The Economics of Baseball's Spring Training

Cities in Arizona and Florida spend millions to host baseball teams during spring training. Is it worth it?
by | March 21, 2011
 

This article, first published in March 2011, has been updated on February 17, 2012.

In just two weeks, one of the world's most valuable sports franchises will move into a new stadium funded by taxpayers in a county battling double-digit unemployment and a foreclosure crisis. How did that happen?

Back in summer 2010, as the start of a new fiscal year approached, Florida’s Lee County was tasked with closing a massive budget deficit. Located on the southwest coast of Florida, the county was hit hard by the housing bubble, and its unemployment rate was more than 40 percent higher than the national average. Desperate, county leaders considered tough choices like cutting millions from their EMS budget and instituting employee pay cuts and furloughs. They did that, and they took $75 million from their reserve fund.

Yet in the midst of those struggles, the county made one decision that faced little dissent: selling up to $81 million in bonds to fund a new baseball stadium where the Boston Red Sox would play 18 exhibition games in the spring per year.

“At the time we’re spending reserve dollars to keep our county government operating, we’re also spending this outrageous money on professional spring training, without asking (the team) to put very much in,” says Brian Bigelow, the lone county commissioner who opposed the deal.

The Red Sox, who play in the county seat of Fort Myers, had been flirting with other cities who had hoped to lure them away from the community that’s been their spring home since 1993. Wary of winding up like Vero Beach, West Palm Beach or St. Petersburg – Florida communities that once hosted spring training but no longer do – Lee County paid up.

The Red Sox previous spring stadium, City of Palms Park, was only built in 1992 -- by Fort Myers taxpayers. To some, the deal represents a giveaway to a team that doesn’t need a handout. The franchise is worth a reported $870 million.

“It was as if it's so important that we retain the Red Sox, it doesn't matter how much we spend," says Bigelow.

But Bigelow’s views are outside the norm, at least among elected officials in Florida and Arizona, where cities find themselves in all-out competition to offer the best stadiums at the lowest prices to Major League Baseball teams. The franchises intentionally play communities against one another in an effort to get the best deal; as a result, hundreds of millions of dollars in public money are spent funding sporting venues that host exhibition games for one month a year. Elected officials say those facilities are investments that pay for themselves many times over, but their critics say there’s no way that’s possible.

Moving Out West

For six weeks each spring, baseball teams flock to Florida and Arizona to prepare for the upcoming season. Players spend the first two weeks practicing, and the following month they play an exhibition season – known as the Grapefruit League in Florida and the Cactus League in Arizona – in which new players try to earn a roster spot, aging players try to keep one and managers and coaches tinker with their lineups.

For fans, it’s an opportunity to see the game’s biggest stars up close, since spring training stadiums are a fraction of the size of their major-league counterparts. They also have the chance to interact with players, who often have a more relaxed demeanor during the exhibition season. The games are immensely popular, drawing more than 3.5 million fans last season, one of the highest attendance figures ever for spring training.

While spring training was once synonymous with Florida, that’s starting to change. Arizona municipalities have become known for offering extremely generous stadium terms to teams that are willing to re-locate there. Since 2003, a half-dozen teams have traded citrus for cactus and moved their spring headquarters west, primarily due to lucrative deals and the heightened geographic concentration of teams, which reduces travel times. Today, baseball’s 30 teams are evenly split between the two states.

That shuffling of teams encourages municipalities to compete to land teams. Since stadium leases expire at staggered intervals, there’s almost always a battle for at least one team at any time. As a result, teams are able to squeeze out vast sums of public money for their facilities, typically making little or no contribution of their own.

(Click the maps below to see which cities in Florida and Arizona host baseball's spring training.)

Millions in Aid

In 2001, the Florida Sports Foundation – a non-profit that works with the state government – put up $54.5 million in state money for construction and renovation of five spring training stadiums. That money was matched – and then some – by localities. Another $52.9 million in matching funds for four stadiums was issued in 2006.

