Charlotte Knights Get New Home

Since early 2012, the Charlotte Observer has published a series of articles about negotiations, proposals, and strategies to move the minor-league AAA Charlotte Knights baseball franchise fromFort Mill,South Carolina to a site somewhere in theCharlotte metropolitan area. Besides effects on the team and its fans, these articles discussed such matters as whether to fund the construction of a new ballpark with private and/or public (taxpayer) money, where to build the venue inCharlotte, and other aspects of the relocation. In addition, there were different viewpoints and even disputes among economists, Knights officials, and members of Charlotte’s Chamber of Commerce (COC) and City Council (CC), and of Mecklenburg County (MC).

Based on information reported in the Observer during specific months of this year, the following sections denote business, economic, and political features of this move.

February

Hired by the nonprofit Charlotte Sports Commission (CSC) to research business activity in the area, UNCC economist John Connaughton determined in a study that local college and professional sports teams generate approximately $402 million in revenue each year and are responsible for 9,287 jobs. After Knights general manager Dan Rajkowski reported that the team’s annual revenue was about 1 percent of the total amount, CC’s economic development committee chairman James Mitchell suggested the city might contribute $6-$11 million to help the team build a $55 million, 10,000-seat baseball stadium in Charlotte and therefore supplement MC’s pledge to spend $8 million on infrastructure. According to Center City Partners (CCP), the stadium would stimulate economic development. In other words, because sports teams benefit the community, it is all right for taxpayers to subsidize them in some way.

March

In this month, the Knights lobbied city officials for an uptown stadium while some prominent baseball economists raised reasonable doubts about the number of new permanent and temporary jobs, and the projected increase in revenues and creation of wealth for businesses and other organizations as estimated by Connaughton in his study. Furthermore, the Knights requested $11 million from the city, MC donated $20 to $24 million in uptown property (land) toward the stadium project’s $78 million in cost (revised later to $74 million), and government officials explored using money from an 8 percent countywide hotel/motel occupancy tax. Any subsidy from the city to the Knights, however, especially concerned CC member Claire Fallon. Then in late March, Charlotteattorney Jerry Reese filed a 43-page lawsuit (his sixth) declaring that the stadium lease and related economic development agreement were unlawful because the Knights lacked money and withheld information about the franchise’s ability to honor its lease. In response, the Observer recommended that Reese drop his lawsuit.

April

Early in April, city staff offered $9 million to pay for a new stadium with one-half of the amount from an occupancy tax and the remainder from property taxes. According to this deal, the Knights must play at the ballpark in 2014 and one year later, the city would begin to reimburse the team. As a result, Deputy City Manager Ron Kimble convinced the COC to support the deal. When the city staff unveiled a new plan that reduced Charlotte’s commitment from $9 million to $8.5 million—consisting of $6 million from a hotel/motel tax and $2.5 million from property taxes—the CC’s economic development committee approved it 4-1. Interestingly, the proposal included 20 annual payments to the Knights of $522,000 from the occupancy tax and another $200,000-$250,000 from property taxes. As expected, the Observer supported the new plan since it was responsible, less risky, and supposedly protected the public’s money. Then in late April, the Knights and BB&T Corporation agreed to a naming rights deal for the stadium yet did not disclose the amount in their contract. These results, in short, indicated that the Knights were likely to move fromFortMill toCharlotte after the club’s 2013 season in the International League.

May

About four weeks after Piedmont Natural Gas (PNG) signed a long-term agreement with the Knights to become a founding partner of the stadium, city staff increased its contribution for the stadium to $7.25 million, collected totally from hotel/motel occupancy taxes, while CCP proposed to donate $750,000 over 20 years to build the facility in 2012-2013. These changes, in part, caused some CC members to switch their support from no to yes on the new plan since the Knights had committed $38 million or 51 percent of the project’s total cost. The Observer approved this proposal because it eliminated $2.5 million in property tax money and included $750,000 from CCP. As stated in the newspaper, “Add it up and you have a public investment that doesn’t put Charlotte taxpayers on the hook — unless, perhaps, something goes wrong” such as low attendances at Knights home games, recession or sluggish growth of the local economy, and/or financial problems at BB&T and PNG.

June

Shortly after the Observer published a column by District 2 representative James Mitchell in which he said the new ballpark would bring hundreds of jobs and millions in economic development toCharlotte, the CC voted 7-4 to approve $8 million toward the construction of a ballpark for the Knights in the Third Ward. Despite financial issues at two or more other taxpayer-supported projects in theCharlotte area, Mayor Pro Tem Patrick Cannon voted yes because “The stadium would provide uptown with family-oriented entertainment.” Although Mayor Anthony Foxx did not veto CC’s decision, he was ambivalent about baseball’s impact on the city.

Frank P. Jozsa Jr. was a professor of economics and business administration at Pfeiffer University from 1991 to 2007. He is the author of ten books on professional team sports including three on organized baseball.