New Ballpark in Kansas City?

While reading the 2005 BP I came across two interesting items in the article on the Milwaukee Brewers that relate to the Kansas City Royals.

First, according to market research done by Mike Jones that takes into account TV ratings Kansas City is the smallest of the 30 major league markets coming in behind Birmingham, Norfolk, New Orleans, and Greenboro/Winston-Salem. That doesn't bode well for the future of baseball in Kansas City.

Second, with all the controvery in KC these days regarding the building of a new downtown stadium (a move the Royals have publicly said they don't want) it was interesting to see the following table that shows how recent teams have fared in their new stadiums (I added the Old-1 column).

City        Old-1 Old  New1  New2  New3  New4  New5

Detroit     1998  1999  2000  2001  2002  2003  2004 
Payroll     24.1  35.0  61.7  49.4  55.0  49.2  46.8
Attendance  1.41  2.03  2.44  1.92  1.50  1.36  1.91
Win %       .401  .426  .487  .407  .339  .266  .444

Milwaukee   1999  2000  2001  2002  2003  2004
Payroll     43.4  35.8  45.1  50.3  40.6  27.5
Attendance  1.71  1.57  2.81  1.97  1.70  2.06
Win %       .459  .451  .420  .346  .407  .416

Pittsburg   1999  2000  2001  2002  2003  2004
Payroll     24.7  29.6  57.8  42.3  54.8  32.2
Attendance  1.63  1.75  2.46  1.78  1.64  1.58
Win %       .484  .426  .383  .444  .463  .444

Cincinnati  2001  2002  2003  2004
Payroll     49.0  45.1  59.4  46.6
Attendance  1.88  1.86  2.36  2.28
Win %       .407  .481  .426  .469

A couple things jump out immediately. First, all the teams increased their payroll significantly in their first year in the new park. However, only the Tigers actually saw any results on the field. Second, all the teams have since reverted to their payroll level before moving into the new park. Third, all these teams were bad before the new park and bad after the new park. Fourth, the attendance spiked in the first year in the new ballpark and decreased thereafter.

So judging from recent history a new ballpark in downtown Kansas City likely won't reverse the fortunes of the team on the field nor draw more fans resulting in increased revenue.

Which brings me to the main point of this post.

Increasing revenues by simply attracting more fans does not raise enough revenue to help a team be competitive. Far more important are broadcasting rights where the difference between the top and the bottom can be around $50M and luxury boxes where the difference is around $20M. In both of these areas, even with a new stadium, the Royals aren't likely to increase their revenue because of the small population base and the lack of large corporate interests in Kansas City.

Until Major League baseball comes to its senses and devises a real revenue sharing plan, what you'll continue to see is the trend I documented in my article on salaries where the place a team finishes in the standings is strongly correlated with their relative payroll.

Rank  NPayroll Teams
1 1.29 43
2 1.06 41
3 0.98 42
4 0.89 42
5 0.77 35
6 0.76  7