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VENUE INTERVIEWS |
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SPORTS ECONOMICS MEDIA QUOTES |
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..."There is an advantage to playing in a big conference, and Baylor has that advantage," said John Vrooman, a sports economics professor at Vanderbilt University. "Get your foot in the door, get the money and you can build a pretty good program. It starts to feed itself." ...
"Nashville may fashion itself as Music City, Nash-Vegas or the Wall Street of the South, but it is still not Houston or Dallas, and this small town by NFL standards is a good place for Vince to get his down-home image together," Vrooman said. "He is unique, and his potential marketability is remarkable..."
- An Arena Without a Team, KCB Magazine July 2007
To woo a team Kansas City has entered an expensive cutthroat competition of creative financing and open extortion, joining Anaheim, Oklahoima City, Las Vegas, Tampa Bay, Houston and a half-dozen other cities eager to lure franchises. After a decade-long builkding frenzy, the country is awash in new stadiums. There are simply more arenas than teams. "The venue revolution is almost over," says Vanderbilt University economics ptrofessor John Vrooman, who tracks the sports business. "Its getting late and KC doesn't have a date to the big dance."...
..With so much upfront money committed to AEG, it may limit what the city can use to seduce teams. "No big league club is coiming to the Sprint Center with this payout that is all AEG," says Vrooman the Vanderbilt economist, who reviewed the management agreement at KCB's request. "By the time the cash flow is cut and sliced there is nothing left for the NHL or NBA club..."
- NHL forced into new reality, National Post 5/13/2009 - [Cached Version]
"It's sort of a reverse sunbelt move," said John Vrooman, a senior sports economics lecturer at the University of Vanderbilt...
- Is smart money on CC? Jacksonville Gazette, - [Cached Version] Published on: 11/12/2008
John Vrooman, a sports economist at Vanderbilt University in Nashville, Tenn., believes Milwaukee Brewers' pitcher CC Sabathia will get a five-year deal worth $20 million to $25 million a year.
But Vrooman isn't so sure the Brewers would be wise to spend money like that.
At the request of the Milwaukee Journal Sentinel, Vrooman was asked to assess Sabathia, who compiled an 11-2 record with the Brewers after he was traded from Cleveland.
Vrooman used a metric called marginal revenue product, a calculation based on attendance and a revenue multiple per fan based on the size of the Milwaukee media market.
Vrooman estimated that the Brewers generated an additional $5.2 million in revenue because of Sabathia, which includes an additional 130,000 fans.
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The problem with free agency, according to Vrooman, is that "the average bid is somewhat accurate but unfortunately for the winner the highest bid systematically overestimates the value of the player in a limited free agent market."
And what about the Brewers?
"As good as he is, he is probably worth only $15 million per year over five years for the Brew Crew," Vrooman said.
He said Sabathia was probably worth $11.5 million to the Brewers in 2008.
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Super Bowl Impact, Indianapolis Star April 9 2008 [ Cached Version]
John Vrooman, a Vanderbilt University professor who teaches a class on sports economics, said he has reason to doubt the cause-effect relationship in such predictions.
"Those estimates are pretty rosy because it's like trying to measure the impact of a pint of water in the ocean," he said. "it's almost impossible to attribute a bump to one event."
- Indy's Bid for a Super Bowl: Enough bucks for the bang? Indianapolis Star Febraury 1, 2007
John Vrooman a professor at Vanderbilt who also teaches a class in sports economics, also thinks the effect will be less than touted and he said rewards go to select few businesses.
On the other hand he said, there are other benefits that are not so easily measured. "Think about the incredible price of a Super Bowl ad," he said. "Here you are on national television, and Lucas Oil getting a ton of free publicity and so is Indianapolis...If I was on the side of it I would say, 'Let's look at how valuable it is as a commercial.'" ...
- D.C. takes the fast track to getting a new stadium Minneapolis Star-Tribune, April 10 2006
Some experts think Washington, which ended up vying with Portland for a major league franchise, simply wanted baseball too much.
"This is a classic case of 'winner's curse' where the winner in a monopoly auction always pays for more than they get," said John Vrooman, a Vanderbilt University economist who has studied stadium deals across the nation...
- The Futures Game: Net Profits, Chicago Cubs Vine Line Magazine
Baseball's recent revenue surge--from $3.18 billion in 2000 to $4.73 billion in 2005--is deceptive. Teams like the Yankees and Red Sox have benefitted more than say the Royals and Pirates, said John Vrooman a Vanderbilt University sports economist.
