Posted Sunday, Dec. 25, 2011, at 10:54 AM
In honor of today's launch of the NBA season, I wanted to write something about the business of basketball and what better topic than Arturo Galletti's analysis of which cities might be promising homes for some of the Association's money looking squads. His take is very insightful, but I think his method (derived from Scott Thomas' work) suffers from two problems. One is that he looks at metropolitan areas exlusively in terms of the Office of Management and Budget's definition of metropolitan areas which is driven by commuting patterns. That's one important factor in determining what a "market" really is, but another not-always-identical way of looking at things is to consider Nielson's Designated Market Areas since television is a big portion of the revenue picture. The other issue is that you've got to consider growth. Moving to a marginal and rapidly growing market is very different from moving to a marginally sized and stagnating one.
As an example, take Albuquerque. This rates as just a hair too small to support an NBA, NHL, or NFL team. But Bernalillo County, the main center of the Albuquerque MSA, grew 19% in the aughts. Sandoval County grew 46 percent. Valencia Country grew 15 percent. That's all way faster than the national average of 9 percent population growth. It's true that tiny Torrance County went from 16,911 people to just 16,383 people, but this doesn't change the basic fact that ABQ would be a small but very fast growing market for a team. What's more, the Designated Market Area for Albuquerque also includes Santa Fe which is also growing faster than the national average. Which is all just to say that when you consider growth prospects, suddenly the New Mexico Hornets looks like a much more appealing proposition than a static analysis would suggest.