Lessons from Oklahoma City: What the Sacramento region can gain from the A’s temporary relocation

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After Hurricane Katrina deluged New Orleans in August 2005, leaving massive damage, the city’s two professional sports teams scrambled to find new venues where they could play.

While the New Orleans Saints split their NFL “home games” between stadiums in San Antonio and Baton Rouge, Louisiana, the city’s NBA franchise, then known as the Hornets, set up shop in Oklahoma City. Until that decision by the Hornets management, the only other permanent professional sports franchise in the city had been an arena football league team.

“I don’t think anybody would have considered Oklahoma City to be a major league market that would be feasible to host an NBA team,” said Joel Maxcy, a sports economist at Drexel University in Philadelphia. “It turned out that hosting the Hornets for a couple of years showed that it was possible.”

The Hornets’ two seasons in Oklahoma City “absolutely helped” to clinch a franchise with the National Basketball Association, said Cynthia Reed, the chief of marketing and communications at the Greater Oklahoma City Chamber of Commerce.

The real thing that the Sacramento region can get out of the A’s temporary three-season relocation to Sutter Health Park in 2025 is proof that it can be a major league city, said Victor Matheson, a past editor at the Journal of Sports Economics and a professor at the College of the Holy Cross in Worcester, Massachusetts.

“If the three seasons go spectacularly well and you get gigantic sold-out crowds and lines out the door and soaring ticket prices,” Matheson said, “that’s the sort of thing that could lift Sacramento to eventually be put on as a Major League baseball expansion city.”

While this would be the fulfillment of a dream that many civic boosters have had since the minor league River Cats franchise moved into its home in West Sacramento, both Matheson and Maxcy warned that all that glitters is not necessarily gold.

Time and time again, they said, studies have shown that professional sports franchise are not a financial boon for the local economies in which the teams play.

If you spend money at your favorite local restaurant, Matheson said, the owners are local and the workers are local and much of what they earn will be spent around the Sacramento region, but when you have the A’s come to town, it’s not a local owner, Matheson, and A’s workers aren’t locals.

“When you spend money at the ballpark, that money is gonna go into the pockets of an owner that’s out of town and players who are from out of town, and so that money is much less likely to be spent and re-spent within Sacramento than that same money spent at your favorite Sacramento restaurant,” Matheson said. “That’s what’s known as leakages.”

Economists have found that leakage, where income escapes an economy, is an all-too-common aspect of professional sports teams, Matheson said, and if a consumer is spending money at a ballpark or arena, those are entertainment dollars that won’t go to local attractions.

Oklahoma City saw $33M in direct spending

In Oklahoma City, a chamber-financed study showed that $33.2 million was generated in direct spending in the Hornet’s 2006-2007 season. The city welcomed its own NBA franchise, the Oklahoma City Thunder, the year after the Hornets returned to New Orleans.

In the years since the Thunder arrived, economists have weighed the growth of Oklahoma City and Tulsa, two cities within the same state that have comparable economic activity, Matheson said. They found that Oklahoma City didn’t do particularly better than Tulsa.

Even if Oklahoma City had not secured a professional sports team to replace the Hornets, Maxcy said, the region likely would have suffered no economic setback. When studying other departures by professional sports teams, he said, economists have found no real impact.

These teams do not operate in a vacuum, Maxcy said. They may generate hundreds of millions of dollars in revenue each year, he said, but they’re typically a small part of the products and services produced by multibillion-dollar regional economies.

How will West Sacramento’s economy be affected?

In this case, though, the A’s are moving to West Sacramento, a city with a population of just more than 54,000, while Oklahoma City has nearly 700,000 residents. Wouldn’t this small city feel the impact of the A’s arrival and departure?

The A’s games are likely to draw many fans from outside West Sacramento, Maxcy said, so that could mean a fairly large, temporary uptick in sales tax revenue for that city, and the team’s eventual departure to Las Vegas could result in a drop in that revenue.

This also means, however, that neighboring cities in the region are losing those entertainment dollars and the tax revenue to West Sacramento, the two economic experts said, and what also is likely to happen is that some local residents will opt to buy A’s tickets rather than River Cats tickets.

Economic impact reports about the revenue generated by professional sports franchises often cite measurable percentages of ticket sales to out-of-town consumers, Matheson said, but studies have not shown commensurate gains in tourism. He and other experts have theorized that this is because those tourists were in town for other reasons and decided to take in a game while there.

While the region may not gain in economic activity, it will gain in terms of having another source of entertainment, said Lorena Martin, a former director of performance for a professional sports team and now an assistant professor in data science and operations at the University of Southern California.

“This could invigorate the team itself, even its own performance, as well as invigorate the community and energize the community,” she said.

Having two professional sports teams will definitely elevate the profile of the Sacramento region, Maxcy said, and they add a level of vibrancy that could give employers an edge in recruiting some workers who place a high value on these kind of entertainment options.

“Hosting a Major League Baseball franchise is kind of a big deal in terms of putting a city on the map, not that Sacramento is not on the map, but it would definitely raise the public view of Sacramento,” Maxcy said. “But is it temporary or permanent? I think that’s probably going to be the big question.”