Arturo Galletti is the Co-editor and Director of Analytics for the Wages of Wins Network. He is an Electrical Engineer with General Electric in the lovely isle of Puerto Rico, where he keeps his production lines running by day and night (and weekends) and works on sport analysis with his free time.
“In the middle of difficulty lies opportunity.”
Can your city Support a new Professional Sports Team?
Let’s start with the graphical answer.
What inspired this particular graph? A few posts back, fellow WOW writer Devin Dignam identified 6 cities that are very difficult markets for their NBA teams. I liked this post a great deal. So much so, that I decided to extend it and flip it around. Rather than ask who shouldn’t have a team, I decided to ask who should.
In my previous post on the state of the lockout, I pointed out that NBA bemoans its economic situation and shrinking profits but their approach at solving the problem is fairly narrow.
The profit equation for any business is simple : Profit = Revenue-Costs. The NBA is focusing largely on cost-cutting (and mostly on the player side) and are leaving a humongous opportunity on the table to increase revenues.
It all comes back to a simple question: Which cities can best support an NBA team? Or for that matter, any professional (MLB,NFL,NBA or MLS) sports team ?
If the NBA can properly answer this question, they can go from worrying about shrinking profits and contraction to talking about record revenues and expansion.
Let’s see if we can help them out (while answering the broader question).
Before we get to the good stuff, I need to get some explanations of terms and links out of the way:
- The work done in this piece draws a lot from the fantastic work by The Business Journals site in their OnNumbers section. Particularly their pieces on Sports Capacity , Overextended Sports Markets, Viable NFL, MLB and NBA markets as well as the link to Metropolitan Areas Total Personal Income for 2010.
- The data for this piece is a drawn from the US Department of Commerce (for US markets), OnNumbers estimates for Canadian Markets, and the Goverment of Puerto Rico.
- “Pro teams”: the number of NFL, MLB, NBA, NHL, and MLS teams in a city. The cost of adequately supporting a franchise was estimated by OnNumbers to be:
- $85.4 billion for MLB
- $37.6 billion for the NHL
- $36.7 billion for the NFL
- $34.2 billion for the NBA
- $15.4 billion for MLS.
- “Total personal income(TPI)”: the sum of all money earned by all residents of an area in a given year. Using team revenue data and average ticket prices one can calculate amount of TPI needed to adequately support a team in each north american professional sports league.
- “Available personal income(API)”: simply TPI less the cost it takes to support the city’s pro teams. If API is positive, it means that you are good to go for a franchise. If API is negative, then you really need to figure out where you are going to move your team. Only teams in the NFL, MLB, NHL, NBA and MLS are counted for this calculation.
All that nice data is here as a google doc .
Let’s start with the negatives first. Which markets cannot support the teams they have?
There are 19 cities that qualify as overextended. The table ranks each city in terms of the gap in income to support the franchise as a percent of the Total income for the metro Area. To me, this is an important distinction because it allows to identifies markets like Indianapolis, Charlotte, San Francisco, Detroit and Salt Lake (15 thru 19) that could very well be able to support the current franchise load if they achieve some measure of economic growth in the next few years.
Milwaukee comes out on top of my rankings because I am assigning them a 70% share in supporting the Green Bay Packers. The cities in the top three (Milwaukee, Cleveland and Denver) reveal an interesting problem: as it decreases in popularity, Major League Baseball is going to find it increasingly difficult to support the current franchise load. Eight of the ten teams in the top ten field MLB franchises and would clear their gap by losing those teams.
For the non MLB cities on the list:
- Buffalo is already in an NFL timeshare with Toronto.
- New Orleans had the NBA repossess their team.
- Winnepeg gets the benefit of the doubt in hockey-mad Canada.
- Nashville is a victim of NHL overexpansion and can be addresed by a quick relocation
The NBA has 11 teams on that list. They break out as follows:
- Victims of a bad economy: Pacers, Bobcats,Warriors,Pistons, Jazz.
- Cities with a johnny-come-lately MLB expansion problem: Denver, Phoenix.
- Candidates for relocation: Bucks, Cavs, Hornets and Timberwolves.
The NBA needs to be thinking about finding markets for these four teams. Let’s identify the candidates.
There are 37 markets in the US and Canada that could support a new or an additional NBA Team. New York and LA lead the list but already carry two franchises each, so let’s leave them as backup options. Of all the candidates with an NBA team already, I am only going to consider Chicago. That gives us:
That’s 23 markets available for expansion (including Puerto Rico yay!) plus a second Chicago team as number 24. The most logical candidates to me would be: Chicago, Riverside-San Bernardino-Ontario (the Inland Empire), Bridgeport-Stamford-Norwalk or a general Connecticut team, Vegas, and Montreal as fallback option. So one option could be for the NBA could “encourage” their owners to say:
- Move the Bucks to Chicago
- Move the Cavs to Conneticut
- Move the Hornets to Vegas
- Move the T-Wolves to the Inland Empire
Every single one of those owners would see their franchise value significantly accrue from such a move. Each one would be a trade up in terms of market size and income available. An additional plus is that 3 of those markets would be NBA only and new markets for the league.
Plus I can see the jerseys now for the Empire team:
Sometimes, these things just write themselves.