APU Business Original Sports

Oakland Athletics: A Case Study in Sports Management

By Dr. James J. Barney
Faculty Member, Legal Studies

The Oakland Athletics team is one of the most storied franchises in major league baseball and has a long history of success. The powerhouse team of the Philadelphia Athletics era during the early 20th century, the “Swinging Oakland As” of the 1970s, and the “Bash Brother days” featuring sluggers Jose Canseco and Mark McGwire in the late 1980s and early 1990s are essential parts of this team’s lore.

In the 2000s, the Oakland Athletics received additional fame. In 2011, Hollywood made a movie about the team’s ability to create a competitive team on a shoestring budget in the movie “Moneyball.”

However, in recent years, most of the talk about the Oakland Athletics has centered on the current owner’s efforts to build a new stadium in Oakland or relocate to another city. The current owner, John Fisher, argued that the existing home of the team, the Oakland Coliseum, has had better days.

Fisher has also said that the Oakland Athletics team needs to build a multi-billion-dollar waterfront complex to compete with the San Francisco Giants, who have a world-class stadium. With the league’s blessing, the team has also explored sites for a new stadium in Las Vegas and other cities.

While this situation in Oakland provides students of sports law, sports management, and business with plenty of material for future study, local residents and the team’s fans do not have many legal or practical options to prevent the team from moving away from Oakland. Oakland can either provide billions of dollars in concessions demanded by the current team owner or hope that another investor will purchase the team to keep it in Oakland.

Alternatively, Oakland’s leaders can hope that the current team owner will come to his senses. In time, that team owner might realize that the Bay Area is one of the most desirable media and corporate markets in the United States and stay in place.

Related link: How Does Playing Sports Foster Future Leaders?

Relocation Is a Frequent Story in Professional Sports

The current drama in Oakland is merely another episode of what has become a recurring story in professional sports. Owners threaten to move their franchise unless local municipalities provide the team with massive tax breaks, free land or tax money to build a modern stadium.

In Oakland, however, the team owner is demanding prime waterside real estate and billions of dollars in tax subsidies to build a multi-use development facility that includes retail stores and housing. At the same time, the Oakland Athletics are scouting out other potential locations, threatening to leave unless Oakland caves to the team’s demands.

From a practical point of view, leaving California’s Bay Area for another market makes little sense, especially when the alternative market is Las Vegas. According to the logic of some outsiders, the low attendance at Oakland Athletics games illustrates why the team has to leave Oakland for Las Vegas.

The news coverage that focuses on empty seats in the Oakland Coliseum ignores the fact that a majority of the money made in professional sports today comes from media deals and sponsorships from large companies, not spectators. Spectators only provide a share of a team’s revenue and, more importantly, fans in the stands provide the public with a sense of a franchise’s health.

Given the fact that the San Francisco metro area’s media market and corporate landscape are so lucrative, the relocation threats may be a ruse to extract concessions from Oakland.

Related link: Cities, Taxpayers and the Financing of Pro Sports Stadiums

Moving from Oakland to Las Vegas Makes Little Sense

I have my own opinions on why moving from Oakland to Las Vegas would be a wrong business decision for the Oakland Athletics. If the owner of the this team is serious about moving to Las Vegas, the team would trade one of the largest and most lucrative media markets shared with the San Francisco Giants for a much smaller media market with fewer corporate sponsors. Presently, the team is mostly funded by media and corporate money, although the Oakland Athletics recently noted revenue losses due to COVID-19 restrictions that prevented spectators from attending games.

Rather than benefiting from one of the largest media markets in the United States with a well-heeled corporate community, the Oakland Athletics will stake its future on tourists, the fickle gaming industry in Las Vegas – a local economy where many workers depend upon the hospitality and recreation industries – and the creation of a media rights stream in a smaller media market. Moving to Vegas is even more curious, given the fact that the Oakland Athletics already have a minor league team in Las Vegas that allows the team to inexpensively promote the Oakland Athletics in the city.

The Las Vegas Business Landscape and How It Would Affect the Oakland Athletics

Because corporate sponsors are critical to a professional team’s success, it is necessary to analyze the Las Vegas business landscape. Las Vegas is one of the headquarters of the gaming industry in the United States. But the proliferation of casinos and legalized sports betting across the United States means that Las Vegas no longer has a stranglehold on gambling, and many gamblers now have more local options.

