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Spring Training

2012 March 4
by Dennis Coates

The Sports Business Journal recently published “Clubs give winter homes a branding boost” about the partnership between MLB franchises and their spring training homes. There is a box with Cactus League and Grapefruit League in it that has links to charts showing “What … municipalities have gained from, and spent on, spring training sites, according to their leases.” Among these pieces of information are the debt service and the net cost to the municipality to operate the facility in 2011.

The article points out that since 1988 19 of the 30 clubs in MLB have gotten new spring training venues and the rest have gotten renovated facilities, to the tune of almost $1 billion. The article also notes that nearly every club has gotten a bigger share of stadium revenue than it had under the previous lease. “Public officials defend their spending on spring training facilities by saying that most of the funding for the projects comes from tourist taxes rather than out of local residents’ wallets”. In return, the cities get the “marketing muscle” of the clubs.

The key for the cities is the belief that MLB clubs draw tourists who spend lots of money in hotels, at restaurants, on souvenirs, all of which transactions are taxed. By my count from the table, only 13 clubs had attendance at their spring games over 100,000. None had more than 200,000. One assumes that at least some of these attendees are local to Florida and many of them are people who take in multiple games, so that the number of tourists brought to any individual city in Florida is fairly modest.

Consider that in the first quarter of 2011 (January through March), Visit Florida reports that there were 22.9 million visitors to Florida, while in the second quarter (April through June) there were 21.8 million visitors. If every one of the difference was there for Spring Training and for no other reason, then one could assign to the whole state of Florida an increase in tourists of 1.1 million during the period of Spring Training relative to the next quarter of the year. Compared to the previous quarter, winter 2010, the boost would be 1.3 million. Of course, the first quarter of the year is likely to attract a large share of college students on spring break and others from colder climates fleeing the winter, so how many of that million or so tourists are in Florida because of and only because of Spring Training is unknown. But surely it is not the whole million plus. Moreover, that figure is for the whole state, not the small number of locations where MLB clubs have their spring training, none of which includes Miami or Dade County.

Perhaps the attendees, net of any current residents among them, generate enough tax dollars to cover the costs to the local community of the facility. Take as one example, St.Lucie County that had net operating costs of $2.075 million in 2011 for the the facility it put up for the NY Mets. If the 87,413 attendees at Mets’ games in the Digital Domain Park are all from out of the area, they would have to pay nearly $24 apiece in taxes while in St. Lucie County (population 280,000) to cover the county’s operating cost of the stadium. Perhaps they do, as does not seem unreasonable if they stay any length of time. Indeed, the county imposes a 5% tourist tax on stays of less than 6 months, with about 80% of that money going to pay for the St. Lucie County Sports Complex (Digital Domain Park). The remaining 20% goes to promote tourism.

To put this in context, a tax is imposed on all tourists that stay in St. Lucie County, even those that do not do so to attend spring training baseball, to pay for a sports complex/baseball facility that might attract out of county fans about 6 weeks during the year. Martin County, directly to the south of St. Lucie has a similar tax, but of only 4% and hosts no MLB club during Spring Training. Indian River and Okeechobee counties also border on St. Lucie County, neither of which seems to impose a hotel or tourist tax (at least I could not find that they do in a quick look at their county government websites). In other words, it is fairly easy for those tourists interested in avoiding St. Lucie’s tax to pay off the baseball facility.

Moreover, given that Martin County imposes a hotel tax at 4% without the need to pay off a baseball stadium bond, it is reasonable to conclude that St. Lucie could do so as well. That means St. Lucie could impose the same tourist tax and devote those funds to other purposes, like those for which Martin County uses its tourist tax revenues, and the fact that St. Lucie County does not do so means those other purposes are funded out of the wallets of the St. Lucie taxpayers.

Similar arguments likely apply in each of the communities hosting Spring Training. The bottom line is, communities providing subsidies to MLB franchises as means of attracting tourists and enhancing their local economies need to think more carefully about what they are getting in return.

3 Responses
  1. Millsy permalink
    March 6, 2012

    Certainly agree that they should think carefully here, but I do think that looking at spring training attendance is underestimating the value of these facilities (but I don’t think there is a good justification for the kind of spending you mention, or even close to it). Many of the facilities are used as spring training and neutral parks for college, high school, and travel youth leagues as well. I know in college, we would go to one of these places (for example, Wide World of Sports at Disney) to play other colleges in warm weather for a week. This happens throughout the year. We were certainly tourists and spent money while there.

    I really have no idea how many visitors this results in. And given that these places charge teams to play there, it seems that they could probably be more privately financed. But there are multiple uses for many of the facilities built that likely reduce the discrepancy between cost and benefit to the locality to some degree (again, it could be very small).

  2. Dennis permalink
    March 7, 2012

    Millsy,

    I agree with your point that the facilities are used for other purposes. If the benefits from those other purposes exceed the costs of building the facilities, then the local government ought to build them. But to argue that they pay for themselves based on the MLB and tourism generated by spring training seems to me a rationalization rather than a sound reason for subsidizing the MLB clubs.

  3. Millsy permalink
    March 7, 2012

    Certainly wasn’t saying it would cover everything, just making the observation that the number of tourists from the facilities wouldn’t be limited to only attendees to the games (and in fact, I would imagine there are more tourists at these other events than the MLB Spring games themselves). I agree that the rationalization you mention is a stretch for $1 billion subsidization, no doubt.

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