Durham County

Measuring Minor League Baseball’s economic impact – Gergen & Martin

This year’s minor league baseball season ended on an impressive note for North Carolina, with the Durham Bulls winning the national Triple-A championship with a 5-3 win over the Memphis Redbirds.

The victory capped an eventful year of baseball news for our state that included the addition of a minor-league franchise, plans to relocate an existing one, High Point’s bid to land its own team – and continuing debates about the value of public investments in minor league ball.

After going without a team since 2011, Kinston this year welcomed the Down East Wood Ducks, an affiliate of Major League Baseball’s Texas Rangers for the 2017 season, continuing a tradition of professional baseball in the city that stretches back to 1908. Fayetteville struck a deal with the Houston Astros to build a stadium that, beginning in 2019, will house the team now known as the Buies Creek Astros.

Meanwhile, a group of High Point community leaders have proposed a $135 million downtown revitalization project with a $30 million minor league stadium as its centerpiece. Organizers say they have arranged for a Connecticut-based team to move there. The public-private initiative would also include a hotel, apartments, and other amenities. But its fate hinges on the willingness of Guilford County commissioners to allow extra tax revenue generated by the project to be used to pay off stadium. Some of them are skeptical and plans for a vote are uncertain.

Gergen

For now, North Carolina has 11 minor-league teams competing at varying levels. The Durham Bulls and Charlotte Knights play Triple-A ball – the highest level of minor league baseball and the last step before the major leagues. North Carolina does not have any teams at Double-A, the next level down, but boasts several in the Class A-Advanced Carolina League, including Buies Creek and Kinston as well as Zebulon’s Carolina Mudcats and the Winston-Salem Dash.

martin
Stephen Martin

In the Class-A South Atlantic League, North Carolina has the Asheville Tourists, Greensboro Grasshoppers, Hickory Crawdads, and Kannapolis Intimidators, while the Burlington Royals play in Rookie-Advanced Appalachian League.

With several of our cities wooing teams and pursuing new stadiums in recent years, the economic impact of minor league baseball – and the wisdom of supporting it with tax dollars – remains a hot topic.

Perhaps the most prominent academic study of the industry was published in 2011 in the Journal of Sports Economics. The article, “The Economic Impact of Stadiums and Teams: The Case of Minor League Baseball,” analyzed the effect that teams and stadiums throughout the U.S. had on per capita income from the mid-‘80s to mid-2000s. Some small increases occurred. Triple-A teams improved per capita income by a modest $67 over this period while a rookie-level stadium delivered per capita income growth of $202. Overall, though, for teams and stadiums at most levels the impact was basically neutral. The study showed, for example, that independent league teams and stadiums – those unaffiliated with a major league franchise and the kind being proposed in High Point – did not cause significant increases in per-capita income.

But there are other ways to measure success. Fayetteville’s $33 million, taxpayer-funded stadium “is anticipated to generate considerable new spending and a resulting economic impact on an annual basis amounting to $7.2 million in annual economic output, $1.7 million in annual labor income and $365,000 in additional taxes” and is also “expected to be a catalyzing economic development tool,” according to city documents.

Durham Bulls Athletic Park has arguably done just that, with hundreds of millions of dollars invested in downtown Durham since the stadium opened in 1995. In Greensboro, development did not immediately spring up around a privately financed downtown stadium that opened in 2005. But as the economy rebounded from a major recession, growth has accelerated in recent years. More than $100 million in hotel, apartment, and mixed-use projects are under way or in the works near the stadium, on the heels of two successful, luxury apartment complexes. Still, an analysis this year by UNC-Chapel Hill MBA candidate Robert Smith found that “there are a number of factors that have contributed to downtown Greensboro’s revitalization, and it is very difficult to directly correlate the stadium’s success with downtown economic activity.”

With debate in High Point swirling and the costs of Fayetteville’s stadium being closely scrutinized, at least one thing does appear certain: even when the bats and gloves are stored for the winter, interest in baseball here is never really over.

Christopher Gergen is CEO of Forward Impact, a founding partner of HQ Community, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin is deputy chief of staff at the nonprofit Center for Creative Leadership in Greensboro. Reach them at authors@forwardimpact.info and follow them on Twitter @cgergen.

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