Any team in Law Vegas will depend upon on its gambling economy, an industry whose future is linked to the U.S. economy and travel trends because gambling is dependent on disposal income. The owners of the Oakland Athletics would be prudent to consider the case of Atlantic City, the gaming darling of the 1980s. Atlantic City fell upon tough times from a recession in the early 1990s and the entrance of gaming competitors in the northeast in the 1990s and 2000s.

Professional baseball requires both a robust population and a business community that can support baseball and its weekday schedule, and Las Vegas has long been viewed as lacking both qualities. Therefore, the success of a Las Vegas MLB franchise will depend upon the ability of the team to attract supporters and corporate sponsors from surrounding states.

However, relocation to Las Vegas potentially puts the team in conflict with southern California and Arizona teams – such as the Los Angeles Dodgers, Los Angeles Angels, San Diego Padres, and Arizona Diamondbacks – who may claim to be Las Vegas as part of their protected markets. While it is several hundred miles from major southern California cities and Phoenix to Las Vegas, these existing teams may argue that their markets extend into Nevada.

Hundreds of miles of largely unpopulated land surround Los Angeles, San Diego and Phoenix. Anyone who travels to Las Vegas will see many baseball hats and t-shirts from various sports teams from California and Arizona, reflecting the fact that a large share of the gamers and tourists in Las Vegas are day trippers from California and Arizona. This fact would support any encroachment claims from southern California and Arizona teams.

The Oakland Athletics may look to the success of the recent additions to the Las Vegas sports market, the Vegas Golden Knights and the Las Vegas Raiders, as models for their future success. Admittedly, these teams have been a success in Las Vegas.

However, professional baseball is different from other sports because the major league baseball season has more games, including many weekday games. Traveling to attend a single game is different from the multi-day game home stays common in major league baseball.

How Professional Baseball Teams Make Up for a Lack of Weekday Fan Attendance

Professional baseball teams make up for the lack of weekday attendance with corporate sponsors and businesses purchasing large blocks of tickets and the massive amount of media money generated by the large media markets. Even established teams in markets like New York City often struggle with fan attendance during the weekdays. Whether there is a broad enough corporate support or media money in Las Vegas to support a baseball team to fill in the gap is debatable.

The owners of the Oakland Athletics should explore the experience of the Miami Marlins. A generation ago, the MLB established the Marlins and promised that thousands of tourists would travel to support the team. However, these hopes have not panned out as the Miami Marlins have one of the lowest attendance rates in the MLB, despite some success on the field.

Can Cities and Fans Buy Professional Sports Teams?

Given the threats by the owners of professional teams to relocate, what are cities and fans to do? Why shouldn’t the city or fans have the right to purchase a professional sports team that threatens to leave?

A locality like Oakland, with an annual budget of nearly two billion dollars, may be able to float a long-term bond. The bond could offer to fund the purchase of the Oakland Athletics franchise, the building of a stadium and other development projects around the stadium. This type of deal would ensure that the Oakland Athletics will stay in the city. Oakland would also benefit from the increase in the team’s market value and would control both the stadium and any redevelopment projects.

Unfortunately, a municipal ownership is a pipe dream because the owners of professional sports teams will not allow such a solution. Under the current ownership model of professional sports in the United States, professional sports teams are owned by corporations or a collection of wealthy individuals.

The one exception is the Green Bay Packers in the National Football League (NFL), which is the only publicly owned team in professional sports in the United States. Despite the prolonged success of the Green Bay Packers, who have shareholders from all over the United States, NFL owners have since barred other teams from adopting a public ownership model similar to the Green Bay Packers.

Major League Baseball Has a Legal Antitrust Exemption

In professional baseball, the team owners have carved out territorial monopolies immune from an antitrust challenge due to an exemption in antitrust law. MLB owners have also created a complex structure that requires any changes to the league – including expansion, changes in ownership, relocation of existing teams, and media rights deals – undergo approval from current team owners.

