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Media & Entertainment Law

: Sports Biz

Where Should the Major Professional Leagues Expand and Which Markets Are Overextended?

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The five major professional leagues, yes sports MLS is a major league - live with it, are currently located in most of the major metropolitan areas of the country with one glaring and obvious exception.  The NFL has been working to remedy that exception for the last twenty years.  Of coure, we're talking about Los Angeles and while, more progress has been made on a stadium there in the last 12 months than in the previous ten years, the prospect of a franchise moving to LA does not look all that great at the moment, and since the NFL has no intention of expanding, it will take a franchise relocation for a team to play there.

In a recent study conducted by Portfolio.com/bizjournals Los Angeles was rated as the most attractive city in which to locate a professional sports franchise.  Since the Southland already boasts multiple franchises in each of the four sports other than football, it's the NFL that is so attractive.

From the same study, it was determined that the financial base necessary to support a team was highest in baseball, followed by football, and hockey and then basketball and finally soccer.  The study used a metric it called available personal income to determine its rankings.  Available personal income is determined by first calculating the total personal income of the metropolitan area (simply, the sum of all money earned by all residents in a year) and subtracting for that sum the minimum income base needed to support the particular franchise, which was determined by reference to ticket prices and team revenue.

Using that metric, Portfolio.com came to the conclusion that each of the five sports could do as follows:

1. MLB.  Could only expand into two markets, both of which are existing markets: New Jersey and Southern California

2. NFL.  With the popularity of the NFL, could expand almost at will.  As noted, LA is almost a "no brainer" by their standards and Portfolio.com also suggests Montreal and Sacramento.  I would add Toronto and Vancouver, although Toronto could be a relocation spot for Buffalo.

3. NBA.  Expansion by four would be feasible and suggests Louisville, Las Vegas, Tidewater, Va and Seattle.  There are arena issues in both Louisville and Seattle but this study didn't deal with that factor at all.

4. NHL.  The best American markets would be Hartford and Portland, Ore, with as many as three Canadian cities capable of supporting franchises: Quebec City, Hamilton and Winnipeg.  At least and possibly as many as three or four of those cities is likely to get a relocated Sun Belt franchise in the next several years.

5. MLS.  Given the relatively low costs of operating a MLS franchise, almost any decent size metropolitan area with an interest in soccer could support a franchise.  The most likely locations for upcoming expansion are: Montreal, Rochester, St. Louis, Miami and Atlanta, all of whom  failed to land a franchise in the most recent round of expansion, which saw MLS grant franchises to Philadelphia, Portland and Vancouver.

While I'm not so sure I would use the same metrics to determine the capacity in a particular market, I don't particularly quibble with the results.  To me, a better measure of a market's capacity to support a professional sports franchise is to first look at its corporate community and see what public corporations have either headquarters or very significant regional or subsidiary headquarters in the market.  Then, look at the private corporate community for similar sized private companies that have been large supporters of United Way or the local collegiate athletic department and may be reasonably thought to become sponsors or suite holders of a professional sports franchise.  It is the suite sales and sponsorships that make or break a franchise more than it is the sale of tickets, although a significant amount of tickets do need to be sold.  The personal income of the market is important but the corporate community is probably more important.

Full post as published by Sports Biz on December 07, 2009 (boomark / email).

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