"It appears that everything is growing, but growing for the Yankees, Red Sox Dodgers, etc.," Vrooman said. "You start getting down to the middle of the pack and those teams are not necessarily enjoying the growth. And when you get down to the bottom, those teams are suffering stagnation..."
"You definitely have a polarized league, more so than any other league in pro sports," Vrooman said.
Baseball's revenue rose about 30 percent compared to 2002 levels, while team payrolls increased less than 10 percent during the same period, Vrooman estimated. Salaries are now less than half of revenue, down from about 57 percent in 2002 and a similar proportion to the NFL. This no doubt has the attenytion of Donald Fehr and the players union he represents, Vrooman said.
The current CBA expires Dec. 19. Avoiding another work stoppage is critical for baseball's growth. "The underlying tension among large revenue owners, small-revenue owners and the player creates an unstable triangle that could precipitate a stalemate," Vrooman warned.
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Titans, Predators and Grizzlies, Oh My!, Tennessee Business February 2008 - [ Cached Version]
How economically vital they are to those communities is debatable, but Vanderbilt University's John Vrooman believes the answer is somewhere between the proponents' and detractors' polarized stances.
"The indirect social overhead benefits of big-league sports in attracting more economically integrated businesses that may indeed have tangible economic effects cannot be denied," says the senior economics lecturer. "There is also evidence that sports teams and their venues can have some important economic impacts if they are integrated as anchors of larger development projects like we are seeing downtown Memphis and Nashville."
King of the Mountain The professional team with the best financial outlook is easily the Titans, Vrooman says.
"The National Football League shares a full two-thirds of revenue among clubs," he explains.
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Vrooman says the league is partially to blame.
"The NFL is the perfectly diversified portfolio," he says. "Meanwhile the NBA Grizzlies and the NHL Predators, playing in leagues that do not share revenue, take the risk of going it alone. This is why the value of the Titans is fast approaching $1 billion (almost five times revenues) while the Grizzlies are valued at about a third of that (three times revenues or about $330 million) and the Preds are over-valued at their recent sale price $190 million (twice revenues)."
Nashville enjoys a healthier corporate community, which facilitates luxury-suite sales at Titans games, but all is not sonorous in Music City. The Titans and LP Field, according to Vrooman, probably have the highest payoff to the team and owner Bud Adams, while having the lowest payoff to metro Nashville.
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"Teams and venues only pay the public if they are linked to the local economy," Vrooman says. "While the Titans are connected to our hearts, they are disconnected from the local economy."
He added that, like the FedExForum, the totally subsidized Sommet Center where the Predators play, is probably over-subsidized because of the leverage of the [league] on the metro government. A good example of a stadium benefiting a community, he says, is AutoZone Park, where the minor-league Memphis Redbirds play. He predicts a similar downtown stadium would also make "social economic sense" for the Nashville Sounds.
- Minor-league parks lure fans looking for a cheaper getaway. Baltimore Business Journal, August 8, 2008
"This is a great alternative," said John Vrooman, a sports economist at Vanderbilt University in Tennessee. "You can spend the night in your own house."
- Market ripe for Ripken, Baltimore Business Journal 7/27/2007 - [Cached Version]
Comcast, Ironclad Authentics LLC., Leffler Agency Inc., Vanderbilt University, WBAL, Steve Davis, Cal Ripken Jr., Ray Schulte, Bob Leffler, Mark Teixeira, Joe Mauer, John Vrooman,
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"There's very few players that have the marketability where they become larger than the game itself," said John Vrooman, a sports economist and professor at Vanderbilt University in Nashville, Tenn. "He's a rare athlete that gives more than he takes.
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Bid to save Preds emerges. Tennessean 6/16/2007.- [ Cached Version]
But even if Balsillie's deal with Leipold falls apart, the local ownership group would face competition to buy the Predators, according to John Vrooman, a sports economist at Vanderbilt University.
William DiBiaggio, a Silicon Valley venture capitalist, has an agreement with AEG, an arena management company, to move whatever hockey cteam he buys to the AEG controlled Sprint Center in Kansas city," Vrooman said.
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Loss of Preds could negatively impact downtown businesses. Nashville City Paper, May 30, 2007 - [ Cached Version]
Despite these seemingly clear benefits, sports economist John Vrooman of Vanderbilt University said most academicians in his field consider sports franchises to have a "zero-sum impact" on any given city.In other words, business generated by franchises doesn't create any new money for a city because it's usually cash that would have been spent on entertainment elsewhere in town.