The MLB structure would not survive a traditional antitrust challenge as its structure has many of the elements of a monopoly. Given the benefits afforded by the antitrust exemption, it is unlikely that the owners of baseball teams will take any action that could be perceived as undermining their power, such as allowing the existence of alternative ownership models.

In the existing structure, cities and fans have little power or a say in the future of their favorite teams. The fans are viewed as customers of a product, while the cities are replaceable sites of an entertainment product. A team can move to greener pastures if its owners decide that relocation is in their best commercial interests. In essence, the current ownership model in sports provides the team’s owners with all the power, holding fans and cities essentially hostage to their whims.

Over the past years, several commentators including Society for American Baseball Research writer Stephen R. Keeney, have persuasively argued that professional sports in the United States should learn lessons from overseas, where a community or fan/supporter ownership of professional sports teams is more common. According to these commentators, professional sports leagues would benefit if cities or supporters were allowed to own teams instead of large corporations or wealthy individuals. This alternative ownership structure would provide more stakeholders in the governance process and spread the benefits and risks of sports ownership.

While there are benefits to such fan/supporter or city-based models, it is unlikely that current team owners would allow such alternative ownership structures as municipal or supporter-based models, since that would hinder their ability to extract concessions from local governments. Consequently, these creative proposals for alternate ownership are a non-starter so long as baseball possesses an exemption to antitrust law, as team owners could kill any alternative ownership model in the cradle.

Instead of empowering fans or localities via alternative ownership structures, fans and cities in the existing sports landscape have to hope for the emergence of an investor to save their teams from undesirable owners. The emergence of an 11th-hour buyer of the Oakland Athletics seems like one of the most realistic ways for the team to stay in the Bay Area.

The Impact on Oakland, Its Residents and Baseball Fans Has Been Overlooked

The city’s best interests and a team’s ownership structure are not typically the focus of a discussion between cities and professional sports teams. Instead, the discussion often focuses on the financial benefits that will be derived from the team’s placement in a particular city and whether the city will support the building of a stadium with a package of subsidies.

This focus on economic matters ignores the damage that can be done to a city due to a team’s departure. When the Brooklyn Dodgers relocated to Los Angeles in the 1950s, the team’s departure marked the beginning of a decades-long decline for this borough of New York. This decision to relocate harmed Brooklyn for several generations, and there was no legal remedy by law. Similarly, the departure of the Oakland Athletics would bring an end to Oakland’s status as a home of a Big Four professional sports team and would harm the city in intangible ways.

So if the decision for a team to leave harms a city and cities cannot buy or form their own sports teams, what can Oakland and other cities do? If a stadium lease is nearing expiration, as in Oakland in 2024, cities unfortunately have little legal recourse under existing law. As a result, they are often left holding the proverbial bag.

Baseball’s Antitrust Exemption May Be Revisited

The baseball’s antitrust exemption has again been challenged in the courts. However, most previous court challenges have failed, and members of Congress have failed to take any action to revisit the antitrust exemption despite criticism from both sides of the political spectrum.

The movement of yet another team may spark further Congressional discussions regarding whether the current ownership model, enabled by the antitrust exemption, should be revised. Eliminating the antitrust exemption would open the door to different ownership models from municipal ownership to fan/supporter ownership models. But as I previously stated, these ideas remain largely pipe dreams for the time being as owners hold all of the cards in the existing power structure.

For the good people of Oakland and Oakland Athletics fans, we can only hope that the team current owner’s flirtations with Las Vegas and other cities are just an elaborate bluff to extract concessions from local leaders in Oakland. It could also be an attempt to smoke out a local buyer to purchase the team and keep it in Oakland.

In the meantime, we will enjoy the good times while they last at the Oakland Coliseum, affectionately referred to as “baseball’s last dive bar” by its most loyal and passionate fans.

Dr. James Barney, an avid sports fan who has followed the Oakland Athletics since the early 1980s, is a Professor of Legal Studies in the School of Security and Global Studies. James teaches legal studies courses including sports law. In addition to possessing a J.D., James possesses several master’s degrees, including one in U.S. foreign policy. He recently obtained a Ph.D. in history from The University of Memphis. James serves as one of the faculty advisors of the Phi Alpha Delta law fraternity and the Model United Nations Club, and he is the pre-law advisor at the University.

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