Even more money could be forthcoming. By 2016, at least four Florida-based teams will have leases that are up for renewal, and many will want renovations. Meanwhile, several Cactus League teams will see their leases expire soon, and Florida municipalities will likely try to recruit them. Nicky Gandy, the communications director for the foundation, says his organization is trying to figure out how to obtain more funding for upcoming projects.

Out west, huge sums are being spent as well. In November 2000, Maricopa County voters approved Proposition 302, creating the Arizona Sports & Tourism Authority which, among other tasks, funds construction and renovation of spring training stadiums via hotel taxes, car rental taxes and other sources.

Initially, the ASTA was slated to provide $402 million over a 30-year period for Cactus League stadiums, says Tom Sadler, its director. So far, ASTA has funded $68.3 million in new construction or renovation at four Arizona facilities. It’s also providing funding for two other facilities in the Arizona cities of Goodyear and Glendale, though it may have difficulty meeting those commitments.

Return on Investment

Public officials acknowledge that a huge sum of money has been spent on the facilities, but they consider it an investment. In Florida, government leaders frequently cite the fact that the Grapefruit League contributes $753 million in annual sales to the state, including $385 million from out-of-state visitors. Meanwhile, the Cactus League estimates that spring training contributes more than $350 million to Arizona's economy. “It’s a proven economic driver,” says Gandy, adding that the stadiums also host minor league teams and college baseball tournaments that likely make the real number impact of the facilities even greater.

“It’s not so much a giveaway as an investment,” says Mark Jackson, director of Polk County Tourism and Sports Marketing, a quasi-government department charged with recruiting and retaining spring training teams in central Florida. “That’s not re-circulating money. That’s new money coming it. It’s essentially making spring training an export.”

Brian Dalke, Goodyear’s deputy city manager, says in his region, spending at hotels, restaurants and bars are highest in the spring training month of March. That’s also the second-highest month for general retail sales, beaten only by the holiday shopping season in December. “The impact is sizable,” Dalke says.

The two also highlight the intangible benefits of spring training. Cities that might otherwise be obscure get cachet and name recognition by serving as spring training hosts, similar to how football has put Green Bay, Wis. on the map. That, in turn, can result in businesses investing in the community. “It’s amazing how much publicity we get for this,” Dalke says.

Leaders in Charlotte County, Fla. -- which recently funded a $27.2 million stadium renovation for the Tampa Bay Rays prior to their 2009 arrival -- also emphasize the benefits of baseball that can't be measured in dollars and cents. “The value-added in having (Charlotte County’s) identity affiliated with spring training is unbelievable,” says Assistant County Administrator Kelly Shoemaker.

The stadium renovation in Charlotte County was funded by $15 million in state aid, $4 million from the Rays and about $8.2 million is from the county, the Sarasota Herald-Tribune reported. The generous package was largely the result of the years the county spent in baseball purgatory after the Texas Rangers left following the 2002 season.

Shoemaker says the team fosters a “home town spirit” and is involved with local charities. “Those kinds of things you can’t get any way else,” Shoemaker says.

Funny Numbers 

Economists, on the other hand, have a different outlook. Without a doubt, they say, municipalities get a bad deal when they fund spring training stadiums.

“There’s absolutely no need for any community to invest in a sports team,” says Philip Porter, a sports economist at University of South Florida in Tampa, located a few miles from the stadium Hillsborough County built for the New York Yankees.

Since teams move around so frequently, there’s ample data to determine whether a city suffers financially when its team leaves. But, Porter says, “nothing changes” when a team skips town. Sales tax, property values, and the size of the tax base generally remain at comparable levels, undermining the argument that the stadiums pose a vast economic benefit. “That finding is so universal as to be irrefutable,” Porter says.

A study by University of Akron professor John Zipp examined the amount of taxable sales in Florida communities that hosted spring training in 1995, when the baseball strike caused teams to field second-rate “replacement players” and there was a 60 percent drop in Grapefruit League attendance. If spring training had a major financial impact on those communities, they should have suffered tremendously. That didn’t happen, and in fact, their taxable sales increased. Those findings “may indicate that spring training is not the major tourist draw that many claim,” Zipp wrote in a paper published by the Brookings Institution.