"The impact studies are very, very questionable," he said. For example, "If downtown is cooking, that just means that West End is not."
- Balsillie reaches deal with Ontario city. Nashville City Paper , June 1, 2007.
Vanderbilt University sports economist John Vrooman said Thursday that he doubts the Predators will move to Hamilton. The NHL probably wouldn't approve locating a team the Detroit Red Wings and Toronto Maple Leaf markets (Buffalo is also nearby). Also, franchise's contract with Nashville can likely only be broken if average attendance next season falls below 14,000.
Vrooman believes the purchase price for the Predators suggests that the franchise is more profitable than current owner Craig Leipold has suggested. The proposed price of $225 million is well over the $175 million Balsillie offered last year for the Pittsburgh Penguins and the Predators's deal with Nasshville is much "sweeter" than most arrangement, said Vrooman.
"The Predators are selling at a premium," Vrooman said. "They're not doing as badly as people think. We need to be a little more confident about this."
- Leipold cashes in: owner stands to make a windfall on Predators' sale. Tennessean 10/21/2007
"The profit scenario is not uncommon in the sports world," said John Vrooman a Vanderbilt University economics professor and expert on sports finances. "An owners profit generally comes form the franchises increase in value."
"It's kind of like you buy a growth stock and the stock doesn't pay any dividends," Vrooman said "But the company is putting all of its retained earnings back in the company. So the value of the stock grows. When you sell the stock, then you get your rate of return."
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| WHO BOUGHT THE PREDATORS |
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| Gaylord Entertainment |
$12.8 million |
| Craig Leipold and family |
$9.6 million |
| Bankloan |
$40.0 million |
| Metro Government |
$20.0 million |
| Total purchase price |
$82.4 million |
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| WHERE SALE MONEY WOULD GO |
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| Estimated sales price |
$193.0 million |
| Cover Leipolds losses |
-$70.0 million |
| Cover team start-up costs |
-$40.0 million |
| Pay off bank loan |
-$30.0 million |
| Cover buyout payment to Gaylord |
-$13.0 million |
| Cover Leipold's initial investment |
-$9.6 million |
| Leipold's profit |
$30.0 million |
In calculating the amount of money Leipold could wallk away with, The tennessean took the proposed $193 million sale price and subtracted $70 million in losses, an estimated $40 million for team start-up costs, and estimated $30 million payoff of the initial loan and an estimated $12.8 million payment ot Gaylord. The analysis also substracted Leipold's initial $9.6 million investment."
- Californian on board aids group's finances, Tennessean 8/2/2007
Last fall a rankinhg by Forbes magazine put the Predators' debt ratio at 28 percent compared to the 46.3 percent average for NHL teams, including some that finance their own stadiums. ...
"It gives the team alot of operating room," said John Vrooman, a Vanderbilt University sports economist. "They can put the money on the ice instead of paying off debt."
Though Del Biaggio's involvement raises the prospect that the team could leave if it isn't financially successful here, that chance is lessened because he only has a minority stake, Vrooman said. "As long as the majority owners are from Nashville, this team is pretty secure."
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Predators' exit could tarnish Nashville's big-league luster. Tennessean 5/27/2007 - [ Cached Version]
"It's not necessarily what they add, but what they take away," said John Vrooman, a sports economist at Vanderbilt University.
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Since fall 1999, the Titans have come to dominate the sports landscape in Nashville, Vrooman said.
"There are only so many luxury-suite sales out there," he said.
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It also could have a tough time persuading another team to move to the city in the future, said Vrooman.He cited the example of Kansas City, which has lost both an NHL and an NBA team, and is having a difficult time persuading either league to give it another shot, despite a population of nearly 2 million.
"We may get branded as the city that lost the team," said Vrooman.
- Smith was always a commodity first, Dallas News, 3/1/2003 - [Cached Version]
"We glorify athletes, but they are meat," said Vanderbilt University economist John Vrooman, who studies sports as a business."They're a commodity."
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"You have all sorts of arbitrary labor market rules in all team sports," Mr. Vrooman said.
The NFL's salary cap, the most restrictive in sports, limits the ability of teams to find ways to keep all the players they want.The challenge for management lies in deciding what players to keep at what price to maximize wins.It helps that teams can walk away from contracts when they feel somebody else can do the job better or cheaper.
