Will Utah need to offer subsidies to lure an MLB team?

SALT LAKE CITY — Utah Gov. Spencer Cox doesn't want the state to subsidize a new effort to bring an MLB team to Salt Lake City; however, sports business experts say Utah may have to find a way to sweeten the pot to get ahead of other cities also vying for a team.

The governor was asked about possible taxpayer spending and economic benefits tied to Wednesday's baseball announcement at an event celebrating Utah's economy Thursday. Cox said MLB has not asked Utah for any form of tax incentive and those types of discussions have not yet been had — and he would prefer that it doesn't happen.

"I'm on the record saying that I don't think taxpayers should subsidize billionaires," he said. "I don't think that's strong economic policy. I don't think that's good for taxpayers, especially when most of the benefits of that (go) directly to the franchise owners.

"We don't build stadiums, that's not what we do," he added. "We've never done that and we're not going to start now."

There could be some tax increment financing with stadiums, which takes parts of tax revenue increases in areas that "see a tremendous benefit," Cox noted. It's one concession that he expects MLB to ask when the league is closer to making a decision to expand.

A coalition called Big League Utah, led by Gail Miller and the Larry H. Miller Company, announced Wednesday its intent to bring a team to the Beehive State. The group prefers to build a new stadium on a portion of the 100 acres of land Rocky Mountain Power is redeveloping on Salt Lake City's west side.

Forbes reported Thursday that the cost of expansion fees and a stadium could reach as much as $4 billion, though it noted that several prominent private financial figures are part of Big League Utah. That could reduce any burden on public funding.

Ideally, the government shouldn't get involved with professional sports but with at least two other cities also petitioning for expansion teams, it will likely have to happen in some form, says David Berri, a professor of economics at Southern Utah University and former president of the North American Association of Sports Economists.

"The problem that Salt Lake City is going to have is, if they want a team, they're going to have to subsidize this," he told KSL.com. "Baseball is going to demand something from them because they have choices. ... (MLB doesn't) create as many teams as they could have and that way, markets are left open."

Berri says this is an "intentional" business model — so teams have stronger leverage in the negotiations, pointing to a pair of current MLB teams as an example of how this works. The Oakland Athletics and Tampa Bay Rays have each explored relocation in recent years, unless new stadiums are built in their respective cities in the near future. If those aren't built, they could end up going to a city willing to meet the team's demands.

ESPN reported Wednesday that MLB wants this situation figured out before the league looks at expansion.

"If you really want a team, you really can't say no to the subsidy because they're going to demand that you do that," Berri said. "The subsidy is the price of getting the team. So to the extent that the team will make people happy in Utah, then I guess it's a good thing."

Cox and other Utah leaders are hopeful that Utah's economic standing will be enough to woo MLB, though. They talked about the effort at an event to celebrate Utah having the top economic outlook on the "Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index" report for the 16th straight year.

Utah Senate President Stuart Adams argues that companies come to Utah because of "good tax policy" and end up staying because of the state's quality of life.

"I think those come naturally with good economic policies," he said.

Economic benefits?

Meanwhile, Utah leaders said they have not conducted a "full-blown economic outlook" on what an MLB franchise would mean for the state's economy. However, they do see it as a boost for the state if it happens.

"In conversation with we've seen with other expansion areas of the country, they will all tell you that it's great, it's really good for the economy," Cox said.

Berri isn't as confident about that, saying there are mixed results on how impactful sports are to local economies, but many studies have found little impact.

For instance, J.C. Bradbury, a professor of economics at Kennesaw State University, wrote that sales tax revenue in Cobb County, Georgia, increased when it opened a new stadium for the Atlanta Braves in 2017; but, "the magnitude of the effect is small and not statistically significant" and wasn't enough to offset the subsidies local officials provided, a study published in the Journal of Urban Affairs last year states.

That's why Berri doesn't think it will add too much to the economy, because sports are entertainment and a new team likely won't adjust how much someone is willing to pay for entertainment every month. In essence, another entertainment option in a different part of the city or region isn't benefiting from someone deciding to attend an MLB game in Salt Lake City, so it evens out the impact.

"They'll spend more money on baseball tickets but they'll spend less money on something else," he explains. "So the other entertainment options get less money and baseball gets more money, and the economy doesn't really change very much."

In the end, he doesn't believe an MLB team will tack onto Salt Lake City's gross domestic product that much, which ended up just shy of $118.5 billion in 2021.

Though, Berri said he's still rooting for Salt Lake City to land a major league team. That's because sports still provides a form of community bonding, something that Big League Utah members said they believe a MLB team will do.

"The reason you do sports is that it makes people happy," he said. "It costs money ... but it makes people happy."

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