The Sprint Center in Kansas City was built partly to attract either an NBA or NHL franchise. Three years on, the gleaming arena has no major sports tenant. The Kansas City Star has an article on the lack of a major sports tenant and what some would like to do, or not do, about it.
Is sufficient demand to warrant having an NBA or NHL team in KC? I’ve always sensed that Kansas City is very good city for sports. But the market already is served by three major college basketball and football programs. The University of Kansas Jayhawks play their home games in Lawrence, KS, roughly 40 or so miles from downtown Kansas City. The Missouri Tigers play their home games in Columbia, about 120 miles away from Kansas City and the Kansas State Wildcats play their games in Manhattan, KS, also about 120 miles from Kansas City. All three schools have a large alumni presence in the city and the city often hosts Big XII championship events.
Then there are the very popular Chiefs, the struggling Royals, and the MLS’s Wizards. Do all these sports teams serve the market inefficiently in some sense to make it worthwhile to have another sports team?
Basic economics tells us that if a potential owner could generate profits by locating a team in KC, then someone would try to do so. But the reality is more complicated because of the closed nature of American sports leagues. To get a team in a new city in the NBA, whether by expansion of moving an existing team, the rest of the league’s members have to vote on it. The same goes for the NHL. Club theory tells us that if a sufficient number of the league’s members aren’t made better off by having a team in KC, regardless of whether it is profitable to its ownership, then a team won’t be placed in KC. Of course it has to be profitable to its ownership, but it has to be profitable to the other league members as well.
The article also raises the point that there are opportunity costs with having a sports anchor at the Sprint Center: playing sports events there takes dates away from other events which also provide value to the good folks in Kansas City. What’s more valuable: a Rush concert or an NBA game?
This brings me to a point that isn’t usually made about facility subsidies in sports, at least not directly. Who can better decide how to allocate resources: politicians or the citizens? Ignoring whether the arena should have been built in the first place, should politicians determine who plays in the arena or should it be left to “the market” to decide? Are our elected officials benevolent social planners – all-knowing, all-powerful, and well-intentioned – that will “do the right thing”? If not, then why trust them with fiddling with the market for entertainment in KC?
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