For a number of years now, Bizjournals, the Internet arm of American City Business Journals, has done an annual study to determine if the largest markets in the U.S. and Canada have the financial ability to support professional teams in baseball, football, basketball, hockey and soccer. Threads have appeared on this before, but they haven't looked at the actual data much, and I thought it might be interesting to focus on their findings not only about potential MLS markets, but also existing ones. Briefly, here's what they did: Bizjournals used data on team revenues and ticket prices to estimate the total personal income that a market would need to support a pro sports team. In 2009, Bizjournals concluded that a market needed at least $86.7 billion in available personal income to support a Major League Baseball team, $37.3 billion in available personal income needed to support a team from either the National Football League or the National Basketball Association, $37.29 billion in available personal income to support a team in the National Hockey League and $13.9 billion in available personal income to support a Major League Soccer team. Note that college teams were not considered, nor were minor league teams or CFL teams. http://www.bizjournals.com/triangle/stories/2009/12/07/daily25.html?page=1 http://www.portfolio.com/industry-n...ow-cities-rank-for-potential-sports-expansion Here’s the list of each MLS market, ranked from the markets with the most available personal income to support additional teams to the least available personal income: New York $583.98 Los Angeles $203.84 Chicago $135.46 Houston $102.13 Washington DC $91.20 Montreal $76.54* Philadelphia $62.55 Dallas-Fort Worth $55.47 San Jose $55.81 Boston $37.27 Portland $36.76 Seattle $30.93 Vancouver $28.85 Toronto $23.36 Columbus $16.44 Salt Lake City ($9.75 billion) Kansas City ($57.07) Denver ($92.5 billion) *after subtracting $13.9 billion for future MLS team You can download all of the data from this pdf file: Link: http://www.portfolio.com/resources/SportsChart.pdf Bizjournals is quick to point out that just because a market has an available personal income shortfall doesn't necessarily mean that any of the teams based there will move or fold, but Bizjournals quickly adds that a deficit in available personal income in a market is a “reliable sign that the teams can expect continued volatility in attendance and revenues.” The Bizjournals study indicates that three MLS markets lacked the necessary available personal income to support all of the major league teams they had: Denver was by far the worst, needing another $92.5 billion in personal income to support their teams, followed by Kansas City, which required another $57.07 billion in available personal income and, finally, Salt Lake City, which was short $9.75 billion in available personal income for the teams it has. Six more markets are tight. Columbus, Toronto, Vancouver, Seattle, Portland and Boston all lack sufficient personal income in the market to add another professional team in any of the four major leagues (that is, the NBA, NHL, MLB or NFL.) When you consider both Toronto and Vancouver do support CFL teams that weren’t considered in the study, the margin for error in those markets may be even less. By contrast, it seems there’s more than enough available personal income to go around in New York, Los Angeles, Chicago, Houston, Washington DC, Montreal, Philadelphia, Dallas-Fort Worth and San Jose. (It’s interesting to note that while San Jose has a surplus, San Francisco – Oakland does have a $20.5 billion deficit, so to the extent the Bay Area is considered as a single market for professional sports the cushion in San Jose may not be as big as it seems.) Comparing the Bizjournals study to the MLS attendance table, it may provide part of the reason why teams in Denver and Kansas City have struggled at the gate compared to their peers, but it’s likewise hard to suggest that Dallas, New England or San Jose’s issues are because of the lack of available personal income. The study also provides some interesting information about potential markets and their ability to support teams. At any rate, some interesting things to consider.
This is neat, but I gotta say, the fact that their numbers don't match up very well with MLS attendance/success makes me think that they've gotten something fundamentally wrong, or at least only have part of the picture.
Yeah, I don't see a lot of correlation here. Denver hasn't changed much in 8 years and the Rapids led the league in attendance in 2002 and was second in 2003. The lacrosse teams are new since then I think, but that's it, and there isn't a whole lot of overlap going on in those fan bases.
The data doesn't necessarily mean the MLS team will suffer -- but without enough money to go around, someone is going to suffer. They talk about Denver specifically: Link: http://www.bizjournals.com/triangle/stories/2009/12/07/daily25.html?page=2 It's also interesting to note that some of the markets mentioned for relocation -- Baltimore for DC United and San Diego for Chivas USA -- don't score nearly as well as the markets the teams are currently in.
This is a little OT, but is anyone else surprised to see MLS included in the bizjournals study (I tried to look at previous years' to see if MLS was included before, but didn't find any)? Have we arrived? Is it now the "big 5" when considering pro sports in the US?
IIRC, they've included MLS before. This isn't the first time. No. Relatively speaking, MLS is still pretty much small potatoes compared to the other big sports. All of the teams in MLS have a combined worth equal to about 3-4 NFL teams.
So New York could support 41 MLS clubs, very nice. I do wonder how many Professional soccer clubs are there in Buenos Aires, how much is their total disposable income?
Based on the salary cap, number of games, and other financial information gathered here and there in newspaper articles over the years (especially on CFL teams that are community owned and therefore have to report their numbers) I'd suggest that the costs associated with a CFL team are about the same as those for an MLS team. It therefore stands to reason that the required personal income base would be the same, too. In that case, Toronto probably doesn't have much extra room left at all since, in addition to the CFL, it also supports its NLL team quite well.
I don't think that total TPI is directly correlated to success of a franchise. Obviously a market has to have corporate and financial ability to support a franchise but its mainly about demand and marketing. The New York Islanders are in New York but have no support because of a lack of demand for Islanders or NHL hockey. Conversely the Green Bay Packers are in a tiny market but have huge support and sell out every game because demand for the NFL is very high.
