How does Utah getting an NHL team impact the effort to land an MLB team?
Utah bagged a National Hockey League team last month. It’s still on the hunt for a Major League Baseball team.
And now that hockey has arrived, does it help or hurt the effort to land a baseball expansion franchise?
MLB will no doubt keep an eye on how the Utah hockey club performs in a market that for decades had only the Utah Jazz and, to a lesser extent, Real Salt Lake to compete for corporate dollars and fans. Salt Lake City, almost overnight, became home to two of the “Big Four” sports leagues in the country. If two’s company, is three a crowd in one of the smaller cities in big league sports?
The key to considering whether a city can support another pro team is always revenue, David Carter, principal at The Sports Business Group and an adjunct professor of sport business at the University of Southern California, told the Deseret News via email.
“The ability to generate revenue depends not just on the size of the market, but also the size of the corporate presence in the region and the competition for the entertainment dollar,” he said.
“MLB will gauge how much financial upside would still exist in Salt Lake City given its rapid growth as a sports city. Baseball is a very different business proposition than hockey and relies heavily on attendance given the length of the season. MLB would not want to see a new team enter the market only to be met with modest interest by fans who have already allocated a lot of their entertainment budget to other activities.”
Big swings
The Larry H. Miller Company is heading an effort to land an MLB team. Big League Utah, a group of prominent business leaders, politicians and former professional athletes, is backing the endeavor. It has identified a site to construct a stadium on the west side of Salt Lake City as part of $3.5 billion mixed-use development. The Utah Legislature passed a bill earlier this year that would divert a rental car tax increase and other taxes to the project.
While baseball expansion is at least several years away, the NHL blew into town like a Carolina hurricane. Utah Jazz owner Ryan Smith made his intentions to bring a hockey team to the state public in January, whether via expansion or relocation. The unprecedented, league-brokered deal for Smith to buy the struggling Arizona Coyotes and move them to Salt Lake City in April happened quickly. The yet-to-be-named team will play its first season in Utah starting this fall.
Both hockey and baseball have strong state and local government support, along with likely tax increases to help renovate the Delta Center to better accommodate hockey and to build a ballpark.
Fan support for hockey so far has been enthusiastic, and more people than the Delta Center holds have put down $100 deposits for season tickets. The Jazz took some time to build a loyal fan base but continue to sell out every game despite two losing seasons.
Baseball, too, could prove immensely popular from the first pitch.
A Deseret New/Hinckley Institute of Politics poll in May 2023 found 81% of residents strongly or somewhat favor bringing an MLB franchise to the Beehive State. Slightly more than half say they would attend less than five games a season, while nearly 3 in 10 say they wouldn’t go at all. Another 13% say they would attend five to 10 games a year, while 3% would go to more than 10 games and 3% would buy season tickets. An LHM Company market analysis found baseball would average about 27,000 fans per game, putting it around the middle of the league in attendance.
David Berri, a Southern Utah University professor who specializes in sports economics, sees the Miami Marlins as a cautionary tale. An expansion team in 1993 with great fan support, the then-Florida Marlins won the World Series four years later and again in 2003. But even in the second championship season, attendance was near the bottom of the league and has stayed there since. The team has made the playoffs twice, including as recently as last season. But the fan base continues to lag, and ranks second to last among the league’s 30 teams so far this season.
“There’s a lot of things to do in Miami, and going to baseball games is not one of them,” Berri said. “You would never have thought that that was not going to work. And it just fell off the cliff. They do not care in the slightest about that franchise.”
In order for sports to work, you have to get the fans addicted to the franchise, and that takes some time, he said. In Miami, it didn’t work, and Berri said there isn’t a good explanation for why. But he doesn’t foresee that happening in Utah.
“I just don’t get the sense that Utah is the same way. It just feels like given what’s happened with the Jazz over time, that this a place where fans are more likely to be addicted,” Berri said.
Like any addiction, fandom comes with a financial cost.
A fall 2022 LendingTree survey found sports fans on average planned to spend $664 on their favorite team. The number was higher for Gen X, lower for Gen Z. And the price of addiction for baseball might be less than it is for other major sports. According to Statista, an average family of four would spend $266 to attend an MLB game, including tickets, food, parking and merchandise. An NHL game runs $462, NBA $444 and MLS $300.
Market potential
Eric Schulz, who worked with NBC and World Wrestling Entertainment in 2002 to launch the XFL football league and headed the Larry Miller Sports & Entertainment Group, said he doesn’t know that hockey and baseball are linked. Major League Baseball, he said, is interested in market potential, noting the seasons for the two sports don’t overlap much.
