An indicator of sports influence is the relationship that teams have with cities which typically subsidize team operations with favorable rental fees in municipally-owned facilities, infrastructure (e.g., access roads, parking lots), tax breaks, low interest loans, and “sweetheart” deals on advertising signage and parking revenues.
Local governments do this in order to have the prestige, publicity, and possible economic benefit of being a “big league” city (Osterland, 1995).
The perceived value of sports franchises to cities can best be seen in the large number of sports facilities that have recently opened or are under construction. In the 1990s, about half of the major professional teams have moved or will move into new or renovated facilities (Klein, 1995).
By 2000, US cities are expected to have spent approximately $7 billion on new playing facilities (Helitzer, 1996). These numbers likely will increase as more teams threaten to relocate if they are not given new facilities that will make them competitive with other league teams (Halvonik, 1996).
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Such threats have become the reality in the NFL where franchise “roulette” is a major trend. In 1995-97, four of the league’s thirty franchises relocated with other moves seen as likely (Torry, 1995). This compares to three relocations in the 1980s and none in the 1970s. In each case, the primary reason given for the move was the inadequacy of playing facilities in the former market.
The fact that a lack of attendance was either minimized or not given as a rationale is indicative of the changing economics of professional sports. There is little doubt that the fans most valued by professional sports teams are those that will purchase luxury boxes and accompanying amenities.
The availability of such seating is considered a necessity in all new facilities (Osterland, 1995; Starr, with Heath, 1995). Of course, the price of such seating typically is a government subsidized tax deduction primarily used by corporations.
Local governments increasingly must provide the facilities and eliminate a team’s financial risk. For example, St. Louis guarantees the former Los Angeles Rams at least $16 million per year in gross ticket sales, an amount approximately $2.5 million above the league average, and all the proceeds from 40,000 Permanent Seat Licenses (PSLs), a fee for the “right” to buy season tickets (Schaaf, 1995).
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The new playing facilities are designed for television with excellent sightlines for camera positioning, production .facilities, and signage availability designed to appeal to the viewer and the advertiser. However, the movement of franchises can serve to work against the interests of the television industry.
For example, the move of the Rams from Los Angeles (the second largest television market) to St. Louis (the eighteenth largest) dropped the television universe in NFL cities from 58 million to 52.5 million households (Goldberg, 1995). Although the league promises to return a team to Los Angeles (and Cleveland) by the turn of the century, the move is a demonstration of the NFL’s clout in its partnership with television.
With the league convinced that television money will continue to grow, it is willing to allow franchise movement to smaller television markets. Even if such movement is a short-term phenomenon, it is unprecedented and would have been considered unimaginable in past years.
New playing facilities are an integral component of the fast-growing business of sports marketing and, more generally, the increased emphasis on integrated marketing which attempts to directly tie product to commercial sponsors.