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DallasNews.com | Dallas-Fort Worth | Business:... - [ Cached Version]
Published on: 2/15/2003 Last Visited: 2/15/2003
Vanderbilt University economist John Vrooman, who studies baseball as a business, isn't surprised to see the new labor deal working a lot like the old one.The market, he said, is still stacked in favor of the players.
"The free-agent market is set up against the team," he said."The problem is there aren't enough free agents.There are one or two sluggers, one or two quality pitchers.A lot of times, they're being paid more than they're worth."
With spring training starting this week, the sport is closing out its first off-season negotiating contracts under the labor deal signed last August.
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When all the deals are done, Vanderbilt's Mr. Vrooman expects baseball's average salary - $2.3 million in 2002 - to increase this season, as it has in just about every other year.
Why hasn't the new labor deal brought more dramatic results?
Some teams feel they can afford to spend more.
- The revolving door of team ownership Dallas News, 11/3/2002 - [Cached Version]
"Most sports teams are not operated at their maximum value because the owner is also trying to win," said Vanderbilt University economist John Vrooman, a sports business expert."This artificially cranks up costs for all other owners in the league and diminishes their net cash flow.
"As soon as the ego satisfaction wears off, the sports franchise often becomes a relatively bad investment compared with other options.Then when the owner decides to sell, he typically slashes payroll to take the club's value back to its maximum right before he unloads it."
The turnover rates for the last decade stand at 50 percent or above in baseball, basketball and hockey.
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Vrooman figures the buying and selling will continue.
"The profit in the contemporary sports franchise ownership is not in the net cash flow after interest," he said."It lies in the appreciation of franchise value.So when the new breed loses interest in building a winner, or they find that building a winner is not as easy as it seemed, the only way to disgorge equity is to bail out and sell the team."
- California Schemin' Independent Sources 5/28/2006 -[Cached Version]
John Vrooman, a sports economist at Vanderbilt University points out that the league (the NFL - ed.) likes to leave one prominent city without a football franchise, "like an empty seat in musical chairs", so that teams in other cities can threaten to move if they do not get their way.This invariably prompts state and local governments to contribute public money to help teams that replace old stadiums with new ones.Los Angeles residents have been scratching their heads about why the country's second-largest city has had no football team since 1994.But the NFL has made far more money from new stadiums that have been built using Los Angeles as a threat, says Mr Vrooman, than it could have made by actually putting a team there.
- Is deal good for teams? taxpayers? fans? Kansas City Star 3/05/2006 - [Cached Version]
The Kansas City Star compiled its list of stadium funding packages by relying on studies done by Marquette University's National Sports Law Institute and Vanderbilt University economics professor John Vrooman, plus consulting reports prepared for the San Jose Sports Facility Task Force and Minnesota's Stadium Steering Committee.
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"Unfortunately, the private share varies directly with home-market size," said John Vrooman, a former Kansas State University football player who is an economics professor at Vanderbilt University and has studied stadium deals across the country.
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But seat licenses and naming rights will together generate almost $100 million, according to figures compiled by Vanderbilt's Vrooman, and it's likely that other new revenues from the stadium will cover the team's remaining commitment.
For the Chiefs.
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"This proposal is completely upside down," said Vanderbilt's John Vrooman.
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The NFL -- the ideal business model, Sports Business News 5/7/2006- [ Cached Version]
"The NFL is a perfect portfolio," says John Vrooman, a sports economist at Vanderbilt University, because one team's losing season and sagging revenues are offset by another team's banner year.The co-operative arrangements also make costs stable and predictable. Mr Vrooman reckons that even if another American sports league, or a big European football league, were to have similar cashflows to the NFL, the American league's teams would still be 50-60% more valuable because their business is so much less risky.
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But the NFL has made far more money from new stadiums that have been built using Los Angeles as a threat, says Mr Vrooman, than it could have made by actually putting a team there.
- HOW MUCH IS A COACH WORTH? Business Week, October 27, 1997
According to economist John Vrooman of Rice University, the financial incentives to win are five to six times greater in the NBA than the NFL. In the National Football League, he notes, two-thirds of total league revenue is shared equally among all teams, compared with only a third in the National Basketball Assn.
Thus, the average NBA coach earns about $2 million a year, twice as much as the average NFL coach. And the Celtics were willing to splurge on Rick Pitino because he will generate tremendous profits for them if he produces a winning team. By contrast, although the Patriots made the Super Bowl last year, their total 1996 revenue rose just $19 million, only modestly more than the average $16 million gain posted by NFL teams. |
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