“It’s really about the ownership group. MLB is looking at do they have an ownership group that’s got the resources to be able to pull it off. Clearly, the Millers do. Do you have a facility that is major league quality that the teams would like coming into? Clearly it will be once they build that stadium,” he said in an interview.
“I think it can all exist. My biggest question would be the corporate revenue side. I just don’t think there’s enough sponsorship dollars to spread around, so they’d have to get creative with that.”
LHM Company CEO Steve Starks said he sees hockey as another great amenity for the state. And that the NHL appears to be off to a great start in Utah only helps the case for baseball, he said.
“I don’t see that it hurts our chances at an expansion franchise at all,” he said, adding baseball differs from hockey in participation rates and fan bases. “I think, if anything, it’s a net positive.”
Baseball, he said, hits a different level of popularity.
“There’s a real love that people have for baseball. I don’t think hockey would threaten that. I think that hockey adds another option,” Starks said. “But baseball’s really in a realm by itself in terms of the way that people love the game and talk about the game and grew up playing the game.”
Slicing the corporate pie
Starks and Michelle Smith, president of Larry H. Miller Sports & Entertainment, say the corporate pie in Utah is growing, and companies will prioritize where they get the most value for their dollars. “We’re seeing those corporate dollars being spent in the market at much higher levels than we’ve ever seen, whether that is with the Jazz, the University of Utah or BYU, or even with the Bees,” she said.
Smith said she has seen an increased appetite to support the Triple A Salt Lake Bees, which LHM Company owns, especially with its new ballpark opening next year in South Jordan. Sponsors, she said, love the fan base, the high number of games and that it’s a summer marketing opportunity. Also, she said overall ticket sales are up 20% from last year.
“It’s got its own identity compared to the winter sports and experience,” she said.
Utah has several demographic factors in its favor as it looks to support multiple big league sports franchises. It led the nation in growth during the 2010s. The combined statistical area of Salt Lake City, Provo and Ogden has an estimated population of nearly 2.8 million people, according to the Census Bureau. The Kem C. Gardner Policy Institute at the University of Utah estimates that the state’s population will grow to 5.5 million by 2060. By some measures, Utah has the best economy and fiscal stability in the country.
In a survey of 500 CEOs across the country for Chief Executive magazine, Utah ranked as the top Western state and the ninth-best state for business overall based on their opinion of how easy it was to do business in that state compared to others.
Though figures weren’t readily available for Utah, corporate spending on sports is exploding.
The pro sports sponsorship market in the U.S. is on track to surpass $1 billion in additional team sponsorship revenue this year, potentially topping $8 billion in 2024 — a nearly 20% boost over last year, according to SponsorUnited, a sports and entertainment intelligence platform. Since 2021, the number of brands buying sponsorships has jumped 10% and partnerships have increased 7% over that time.
Schulz, a senior lecturer in marketing at Utah State University’s Jon M. Huntsman School of Business, said Salt Lake City is a viable hockey market but it might be tough sledding after the inaugural season and the newness wears off.
“Years two to five might be a bit of a struggle, especially if MLB comes to town and sucks up a lot of sponsorship dollars and ticket sales. NHL TV ratings have traditionally been low in Salt Lake City, so there isn’t as much awareness and interest as is the case with MLB,” he said.
The advantage Ryan Smith has is existing infrastructure and sponsorships with the Jazz, Schulz said. “He can package them together with the NHL,” he said. “How much more money are they going to get for it, I don’t know.”
Gail Miller and her family company has convened a group of potential investors to pursue ownership of an MLB tea, according to Big League Utah. Although the the group hasn’t publicly named those investors, its list of business supporters includes Utah Sen. Mitt Romney’s son, Tagg Romney, co-founder of Solamere Capital; Lew Cramer, CEO of Colliers International, one of largest real estate companies in the world; and Todd Pedersen, founder of Vivint Smart Home, which formerly held the naming rights to the Jazz arena.
Stretching the talent pool
Schulz said the pieces are in place for Salt Lake City to get a baseball team, but faces formidable competition in Portland, Nashville and Montreal. The big question for baseball, he said, is how much it wants to expand.
“If I’m sitting in the MLB office, do we have enough talent to support three or four more teams? Pitching is already thin in this league,” he said.
A dozen top line pitchers have gone down with injuries in the first month of the season, with Forbes noting pitcher injuries cost Major League Baseball hundreds of millions of dollars each year.
Should baseball expand or look to relocate a franchise, Starks said that like Smith Entertainment Group with the hockey club, LHM Company is ready to go now. A team could play at the new Bees stadium as early as next season until a major league ballpark is built, which he says gives it an advantage over other markets.
“The formula that we have, we believe will ultimately be a winning formula,” Starks said, pointing to a willing and proven ownership group, secured real estate and a private-public partnership allowing public financing for a portion of stadium construction.
