of the first 25 years of the Expos. Additionally former Expo Warren Cromartie, at a reunion of the 1981 team earlier in the year, expressed interest in assembling an ownership group who would bring top-flight baseball back to la belle province. In spite of the history and shows of support, are the factors in place in order to allow a revived team to succeed where the Expos failed, or is baseball returning to Montreal a pipe dream?

The City
Montreal's skyline, seen from the river.

Montreal has all the makings of a city that should be able to support a major professional sports franchise. As of 2011, Montreal is the 15th largest metropolitan area in Canada and the USA, excluding the Riverside-San Bernardino area which is part of Greater LA, and the largest without a professional baseball team Montreal is almost 2.5 times the size of the greater Milwaukee area, where baseball has thrived for many years. The median household income for Montreal is $36,000 per year which would place them 24th in the MLB for per capita income above cities such as Detroit, Cincinnati, Cleveland, Miami, St. Louis and Milwaukee. All of these cities but Cleveland have had new ballparks constructed since the turn of the century. Montreal ranks on roughly even footing with Philadelphia, Pittsburgh and Baltimore, three teams which have experienced financial success over the past number of years. Although Montreal would be in the bottom third of per capita incomes in the league, they have a larger metro area than most of the teams below them in the per capita income rankings. Simply put, Montreal’s ranking in the lower third of median per capita incomes would be partially offset by their ranking in the middle of the pack for metropolitan area population.

A contributing factor to the failure of the Expos was the drastic decline in the value of the Canadian dollar in the early part of the 21st century. On September 29, 2004; the date on which the MLB officially announced the relocation of the Expos to Washington DC; the Canadian Dollar closed at a value of US$0.7875, meaning that one Canadian Dollar was worth 22% less than an American one. A mere two and a half years earlier, the Canadian dollar closed at US$0.6179, a 40% markup and the lowest the exchange rate had ever reached. Consistently over the last decade of the team’s existence the exchange rate floated around the high 60 –low 70 cent range, meaning that the Expos; who collected their gate receipts, concessions and most of their merchandise revenue in Canadian dollars; were placed at an immediate disadvantage in terms of spending power. Today, the Canadian dollar is worth more than the American dollar, and has floated around parity over the last half-decade. Although this better exchange rate would not be a magic solution to the financial problems that plagued the Expos, the more favourable exchange rate would allow the money that they collect to be turned into on-field talent more effectively.

The true death blow to the Expos came in 1998, when following the post-strike fire sale of talent; the team reached a new low of a 65-97 record. Their .401 winning percentage was the third lowest in club history, bested only by their expansion year and 1976, their last season at Jarry Park. From their inception in 1969 until 1998, the Expos had average a little under 19000 fans per game, not overwhelming numbers by far, but respectable. In 1998, the team had the lowest payroll in all of baseball and the ownership group bragged about how they were able to turn a profit. In 1999, attendance plummeted and when the talk of contraction began to take place, the team was never able to recover. Jeffrey Loria’s ham-fisted attempt to extract more money from English language broadcasters was an abject failure and he abandoned the team to purchase the Marlins. Under the three year ownership tenure of the rest of the MLB owners, the Expos were placed under a hard cap for payroll and no improvements were made to the roster or stadium. A poor on-field product, combined with overtures of contraction or relocation, made it easy to justify the team’s ultimate move to Washington.
New ownership for the Expos would need to resemble the old ownership group of the late 80s and early 90s, when the team was run by a consortium of local owners, including BCE, CR and Loblaw’s. Given Bell’s move towards the purchase of properties that could generate content for their TV networks, evidenced by their recent purchase of a 37.5% share in MLSE; owner of the Toronto Maple Leafs, Toronto Raptors, Toronto FC and the Toronto Marlies, they would appear to be one of the frontrunners to buy a franchise should one return to Montreal.
BMO, with a net profit of $3.2 billion and a valuation of $477 billion; CP, with a market value of $7 billion; the Molson family, owners of the Montreal Canadians and chairs of Molson-Coors; the Weston family, owners of Loblaw’s; and Saputo, the Montreal based dairy giant, also could enter the conversation for ownership. More than one of the groups would likely form an ownership team, so as to cut the very large costs of purchasing either an expansion franchise or another team, at a likely cost of $500-$600 million, plus the additional costs of building a new stadium.

