The MLB Expansion Fees Argument and Las Vegas

Since the Oakland A's announced their intent to move the franchise to Las Vegas, there has been one argument that has never made sense to me, and it revolves around expansion fees. When people question the move, you'll hear a retort that sounds something like "why move when those MLB expansion fees are just waiting for you in Las Vegas?" 

In essence, people are saying that Las Vegas is ripe for an expansion franchise and the League would make money by using Sin City as an expansion site, so why use them as a relocation city? While an expansion team would likely do better in Las Vegas than a John Fisher run A's team ever will, that particular argument doesn't have a lot to stand on.

Don't get me wrong, I'd love to see the A's stay in Oakland. They've been the team that I've rooted for my entire life, and now they feel more like an ex that is just hanging around. There are plenty of other reasons to knock the move, but this just isn't one that carries much weight. 

Here is why that particular argument doesn't make sense, and it's pretty simple. No matter where MLB expands, those expansion fees will be charged, and they will be hefty. Some have reported that they could be in the $2.2 billion range per team. That is regardless of location. If a billionaire wanted to put a team on the moon, they could do that too! It would just cost them $2.2 billion to do it. (Note: The moon is not currently on the short list of expansion cities).

So the league wouldn't necessarily be "burning" an expansion site, they would be adding another city to the mix. With the A's in Oakland, the expansion sites were likely to be Las Vegas and Nashville. With the way things are currently looking, it seems as though the expansion sites now would be Nashville and a big question mark, with Salt Lake City, Oakland, Portland, and others in the mix. All we know is that it's likely to be a west coast city with re-alignment also set to take place to make travel easier, and with Nashville being added, a team out west would off-set that addition. 

There is one key question here, however, and there isn't necessarily an answer out there that I can find. Does the market size of a potential expansion city play any role in the amount that it costs to buy a franchise? Could two franchises be charged separate amounts? This wouldn't happen, but what if New York got a third baseball team and then Montana landed their first. Would the owners of those franchises be charged the same entry fee? One city is the biggest market in the United States, and the other would be home to the first professional sports team in Montana, with Missoula ranked as the #162 media market in the U.S. 

The last two times that Major League Baseball has expanded, both incoming franchises have paid the same expansion fee. In 1993 the Colorado Rockies and Miami Marlins each paid $95 million, and in 1998 the Arizona Diamondbacks and Tampa Bay Rays each paid $130 million. Now, they could be paying the same amount as two incoming franchises at the same time, but both duos also play in similarly sized media markets.

The D-Backs and Rays play in the #11 and #13 media markets in the country, and the Rockies and Marlins operate in #16 and #18. 

According to MLB Commissioner Rob Manfred, the estimated $2.2 billion entry fee this time around comes from the average franchise value, which would be used as a starting point when determining how much to charge incoming owners. 

Existing owners voted to unanimously approve the A's relocation because it gets them one step closer to splitting those expansion fees, which would be $4.4 billion or so split between 30 billionaires. That's why they approved the move, not because John Fisher is a visionary. It's to help him get out of his own way and maybe actually get a ballpark built somewhere--anywhere--they don't care. They want those expansion fees. 

While it would appear as though both new franchises will be charged the same amount to enter MLB, if by chance they were to be charged different amounts based on market size, like in the New York/Montana example, then Las Vegas, the nation's 40th largest market, wouldn't have helped the owners maximize the fees they'd receive. Nashville is ranked #27 in media market size, and right behind them at #29 is Salt Lake City. A few spots ahead of them at #20 is the Sacramento area of California. 

If by chance those fees are dependent on market size, then Oakland would hold a slight edge being in the country's #10 market. That said, it's hard to see Oakland getting an expansion team any time soon, especially with this Commissioner. Why go through all of the trouble taking the A's out of the city and trashing the team's fans in the process, all the while saying that the market isn't viable anymore, just to hand them a new team to root for a few years later? It just wouldn't add up. 

In short, the expansion fees will be charged no matter which market MLB enters next, and even if the fees end up determined by market size, Las Vegas is one of the smaller markets on the table.