Some Advice for Herm Edwards in K.C.: Rent, Don’t Buy

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The New York Sun

Here’s a little advice for former Jets head coach Herm Edwards as he embarks on his new job with the Chiefs: Rent your home in Kansas City, because in two or three years you might be working in Los Angeles and it’ll have nothing to do with your record or coaching ability.


Chiefs owner Lamar Hunt and Royals owner David Glass are about two and a half months away from finding out just how much their teams are loved by Jackson County residents, who are being asked if they want to pay more taxes to bring both the Chiefs’ Arrowhead Stadium and the Royals’ Kauffman Stadium up to 21st century standards.On April 4, residents will decide whether the local sales tax should rise by three-eights of a percent in an effort to raise some $850 million over 25 years to renovate the two aging arenas.


If the voters say no, both Hunt and Glass can break their leases with the city and look to take their teams elsewhere. Or Major League Baseball can use the no vote as leverage with its Players Association in the next collective bargaining negotiations and threaten to eliminate the Royals along with another team (Oakland, Florida, and Minnesota are all candidates) to get players concessions.


As the future of the Chiefs and Royals plays out, Kansas City will, amazingly,begin making a big pitch for either an NHL or NBA franchise to come to the city and its new arena, which is scheduled to open in 2007.In fact,Kansas City Mayor Kay Barnes told the American Subcontractors Association’s Greater Kansas City Chapter nine days ago that she expects a Kansas City NHL or NBA franchise to open the 18,500-seat arena in the fall of 2007.


The NHL has one team that could legally move after the 2006-07 season, that being the Pittsburgh Penguins. There is also one NBA team that can relocate with no legal complications.The Orlando Magic’s ownership group has a year-to-year contract with city officials to use the local municipal arena. Less clear is the status of the Sacramento Kings and the Milwaukee Bucks. The Maloof Brothers in Sacramento and Senator Herb Kohl, the owner of the Bucks,want new arenas for their teams. Seattle SuperSonics owner Howard Schultz, who is the chairman of Starbucks, is also seeking a new arena in the Seattle area.


Of course, the question of whether Kansas City can financially handle all of these teams should the voters say ‘yes’ on April 4 and if the city lands a NBA or NHL remains unanswered. In 1976, when tickets prices were a lot cheaper and corporate clients were not needed for club seats and luxury boxes, the city’s NHL team, the Scouts, moved to Denver after just two seasons in Kansas City. Nine years later, the NBA’s Kings, who had already failed in Cincinnati, ended a 13-year run in the city and headed west to Sacramento.


Kansas City could not support the Royals, Chiefs, Kings, and Scouts 30 years ago, and according to economist Daniel Rascher, who prepared a 2004 assessment of Kansas City as a viable NBA or NHL market, not much has changed in three decades. Rascher pointed out that Kansas City had a very low ranking in additional franchise viability based on “the population of its metropolitan statistical area (needed for ticket sales, premium seating, merchandise, concessions, parking, and local media revenues), corporate depth (needed for premium seating, luxury suites, and sponsorship), and the number of existing major sports franchises.”


Furthermore, Rascher said, “Kansas City is already saturated with sports entertainment. If a team were to move to Kansas City, it is likely that it and the existing local teams would struggle more in terms of winning and profits.”


Glass’s Royals have been terrible for years and simply cannot compete financially with big city markets in two major areas: cable TV revenues and corporate dollars.Moreover,the absence of a salary cap in baseball makes it impossible for smaller-market teams like the Royals to compete in terms of salary. Even with a renovated Kauffman Stadium, the Royals will not have the financial wherewithal to compete on an annual basis with the Yankees or Mets. Kansas City cannot generate enough cable TV revenue either making the Royals a perennial revenue sharing receiver.A renovated stadium will not change that. Small market baseball teams will have to develop players and hope those players become solid contributors who will allow them to be in playoff races over a two to three year period before they become too expensive, like what has happened in San Diego or Florida.


Hunt’s family will have to figure out how high they can raise prices at a renovated Arrowhead Stadium. The Chiefs have fans, but if ticket prices skyrocket with a new stadium, will Kansas City have enough customers to pay the freight?


Teams want customers,not fans.Customers eat at stadium restaurants, buy merchandise, and can afford higher ticket prices on a regular basis. Fans are loyal to the team but don’t spend big money on the product in the stadium on a regular basis. Kansas City is at the crossroads as a “big league city” and in April, Jackson County residents will decide if being a major league city is worth the cost. That’s the reason Herm Edwards should consider renting, not buying.


The New York Sun

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