Rob Manfred recently suggested that the average MLB franchise's valuation is a good starting point for considering the expansion fee for new franchises. Based on the numbers put together by Sportico (see here), that puts the estimated expansion fee at $2.2B. That's just the MSRP which does not include small add-ons like a stadium, land for a stadium, and the megafunplex that must be built to capture even more entertainment dollars.
Why does MLB need to expand? Well, the obvious goal is to conquer the universe, and adding more teams that refuse to provide a living wage to hundreds of minor league players is the first step. That the expansion fees would provide a much-needed economic stimulus for the league and its teams is just an afterthought when one thinks of conquering a universe.
Why is there an expansion fee? Because "fees" sounds way better than "extortion". Also, the expansion fees help cover things like Rob Manfred's personality suppression treatments.
More teams = more good:
Increasing the number of teams from 30 to 32 would create mathematical symmetry. Each league would have 16 teams broken into 4 divisions of 4 teams each. Most importantly, MLB would be able to extract money from more cities.
More teams = more not good:
Symmetry would impact the playoffs in a significant way. Having 4 division winners means FAR less baseball than we currently enjoy because the wild card would no longer be necessary.
Just kidding. There is no way MLB gives up the extra excitement of the wild card races. That leaves the door open for all sorts of ridiculous playoff seeding possibilities. Here are some ridiculous options.
The top 4 seeds in each league are the division winners with seeding based on records. The top 2 seeds get a first round buy. The 3 and 4 seeds play the 2 wild card winners in a best of 3 series. To keep everyone sharp, the top 2 seeds play exhibition games against an All-Star team of their own minor league players.
The top 4 seeds in each league are the division winners, and there are 4 wild card teams. The top seeds host the wild card teams for a 3-game series.
The top 4 seeds in each league are the division winners, and there are 12 wild card teams. The seeding is based on run differential with the Cubs playing all road games no matter what seed they have.
As if creating a reasonable playoff system that does not push the World Series into January isn't difficult enough, imagine the actual expansion process.
Start with selecting the two cities. Imagine the IOC selection process for the Olympic Games but with far more corruption. Realistically, there probably aren't even that many cities in the running (assuming the interest is there). Personally, I favor Portland and Las Vegas - the former because the Mariners have zero competition in the Idaho sheep farmer market, and the latter because Vegas is awesome. Also, market saturation is a consideration, and I think the untapped potential in the West is greater than it is in places like New Orleans or Nashville.
In theory, MLB likely has a far more complex selection process that accounts for more factors than most of us can imagine whereas the IOC just wants a city to commit to spending whatever is required to host the games. Here are a few things MLB has to consider:
Is there an ownership group capable of buying a substantial portion of Amazon? Because the price tag is massive. Based on a buy-in of $2B, the total cost could be $3.5-4B.
Can the city/region support a baseball team? Keep in mind that this isn't simply about population. Competition for entertainment dollars is intense, and some places have more ways to split the dollar than others. If you split the contiguous United States into quadrants, the northeast one has a ton of teams, and a small corner of the southwest quadrant has a lot as well. Most of the gaps in the other quadrants reflect population density so....
What's the net effect on the total baseball entertainment marketplace? Each new team will cannibalize market share(s) from other teams. A new team in Vegas could have an impact on 5 or 6 teams - Arizona and some of the 45 teams in California. A new team in Portland would impact the Mariners and more importantly the Sea Dogs.
Is there a regional network capable of delivering the bundles of money teams need? If so, do they want to overpay when bidding against themselves? There probably is and they probably do, but that means the advertising dollars must be there.
It's all about the money.
The Braves opened a new stadium with an entertainment district in 2017 with a total price tag of $1.3 billion (or so). That stadium was built a 4-hour drive from downtown Atlanta, so land costs helped keep the price down a little. Based on that cost, it's easy to imagine the total price tag going north of $3.5 billion for a team opening for business in 2024 or beyond.
That's $2 billion or so for the buy-in plus $1.5 billion for the ballpark and entertainment district development. If it's a downtown stadium, that could be closer to $2 billion. Unless someone previously married to Jeff Bezos or Bill Gates wants to own a franchise, financing is a really complicated issue. It takes time to put together an ownership group that must then set about the task of securing financing. Then they have to hire a consulting firm to help them determine how best to fleece the taxpayers to reduce debt servicing costs.
When the Cardinals decided to build Busch III and the Ballpark Village supermegafunplex, the roughly $665 million cost was financed using every available means. The stadium was financed through private bonds, bank loans, a long-term loan from the county, and a couple bucks from ownership. Cost overruns required additional financing that came from piggy bank raids and stealing Social Security checks from old people.
So when you hear that the A's are thinking of relocating, it may be more than a strong-arm attempt to get a new stadium with all the bells and whistles. Moving out of a saturated regional market must have some growth potential, right? Setting that aside for the moment, it makes a lot of sense for another city to try and lure them away. Again, Vegas just makes sense. The relocation fee is half the expansion fee so that's over $1B saved right there. Land is relatively cheap and plentiful compared to southern California, and the location change doesn't significantly impact travel times for away games.
Is there a city in the US better equipped to handle overnight accommodations for fans? Vegas is its own supermegafunplex, and I suspect more than one casino would look at revamping or expanding to cater to baseball fans.
MLB relocations don't happen overnight, but they don't have to take half a decade either. If Vegas wants a team, the relocation route has to look awfully good right now.
I'm in favor of expansion, but the A's relocating to Vegas would take one of the best candidates for expansion off-the-table. If so then Portland stays in my top 2 with Anchorage and Butte competing for the other spot.