I know it was mentioned already, but the lack of college football throws the analysis off a fair amount. I'm thinking of columbus.
I think it's also true in the Twin Cities -- not just for football, but men's basketball and hockey as well.
I can see why they'd leave it out, though. To include school and other influences would require a city-by-city breakdown. For example, college football has a big impact on Columbus. In Toronto, university football is basically nothing but the CFL and lacrosse have a significant impact that doesn't exist in Columbus. I'm guessing college football is big for Houston but possibly college basketball is the important factor in DC. And so on.
Why wouldn't we expect a city-by-city breakdown? The question of what markets can carry an MLS team is a multi-variate analysis and this chart seems like a half-hearted attempt to look at one of those variables (income). This analysis done by some academics a few years ago makes much more sense. Its model is based on (1) city population; (2) Metropolitan Statistical Area (MSA) population; (3) population growth rates; (4) percentage of male residents ages 18-34; (5) income levels of those MSAs; and, (6) the percentage of the MSA population that is Hispanic or Latino. I think it would interesting if you added in the number of other sports options (pro & college, perhaps based on per capita attendence multiplied by average ticket price). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=926202 Anyway, if I was editor of a sports business journal, I wouldn't let an article that looks at one factor and then jumps right to make conclusions see the light of day.
To be fair, they're really only trying to speak to half of that. The model would be uncomfortable with the Green Bay example, but not the Islanders one, because it only attempts to predict when a franchise is likelier to struggle, not when it's likelier to succeed. Having a market available was never meant to imply actually capturing it. And one could argue away the Packers by saying that one outlier doesn't disprove a trend (since a trend, not an iron law, is what they're assuming). That said, you wonder here. As has been pointed out, it is obviously true that the major league sports don't only compete with each other. College sports has been brought up, but they also compete with 'major events', like say, the Indy 500 or the US Open tennis tournament or the Rose Bowl. But that brings up a lot of tough questions to answer like how many people travel to those events versus how many are local, and how do you account for that? It also competes with most forms of entertainment at some level. You might be able to gloss over that by assuming (and it would probably be a reasonable assumption) that 'background entertainment' options like movie theaters, restaurants, bowling alleys, etc. aren't limited by leagues and conscious decisions of a very small number of people, so the free market will direct them to arise in proportion to demand--and the demand level, basically, is TPI. Like I said, a reasonable economic assumption. But then you have to ask whether the tendency to prefer sports over those other avenues is flat, or even close to flat, across the country. (I should note, though, that a lot of the argument is really about S&S--sponsors & suites, not general attendance, and if DCU were to head to Baltimore, those sponsor dollars won't straightforwardly jump to Ford's Theater or the local restaurants.) At the end of the day, it's a vague guide. There are a handful of cities that have a lot of sports teams already for their market size, and one should probably be a little more circumspect about putting new teams in those markets. But that doesn't mean there might not be a specific demo that's under-served, or that will abandon their current team spending to spend on your team.
You're describing a niche really, and you're right, ventures can make a lot of money finding and filling a niche successfully, soccer teams included. The problem with that strategy is that I think its harder for a league with a lot of small markets to move beyond those niches and push into the mainstream. For example, I think in a couple years time Philly and RSL will be very similar: both built handsome new stadiums early in their existence, both will draw well (at least in the upper third of MLS), and both seem to be reasonably well run and play a fairly attractive style of soccer. Yet the upside for MLS of having a strong team in a major Eastern media market has to be higher than having a strong team in a relatively small media market in the Mountain time zone. Fair or not, the former is naturally going to get more attention than the later. And that's the real problem with these guidelines IMO. There are over 40 cities on that list that could, in theory, support an MLS team -- and many of them are smaller metro areas which have been under-served by the other major leagues. If it so desired, MLS could take that list and have 20 teams in smaller markets which would, in theory, actually draw pretty well. But to garner more national sponsorship and TV revenue, MLS has to succeed in bigger markets too IMO. It needs success in Philly and Houston, not just Salt Lake City and Portland. A bitter, well attended multi-team rivalry in the Pacific Northwest is great, but it would be nice to see that replicated between New York, DC United, Philly and the Revs -- right under the nose of ESPN -- were it would get more media attention and coverage. So, while a lot of markets could sustain an MLS team, even if they are successful I'm not sure they are all equal. Some are going to be more strategic than others.
Absolutely. One big difference, I think, is in how it's perceived outside that particular market. Seattle has been a great story for the league, but regardless of what the reasons are, it seems New York can garner more attention in the rest of the country by drawing 20,000 fans a game or so than Seattle can drawing 36,000. Call it what you want to, for some reason the former legitimizes the entire league in neutral areas in a way the latter can't seem to do.
The only way to really figure out whether a specific market is attractive is by doing a full-bore market analysis. Which is what I imagine MLS does when discussing potential expansion teams. Some locations are a no-brainer, especially if there is a legitimate owner group involved. I don't need a market survey to tell me that a NYC2 owned by David Beckham and the owner of the Mets is going to be a star for the league. And, on the other end of the spectrum, a team in Rochester, NY isn't all that attractive to the league. Even if the market survey shows that there is enough of a fanbase to make the team viable. A lot of things go into making a team viable. But, all things being equal, a market with a larger economy is preferable to something smaller. If I was picking a market that I think would be a good place for a new MLS team, I'd vote for Austin.
Has this changed at all? or are the top 5 cities with available disposable income still LA Charlotte Las Vegas Stanford Connecticut. Atlanta Georgia (they just lost they hockey team so they are probably higher on the list).
Stamford (not Stanford), Connecticut is part of the New York City market. I don't expect Stamford itself to get any major professional sports teams anytime soon.