MLB Economics & Expansion: an Addendum

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13 Feb 2019 23:01

There were two topics I intended to address in my previous article, and forgot. Thankfully the two go together, which allows me to write another post on a mildly different topic: expansion.

The MLB Market Reach

Currently Major League Baseball directly operates in 26 media markets, these markets include (market size according to Nielsen):

New York (#1)
Los Angeles (#2)
Chicago (#3)
Philadephia (#4)
Dallas-Ft. Worth (#5)
Bay Area (#6)
Washington DC (#7)
Houston (#8)
Boston (#9)
Atlanta (#10)
Tampa Bay (#11)
Phoenix (#12)
Detroit (#13)
Seattle (#14)
Minneapolis (#15)
Miami (#16)
Denver (#17)
Cleveland (#19)
St. Louis (#21)
Pittsburgh (#23)
Baltimore (#26)
San Diego (#28)
Kansas City (#33)
Milwaukee (#35)
Cincinnati (#36)

MLB also services Toronto which I estimate to also enter the top 10, if not higher (Canadian and Mexican markets were not included).

Overall, Major League Baseball covers a large majority of the biggest American markets. However, several other markets remain without a Major League team. Surprisingly, the largest market without a team is Orlando; other significant markets include: Sacramento, Charlotte, Raleigh/Durham, Portland, Nashville, Indianapolis, and Columbus. Many of these markets are growing pretty intensely in both size and economic importance, along with their local TV market rating.

Tapping into these Markets: Expansion

This is my first idea to discuss. The obvious and direct way to expand Major League Baseball's reach is to approve expansion teams for some of these markets. Obviously the likeliest candidates are some of the largest markets not currently covered directly by an MLB team, notably Charlotte (22nd) & Portland (25th). Of course, a larger market does not guarantee success. Tampa Bay & Oakland both play in massive media markets yet fail to find the same economic success of teams in smaller ones (ahem, St. Louis). So to assist guiding what teams I looked at the attendance of the minor league teams currently residing in some of these markets:

#22 Charlotte

Charlotte offers several benefits as a potential expansion location. The first is Charlotte is the third largest media market without a team, and North Carolina is the largest state without a MLB team (leapfrogging Virginia). Charlotte also resides closely to other untapped markets including: Raleigh-Durham (24th) & Greenville (37th). The second big advantage Charlotte offers is a strong market for baseball; the Charlotte Knights attracted the most visitors to their stadium in 2018. Finally, Charlotte does not reside particularly close to any of the current Major League franchises. The closest competitor for attention is Atlanta, but Atlanta is big enough on its own it does not require North Carolina to support its current team.

#25 Portland

Numerous analysts mention Portland in their analysis of potential expansion sites, and it is not difficult to see why. Portland is growing fairly rapidly, resides in a vast territory between the two nearest teams: Seattle & Oakland/San Francisco. Portland also benefits from potential owners who are actively working to put a MLB team in Portland. However, Portland suffers from other problems: the first is its current MiLB performance. Despite ranking 25th in media size the Portland Sea Dogs only rank 34th in attendance among MiLB franchises. Unlike Charlotte, outside of Portland Oregon does not offer many large markets for a new franchise to tap.

#20 Sacramento

I do not believe I have ever heard an analyst mention Sacramento as a potential site for a new MLB team, and I suppose I should not be surprised. Sacramento barely registers in the mind when compared to San Francisco, Los Angeles or even lesser cities like San Diego & San Jose. However, with the coasts becoming costly to live in, thousands flock inland, and many of them to Sacramento. Another point in Sacramento's favor is its MiLB team ranks 10th in attendance among MiLB franchises, a strong performance. The biggest concern with Sacramento is its competition with other Californian media markets, and the dearth of major markets surrounding it.

#29 Nashville

Nashville fascinates me. Like Charlotte it’s a quickly growing & a big market in its own right. Also like Charlotte, Nashville boasts a minor league franchise with the third highest attendance of any minor league team. My concern with Nashville (and to a lesser extent Charlotte) is that the two cities are too close together to start together. If Nashville & Charlotte gained a team, they would create a new line of teams between St. Louis, Nashville and then Charlotte. To the north lies Cincinnati. However, its growing population & strong footprint offers a tempting location.