Olympic Stadium, home of the Expos from 1977 to 2004

Olympic Stadium was built for the 1976 Olympics and was wrought with problems from day one. Not even properly completed until 1987, the “retractable” roof tore, leaked, collapsed and was eventually closed for good in 1999. It was a 70s multipurpose stadium in every sense of the term, no luxury boxes or private suites, poor sight lines and a high upper deck. In spite of all these drawbacks, the Expos outdrew the Mets from 1977-83 and the Yankees in 1982 and 83. The Big O was viewed as a White Elephant by some; it took until 2006 for the special cigarette tax imposed by the provincial government to recoup the costs of building the stadium. Counting interest, repairs and renovations, Olympic Stadium cost over C$1.6 billion to construct, making it the second most expensive stadium of all time. During the final years of the Expos tenure, the stadium was poorly maintained, grimy with chipped, stained and soiled concrete. The poor venue maintenance, combined with the poor play of the team, made it easy for fans to stay away, despite the cheapest average ticket price in the majors for the last several years of the Expos tenure in Montreal.
The presence of the stadium debt stood in the way of attempts during the Expos tenure to build a new stadium. During the debate over a 1997 convertible stadium proposal, which would have stood two blocks from the Bell Centre, in the heart of downtown Montreal, then Premier Lucien Bouchard was quoted as saying “there's already a stadium in Montreal that cost a lot of money, and it's still not paid for”, effectively ending the debate over the funding of the proposed venue. The chosen site for the then $225 million stadium is now a condominium complex. The stadium, which would have been located at the corner of Notre Dame and Mountain, would have been a 15 minute subway ride from the heart of downtown, half as long of a commute than to Olympic Stadium which is located in Olympic park, 35 minutes north of downtown on the subway. Although the original proposed location for the new stadium no longer is available, a stadium still could be constructed close to the downtown area, on St. Helen’s Island, near the Montreal Biosphere, an Aquatic complex and the site of the annual Montreal Grand Prix. Most importantly, this site would be a 15-20 minute subway ride from downtown and a 200 meter walk from the nearest station. St Helen’s island is also accessible via two bridges, in the north connecting to Papineau and south, connecting to downtown.
With the stadium facing west, fans would be treated to a view of the Montreal skyline across the narrow stretch of river separating the island from the rest of the city.
Factoring in inflation, the stadium would cost $335 million to build today; approximately $100 million of the cost could be covered through the sale of seat licences, luxury boxes and advance season ticket packages. The sale of naming rights to the stadium could net another $40-$50 million. If the ownership group could be counted upon to contribute $100 million of their own finances, only $95 million would be required from government sources to complete the funding, a far more manageable amount than the final cost of Olympic Stadium, and funded in equal part by all three levels of government, would only cost $31.6 million per level, which could be recouped through bond issues, slight tax increases or a variety of other revenue sources.

Montreal has all the right pieces in place to be able to support an MLB franchise. A large metro area, combined with a population with enough disposable income to support a team, a history of baseball support, a cost effective plan for an accessible stadium which could be resurrected and enough potential, locally based owners to financially support the theoretical team. Montreal lost their team to a poor stadium, poor post-strike results and owners disinterested in putting a good product on the field without first getting their hands on a new stadium. In the next decade, depending on the changing economic landscape of the league, the possibility may soon become an opportunity, and if an ownership group were to come into being, MLB could one day return to Montreal and allow baseball to right one of their worst wrongs of the past 15 years.

This article was originally posted on Bluebird Banter, the Toronto Blue Jays SB Nation site.

Tuesday, 26 February 2013

Show Me the Money!

Not necessarily him, but you get the idea.

How would you like it if at your job, every time you made the slightest mistake a little red light went on over your head and 18,000 people stood up and screamed at you? – Jacques Plante

Professional sports operate unlike any other business. On a daily basis athletes, coaches, executives and owners have their decisions put under the microscope both by professional analysts and armchair quarterbacks. Although there is an emotional aspect to the industry, sports, at their core, are a business. The purpose of this blog is to cast light on the seemingly irrational decisions made by those in charge of the finances of pro sports franchises and leagues.

The blog is named to commemorate Jeffery Loria, the owner who gutted both the Montreal Expos and the Miami Marlins while holding the municipalities hostage for new stadiums. Loria claimed huge profits while his teams held low payrolls and floundered in the standings. May no fan ever suffer under an ownership regime as dreadful again.