Even Little Cities Deserve Kings: Sacramento's Basketball Victory Is a Win For Small Sports Markets

Posted by Megan Greenwell

Maloofs

Kings executives, including owners Joe and Gavin Maloof

The Sacramento Kings are one of the worst teams in the NBA. They haven't been competitive in years. Their games are among the league's most poorly attended. They're among the least valuable franchises. In theory, that should make them prime contenders to be shut down or move to a new city that can better support a team.

But basketball and business aren't played on paper, and yesterday the Kings' owners announced a deal for a new stadium that will keep the team in Sacramento. The team's owners, the Maloof family, will pay $75 million up front toward construction. The rest will come from revenues raised by leasing city parking garages to a private firm.The move may not pay off—there's no guarantee a new arena will measurably increase attendance, revenue, or talent level in an economically depressed small-market city—but it's a gamble worth taking.

The plight of small-market teams has been the defining sports business storyline for decades. When the NBA was created in 1949, it had teams in Ft. Wayne, Rochester, Syracuse, and the tri-city region along the Illinois-Iowa border. These days, it's unclear whether New Orleans and Charlotte can support their teams long-term. Seattle, the hub of the 15th-largest metropolitan area in the country, lost its NBA team over a stadium dispute in 2008.  Oakland could see all three of its sports franchises flee to larger cities over the next few years.

It's tempting to take a "survival of the fittest" philosophy to such moves. Sports teams are luxuries for cities, not rights, and using city funds to build new stadiums is perennially controversial. The long-term economic impact of bringing a pro sports franchise to town or building a new stadium is debatable at best. It's hard to look at the row after row of empty seats at a Kings game and think that Sacramento "deserves" a team, especially if you're not a dyed-in-the-wool fan.

But the average economic impact of teams across the country is not the most relevant factor when one city is considering whether to build a stadium. In many cases, sports teams do have a dramatic effect on parts of their home cities—the Washington Wizards' arena in D.C.'s Chinatown helped transform a violent neighborhood with few flourishing businesses into a yuppie haven. And while it's easy to find the cultural value of the neighborhood's chain restaurants lacking, it's tough to quibble with the economic value to the nation's capital. The Wizards' experience is no guarantee that a new Kings stadium will revitalize downtown Sacramento, which has struggled for years, but to assume that it won't isn't fair either.

The less-tangible effects of sports franchises are no less important: The sense of civic pride that results from having a team in town is hard to replicate any other way. Sports teams make cities into destinations—fans follow their teams on the road, then spend money on tourist attractions in town. People want to live in towns that have nice things. Even when they lose, the Kings act as a huge selling point for Sacramento.

This puts the onus on team owners, who have a tendency to be generally sleazy. Putting such a large share of the city's future in the hands of a billionaire businessman (or, in Sacramento's case, a family of them) is a risky proposition, especially since study after study shows publicly financed stadiums are a bad investment. But when owners are forced to put their personal assets at stake rather than simply accepting handouts from the city—as is true in the Sacramento deal—the risk of municipal economic catastrophe is removed from the equation.

Creating a successful team—whether financially or competitively—also requires leagues to take a proactive approach. This means salary caps, which have been successful in the NBA and NFL. By definition, small-market teams don't have the assets of the Yankees or Lakers, and they can't succeed without some restrictions on the giants to ensure parity. While the Yankees can't buy their World Series rings every year, the lack of a salary cap in baseball has hurt efforts toward parity—and thus at keeping teams in their hometowns—immeasurably. Though the Kings haven't won recently, there are plenty of mid-sized cities at the top of the NBA standings—check out the team with the second-best record in the league, the Oklahoma City Thunder.  If the Kings played baseball, they couldn't afford to stake their future to Sacramento.

Residents of Sacramento (and similarly situated mid-sized cities across the country) should be cheering yesterday's deal and rooting for a policy change in Major League Baseball. Whether they follow sports or not, they don't want to live in a town without the Kings.

Photo via (cc) Flickr user Renee V