With the Richmond Braves and Mayor L. Douglas Wilder locked in the proverbial blame game — and which side will take the heat if, or when, the Braves leave — a bigger question has yet to be addressed: Does Richmond lose money on the Braves?
Almost everyone agrees that the Braves’ franchise is a “quality of life” attribute rather than a major economic engine for the region. In the past, the team’s owners have admitted as much. But here’s a more radical precept: The amount of tax dollars and new money brought in by the franchise may actually be less than what the region puts into the team. In other words, the Braves may well be a drain on the local economy.
It’s not so far-fetched, experts say. Nearly all of the independent research on the economic impact of big-league sports comes up nil. That is, pro basketball, football and baseball teams generate no substantial economic benefits in the regions where they are located. Typically, big-league cities are on the hook for multimillion-dollar sports stadiums, which negate any benefit by way of ticket sales, food-tax receipts and other ancillary benefits such as player salaries and merchandise sales.
Fans typically come for a game and spend their money inside the stadium, experts say, and that money fails to trickle down significantly to surrounding retailers and restaurants. There are fans from outside the region who bring in new dollars, but not enough to offset the typical debt service taxpayers pay on, say, a $300 million arena.
“In all major league sports, the economic impact is virtually nonexistent,” says Robert A. Baade, a sports economist at Lake Forest College in Illinois. “In order for a team to have an economic impact, it really has to somehow induce spending from outside the area. And then the money has to stay in the community.”
Take the Richmond Braves. Last year, the team reported an average of 5,214 fans attended each of 69 home games, according to the city. It’s improbable that a significant portion of those fans traveled from outside a 25-mile radius, Baade says.
Braves officials in Atlanta didn’t respond to several phone and e-mail requests from Style for revenue information or an interview.
As for direct tax benefits to the city, there appears to be a net loss, according to city tax records and financial reports from the Richmond Metropolitan Authority, the political subdivision that owns and operates The Diamond.
On the plus side, the city received a total of $183,737 in tax revenues from The Diamond — including sales taxes, business and personal property taxes, admissions taxes, meals taxes and annual business license and occupational taxes — in fiscal 2005.
That’s not bad, until you factor in the more than $261,000 subsidy that Richmond gave the RMA to pay debt service and close an operating shortfall at The Diamond in the same year. (In 2005, The Diamond was finally paid off, marking city’s final loan payment on the facility. For fiscal 2006, the city has budgeted $83,000 to subsidize The Diamond’s operations.)
There are other economic dominoes that are more difficult to measure. Employees of The Diamond receive salaries that ripple through the communities where they live, and there are the incomes of players, coaches and the various vendors who do business with The Diamond during the baseball season.
Some benefits are easier to measure. James B. Kennedy, director of operations at the RMA, says The Diamond generated $397,299 in revenue during the 2005 season. That figure includes the $143,100 the Braves pay in rent, as well as box-seat rentals, parking fees and the annual rent paid by Virginia Commonwealth University for the men’s baseball team. (The college team is scheduled to play 25 games at The Diamond this year; to date, one game has been canceled.)
But when you consider The Diamond’s expenses of $395,982 — which includes salaries of the stadium’s field crew, police officers at the games, cleanup crews and other miscellaneous items — it’s essentially a break-even operation.
Much of that money stays in the community, which creates positive economic effects. And visiting teams playing the Braves and VCU need a place to sleep, which helps local hotels such as the Holiday Inn Central on the Boulevard.
VCU’s baseball team, for example, draws out-of-town families, especially during weekend double- and triple-headers. As for opposing teams, the numbers fluctuate, says Jeff Cupps, senior associate athletic director at VCU. But they typically need beds for between 20 and 50 people. Ticket sales generate only “a few thousand dollars” a year, he says, and attendance at games typically hovers between 100 and 300 people.
How many out-of-towners visit Richmond to see the Braves play? Not many, the independent studies suggest. In his research, Baade says he hasn’t found any major league teams that draw a significant amount of out-of-town fans, so it stands to reason that on a smaller scale, neither do the Braves.
The most important measure of the Braves’ economic impact is how much new revenue is generated when the Braves play, Baade says.
If a family of four doesn’t go to a Braves game and spend $50, they’re likely to spend that $50 on some other leisure activity in the region.
“The reality is simply that people are reallocating their spending from one leisure activity to another,” Baade says. “You are simply shuffling around entertainment dollars. It may be that you are, through subsidizing this professional sports team, actually encouraging an outflow of funds.”
How? It’s unlikely most of the Richmond players live in the community. Most rent apartments during the season, about six months out of the year, but they also spend an equal amount of time on the road playing away games and live elsewhere during the off-season. When you consider an average Triple-A player makes $2,100 a month, according to Baseball America, a Web-based affiliate of ESPN, it amounts to very little disposable income reverberating through the metro area.
Mark S. Rosentraub, an economics professor at Cleveland State University who specializes in sports economics, says the amount of regional spending generated by professional teams is almost nothing.
“Where spending occurs is as important an issue as is the issue of if spending occurs,” Rosentraub says via e-mail. “On the point of does a facility or a team generate new spending … the answer is fairly clear. Sports does not generate new regional spending levels.”
Rosentraub, author of “Major League Losers: The Real Costs of Sports and Who’s Paying For It,” says the lessons learned from major league sports can be aptly applied to minor-league teams, especially when it comes to financing new stadiums.
While the proposal for a stadium at Fulton Gas Works has stalled, William Harrell, chief administrative officer for the city, says it would have included the city picking up some portion of the proposed $45 million stadium — perhaps financing it through some regional entity such as the RMA. Talks didn’t progress that far.
Also, the city likely would have coughed up much of the $20 million in road improvements and environmental work to make the site work, says Harrell, adding that the deal is now “off the table. We are proceeding with other plans for that area.”
In terms of economic impact, other retail developments at Fulton Gas Works may generate as much or more local dollars than a stadium would anyhow. Without the Braves, Baade says, entertainment dollars that families spend would go elsewhere in the community, likely generating as much tax revenue — very possibly more — as the Braves.
“It could be that you even induce an outflow of funds on balance,” Baade says. “You’re replacing some locally owned and operated entertainment venues.”
Rosentraub concurs, but cautions that entertainment dollars spent elsewhere don’t always stay within the community, either. Go to a movie, for example, and the money can leak out of the regional economy and into Los Angeles, he says.
At the least, experts say the economic question warrants further study. If past research holds true, the city would likely find the Braves aren’t worth it. “This is not the way to develop economically,” Baade says. S
