Minor League Baseball and Local Economic Development.

• Author: Siegfried, John J.

This book addresses three public policy issues: (1) How cities make decisions to construct sports stadiums; (2) The extent to which municipal development strategies affect decisions to build stadiums and acquire minor league baseball teams; and (3) The value of a minor league baseball team to the economic vitality of a community. Because you are reading this review in an economics journal I focus on only the third question.

After an overview of minor league baseball franchises and how they relate to their host cities and major league baseball, the book reports on 15 case studies of minor league baseball. It concludes with a summary of the political economy of minor league baseball. One can profit considerably from reading just the first 53 pages of this book, which include the excellent introductory material and the first (and best) case study in the volume, describing Fort Wayne's refusal to provide public support for a minor league baseball stadium in the late 1980s.

Johnson provides income statements for the AAA league teams from Columbus and Toledo, Ohio, and Indianapolis. The average annual gross revenue of these three teams (at the highest minor league level), including ticket receipts, playoff money, advertising and parking revenue, and net income from concessions and radio broadcast rights was $1.42 million for 1988, only a bit more than the average drugstore in America that year (49,570 drugstores averaged 1.1 million gross revenue in 1987). This is less than three percent of the typical gross revenues of a major league team in 1988. There is clearly a chasm between even the highest level of minor league baseball and the major leagues.

Advocates of municipally owned baseball stadiums almost always argue that a publicly financed stadium is required to acquire or retain a franchise, and the franchise is worth the taxes required to finance the stadium because it increases regional economic prosperity. The necessity for a publicly owned stadium in order to secure or retain a team appears to be as true for minor as for major league baseball franchises. Limitations on league expansion have allowed both major and minor league baseball owners to successfully exploit scarcity by threatening to move franchises to other localities in the event they do not receive municipal subsidies. The vast majority of minor league stadium leases are for fewer than five years, affording teams frequent opportunities to return to the public trough with such...