The peculiar economics of sports team ownership

Abstract

Purpose The purpose of this paper is to examine how North American professional team owners are engaging in broader urban development projects that have their teams as anchor tenants in new sports facilities, by examining the case of Rogers Arena in Edmonton, Canada. Design/methodology/approach Approached from a constructionist perspective, the study employed an instrumental case study strategy as it facilitates understanding and description of a particular phenomenon and allows researchers to use the case as a comparative point across other settings (with similar conditions) in which the phenomenon might be present. Findings Using urban regime theory as a framework, the authors found that in Edmonton, the team owner was able to align his interests with other political and business interests by engaging in a development strategy that increased the vibrancy of Edmonton’s downtown core. As a result, the owner was able to garner support for both the arena and the surrounding development. Research limitations/implications The authors argue that this new model of team owner as developer has several implications: on-field performance may only be important insofar as it drives demand for the development; the owner’s focus is on driving revenues and profits from interests outside of the sports facility itself; and the team (and the threat of relocation) is leveraged to gain master developer status for the ownership group. Originality/value This paper adds to the understanding of owner interests and how franchise profitability and solvency can be tied to other related business interests controlled by team owners.