Other Markets

Looking at several other markets, in terms of both Minor League performance & media market size a few other potential candidates arise: Columbus (32nd biggest market, 5th highest MiLB attendance), Indianapolis (27th biggest market, 2nd best MiLB attendance), & Salt Lake City (34th biggest market, 13th highest MiLB attendance). Unfortunately each city creates its own complications. Columbus is located smack dab in the middle between Cincinnati & Cleveland (with ties to both), and is also near Pittsburgh; and faces stiff local competition in Ohio State. Indianapolis is also near several teams, notably two Chicago teams, Cincinnati, and Detroit. Salt Lake City is growing, but is located in a state with only one major media market.

My Suggested Scenario

Without considering other potential cities (Montreal being the obvious candidate, but Vancouver as well), I think Major League Baseball faces numerous potential options for expansion. The most obvious candidate for a new team is Charlotte. Charlotte is growing, with a large corporate presence, and sits between several other media markets, and a quickly growing state. Personally I think Charlotte gives Major League baseball the easiest route to expansion in any scenario. The next city I’d suggest is Nashville, which surprised me when I first looked at the data, but I think Nashville is one of the most underrated city we could consider. The third best candidate is probably Portland, especially since an ownership group already exists to pay the substantial expansion fee. Finally, the fourth best candidate in my opinion is Sacramento.* Thus I think MLB would do well to expand in some combination of: Charlotte/Nashville & Porltand/Sacramento. Any of those scenarios would work well for the league.

*For those curious I ranked the candidates: Charlotte, Nashville, Portland, Sacramento, Salt Lake City, Indianapolis, & Columbus

Tapping into the Domestic Market: Progresses

This idea is what initially inspired me to write this post. Major League Baseball is doing a good job bringing MLB teams to other countries with the Indians playing in San Juan last year, and series played in Tokyo & London. However, I think Major League Baseball could do a better job tapping into more domestic markets. Columbus, in my opinion, showcases a perfect example. Columbus is the 34th biggest media market, and boasts a long standing, and popular, Minor League Team in the Columbus Clippers. Columbus is probably too close to both Cincinnati & Cleveland to grant an expansion team (especially since neither the Indians nor the Reds can really compete with the size of the behemoths in baseball). However, it is still worth getting more Columbus households watching Major League Baseball on a regular basis. So, instead of expanding into Columbus the Indians & the Reds should play their interleague games in Columbus, or at least play one series in Columbus a year. This will generate more interest in Columbus for the nearby Major League teams and expand MLB’s reach into a currently less tapped market.

Columbus is also hardly the only market MLB could perform these series, which I would call ‘Progresses’ in the US. A few other suggestions:

Tampa & Miami play in Orlando (18th biggest market)
Mets & Yankees play in Albany (59th biggest market)
Baltimore & Washington play in Richmond (55th biggest market)
Cleveland & Detroit play in Toledo (78th biggest market)
Houston & Texas play in Oklahoma City (41st biggest market)
Boston & Yankees play in Hartford (30th biggest market)
Cleveland & Pittsburgh in Buffalo (53rd biggest market)

Overall, I feel there are endless possibilities for MLB to play more games across the country, while also benefiting the individual teams. The Reds & Indians would be thrilled to garner more revenue from their larger neighbor. I am sure the Mets would love to steal some of the Yankees’ attention in upstate New York (where the Yankees reign supreme). This would also showcases some new stadiums: Huntington Park in Columbus is widely considered a gorgeous new stadium, and Minor League Stadiums across the nation allow the teams to easily play in other cities.

The only issue I can see with this idea is teams surrendering home games, especially the interleague games. Interleague games remain draws for teams, and asking the Indians and the Reds to surrender three valuable home games to play in Columbus could be a turn off. Therefore I think to incentivize the team to give up its home games: the surrendering team gets to keep the whole gate from the venture, and every team can only sacrifice two home games a year to a progress, and never two years in a row.

Conclusion

Major League Baseball needs to continue to expand, but I do not think MLB should limit itself to using expansion to expand its reach across our own country. Certainly international markets offer tempting opportunities, and I do believe MLB should work on expanding to these markets, especially the nearby Canadian and Mexican ones (perhaps even someday Havana Cuba?). However, I don’t think MLB is done expanding in our home market, the US. There’s plenty of ways to get more people excited about MLB, and I love the idea of using the San Juan, Tokyo and now London model to get people excited throughout the country.

MLB Economics & Expansion: an Addendum

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