Porter says studies that tout the positive economic impact of spring training – typically commissioned by state and local governments – do so by asking fans at games how much they spend while they’re visiting, then multiplying that figure by the number of people who attend games. That method is flawed, Porter says, because it doesn't account for money spent locally that actually goes to the team and leaves the area, such as ticket sales or stadium advertising purchased by local businesses.

“Essentially you bring a team into the community, you’re not charging them anything for rent, and you’re inviting them to sell things to your community,” Porter says.

Critics also say many people visiting Florida for spring training would visit the state anyway, regardless of baseball, just to enjoy its warm spring weather. Furthermore, assuming the estimates of spring training's impact are accurate, it's still a relatively small sum. In 2010, Florida had taxable sales of $281.5 billion statewide. The sales reportedly generated by spring training represent less than a third of a percent of that total.

“Baseball is important, but it’s a very small flash in the pan of our entire tourist industry,” says Bigelow, of Lee County. “To throw so much money and effort behind it, for such a small component of what attracts people here, is very short sighted and does not benefit our economy at large.”

Just Business

In the case of Winter Haven, Fla., where the Cleveland Indians trained from 1993 to 2008, the economics of spring training simply didn’t work out. The team initially relocated to the city of 35,000 after Hurricane Andrew damaged a newly-built stadium in Homestead, Fla. that was supposed to house the team. The Red Sox – which had called Winter Haven home since 1966 – had just left. “The city was desperate for a team, and the Indians were desperate for a home,” says Michael Stavres, director of community services for Winter Haven.

When the team left, Winter Haven was already giving the Indians a sweet deal -- the team didn’t pay rent, and it kept the bulk of revenue from ticket sales, concessions, parking and advertising. Meanwhile, the city paid for the operational costs of the stadium in full, which Stavres says cost around $800,000 annually. “Spring training is extremely expensive,” Stavres says.

But Winter Haven’s aging Chain of Lakes Park, which opened in the 1960s, lacked the sort of modern amenities that are the norm for a professional team. The city tried to retain the team but lacked the financial wherewithal to make a multi-million dollar investment in a new stadium. Eventually, the Indians would move on to greener fields in Goodyear, Ariz.

“We knew we wouldn’t go into another spring training agreement unless it was a mutually beneficial deal,” Stavres says. Goodyear, meanwhile, gave the Indians a deal Winter Haven just couldn’t compete with: a $108 million, 8,000-seat facility designed by HOK Sport, the premiere architect of athletic venues. “When it came time, we negotiated with them as much as we could in their final years,” Stavres says. “We just couldn’t strike a chord.”

When the team left, Stavres says, “businesses felt the pinch.” Though city sales tax revenue fell $133,000 the year after the team left, that was just a fraction of what it cost to operate the stadium. Ironically, the stadium that at one time was once synonymous with Winter Haven will soon be demolished. Plans call for a developer to build a commercial site where the stadium currently stands. Meanwhile, Legoland has opened an amusement park in Winter Haven that could have a greater impact on the city than spring training, since it’s open year-round.

Stavres says Winter Haven may seek baseball again some day, but it will have to be on terms that make fiscal sense, with the city, county, state, a private developer and a team – especially the team – playing a role in the deal. “I think in today’s economy, you have got to have the team (invest) as well,” Stavres says. “If they don’t have a stake in the claim… I think you have a hard time selling it to your community.”

But 90 miles south Charlotte County is still having its baseball honeymoon. The Rays entered 2009, their first season in Charlotte County, as the reigning American League champions and have continued to be successful. The community has embraced the team largely because during the regular season, it plays in nearby Tampa, making it a true home town team.

Shoemaker, the county official, compared the expense of a stadium to public money spent on parks, libraries and other amenities that make a community an enjoyable place to live. “You as a community decide what quality-of-life items are important to have in your backyard,” Shoemaker says. “It’s just the decision you make. If that’s an expense you want to pay for, that’s what you pay to do business.”

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